Pound soars back to nearly €1.40 after Conservative Majority

As I said in my last post just over a week ago, the blog was going to be quiet while I took a short holiday. Much has happened since I’ve been away! As most readers will already know, the Pound has surged higher against the Euro as Sterling posted its largest gains against the Euro in years. As exit polls showed that the Conservatives would take an overall majority, GBP/EUR rose 4 cents, and touched the €1.40 level several times as the chart below shows: 

Why did the Pound gain so much on a conservative win? 

The Pound had fallen sharply before the election, due to political uncertainty for investors who had expected a hung parliament. Most polls had again and again shown the two main parties neck and neck, with neither expected to secure a parliamentary majority. The overall majority for the conservatives while not popular with everyone, is certainly very good news for the UK economy. As such, investors rallied to buy the Pound, helping to push it up against other currencies. 

Will the Pound/Euro rate get back to €1.40? 

I personally don’t think so. You can see the resistance GBP/EUR has at €1.40 in the above chart, and the currency pair seems unable to break through this. Indeed this week we’ve seen the rate drop back to the €1.38 level. I think the Pound/Euro rate could now fall again, and I’ll explain the reasons why… 

• The Conservatives now have a majority, they can implement much tighter monetary policy than they have done under the Con/Lib Dem coalition. This means that the Bank of England may now keep monetary policy easy and keep interest rates low, which would weaken the Pound, which could take some of the wind out of sterling's sails. 
• Cameron has pledged to hold a referendum on membership of the European Union within two years, and the uncertainty this will generate will also keep investors wary and limit any further gains.
• The Spotlight is now back on the EU and Greece, and actually recent figures suggest the European Central Banks stimulus program is having the desired effect, and the economy in Europe seems to be recovering. 
• Greece (which incidentally is where I have just been on holiday!) seems to be playing ball and, for the moment, is meeting its debt repayments. The Euro is weak at the moment due to Greece, and if this gets resolved, it could regain strength and become more expensive to buy. 

What should you do if you need to buy Euros this year?

I can’t predict what the rate will do, nobody can. What you can do however is speak to an expert currency broker like me to ensure you have an understanding of the options available. For example if you are worried about the rate falling, you can lock in the rate now for up to 2 years with a Forward contract. If you want to gamble on rates going higher, then you can use a ‘Stop Loss’ order to fix a rate should we see it plummet below a particular level, so you’re not exposed. Or, you could hedge your bets and fix a rate on half your requirement now, and see what happens later in the year with the remaining funds you need. 

Do you need to achieve the best possible exchange rates? 

The above is just an example of how I can help you if you’re looking to buy or sell currency. I can source you rates of exchange that are very close to the mid-market level you see published online and if you are converting a large sum, the savings could be thousands of Pounds. If you would like a quote on the exchange rate I can provide, or would like to discuss your options in more detail regarding when to fix a rate, then click below to send me a free no obligation enquiry today. 

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Pound/Dollar rates at 5 year low

Monday 13th April 2015

Pound/Dollar rates hit 5 year low

The US Dollar has been gaining more and more strength recently, and has therefore become more expensive to purchase. First thing this morning the GBP/USD rate was as low as 1.4569 which is the lowest in 5 years. It’s climbed a little during trading to 1.4645. Still a far cry from the highs of $1.72 we saw last summer! 

The reason is the US economy is performing very well, and it’s likely they will be the first major western economy to raise interest rates. Also, global uncertainty is driving investment into the ‘safe haven’ US Dollar, which also strengthens it. This is great news for anyone looking to convert Dollars to Pounds. Those needing Dollars however should note that many forecasts think the rate will continue to slide this year. 

 

 

Sterling/Euro remains supported at €1.38

The strength of the Dollar is also causing weakness in the Euro. Issues over Greece means investors are moving from Euro to Dollar, which is weakening the single currency and keeping GBP/EUR rates supported above the €1.38 level. 

I’m actually surprised the rate is holding at these levels, and I’m still of the view that as the election draws closer, Sterling will start to lose value against other currencies. Only on Friday figures showed weaker-than-expected industrial data, and the rising risk of prolonged political uncertainty after a tight British election next month is already dragging the Pound down against other currencies. Remember, the current high level is Euro weakness, not any fundamental strength in the Pound! 

If you are looking for the best exchange rates and would like a quote on your exchange, click here to send me a free no obligation enquiry. 

What could affect exchange rates this week? 

Below I’ve listed the scheduled releases for the coming week that I think may affect exchange rates. Remember that other things such as election uncertainty could also change rates at any time without warning. To discuss your currency requirement in more detail, or have a chat about which direction the exchange rate may go, click here to send a free enquiry today. 

Tuesday 14th April 2015 – Quite an important day for the UK as we have the latest inflation numbers. Recent figures show the UK headed towards deflation, which could in turn mean interest rates going down. If that’s the case, the Pound could weaken. In Europe the only data of note is Industrial Production at 10am. Later in the afternoon in the USA we see the latest Retail Sales numbers. These are a good overall indicator of economic activity and so GBP/USD rates could be affected. 

Wednesday 15th April 2015 – Nothing from the UK today, but plenty from the EU that could move GBP/EUR rates. Germany releases a host if inflation numbers at 7am, and at 12:45pm we have the latest decision from Europe in interest rates. They are unlikely to change the rate, but at 13:30pm they give a press conference, and comments made often cause volatility for the Pound/Euro rate. Elsewhere, Canada also announces interest rates, and the USA has Industrial production figures. 

Thursday 16th April 2015 – Another quiet day for the UK. The only data of note today is in Australia where we see the latest employment figures, and the USA which also releases jobs data. Staying in the USA, we also have a speech by a FED member which could affect the Dollar. 

Friday 17th April 2015 – After a quiet few days, this could be an important one for Sterling. At 09:30am we have the latest employment numbers from the UK. This can often affect the Pound so expect a volatile morning for GBP exchange rates. Europe, Canada and the USA all release inflation numbers today too, so GBP/CAD, GBP/EUR and GBP/USD could all change today. 

Do you need to convert currency at the best exchange rates? 

If you have a currency transaction to perform, would like a quote, or to simply discuss the market or anything I’ve covered above, contact me for a free no obligation consultation by clicking below. 

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Pound/Euro starts to plummets as election uncertainty takes hold

Thursday 2nd April 2015
Since my post a few days ago, we have seen the general downward trend in Sterling/Euro rates resume, falling from €1.38+ to €1.36 in the last couple of days. As the chart below shows, in the last 3 weeks alone the Pound has lost nearly 5% against the Euro: 

Economic data from the UK has actually been quite good! Growth has been revised up, manufacturing has picked up, and the UK is now the fastest growing major western economy. Despite this, it looks like the Pound is going to drop further against the Euro. 

The main reason as I’ve touched on a few times in the last few weeks is the general election. The latest polls suggest a hung parliament and it was this that was the catalyst for the drop earlier in the week. If we cast our minds back to last year’s Scottish referendum, the uncertainty that created pulled Sterling significantly lower against other currencies. The election is likely to have the same effect, and it could potentially be a much greater one. Tonight will also be interesting with the televised debate for 7 leaders, and could also cause the pound to come under pressure. 

Nearly every forecast I’m reading suggests a drop. As an overall majority is highly unlikely, this uncertainty is likely to continue for at least several weeks after the election, which means a very volatile couple of months for the Pound. 

When is the best time to buy Euros? 

If you have Euros to buy in the next 6 months, then you’re still doing very well. Yes the rate has dropped from the recent 8 year high, but the rate is still very good indeed and around 10 cents higher than the start of the year. 

If you need to buy Euros then you can lock in the current rate for up to 2 years by lodging 10% of the Sterling you want to convert. You are then protected against further declines in the rate and know exactly where you are. 

To discuss this or any other Euro purchase we can help you with, click here to make an enquiry. 

When should you sell Euros back to Pounds? 

If you need to convert funds back to Pounds, perhaps from a property sale overseas, then there is every chance the rate could get better for you as the Pound gets weaker. You should just hope this is the case though. 

You can utilise what’s called a Stop Loss order, which means if the market moves against you your rate is fixed at a pre-agreed level, while still allowing you to take advantage of any gains in the market.  

To discuss this or get a quote for your exchange, click here. 

Getting the best Exchange rates 

I work for one of the UK’s leading Foreign Exchange Brokerages; one of the few to be granted an e-money licence from the FCA, which gives you significantly more protection than a firm that is simply authorised by them. Clients that have contacted me directly from this blog over the last 6 years have now converted over £350m Sterling, and saved around 2 to 3% compared to their bank/existing broker. 

I can trade over 35 currency pairs on a bank to bank basis for both private and business clients. We also have segregated client accounts, so you can trade with us safe in the knowledge your funds are very safe and secure. 

If you need the best rates, are converting over £5k and needs funds wired to a bank account, then it is certainly worth getting in touch to see what rate I can offer you. It costs nothing to get in touch for a quote and you will likely be pleasantly surprised how much I can save you by getting you a better rate. I can also talk over various options and strategies you can consider so you can take control over your requirement. Don’t simply sit back and hope an exchange rate will get to a particular level; hope is not a reliable economic tool. Take advantage of my 15 years of experience in Financial Services today. 

Click here to send me a free no obligation enquiry. 

We will be closed over the Bank Holiday weekend, and will be back in action on Tuesday. Enjoy the break!

Sterling continues to fall against other currencies

Friday 14th November 
The sterling sell off continues this week, as expectations of an interest rate hike in the UK are pushed back. The chart below shows how the rate has moved over the last few days:

There hasn’t been any further data to cause the drop, and the fall is purely investors continuing to dump the Pound due to the fact interest rates are not going up any time soon, as I outlined in my last post on Wednesday. 

The drop has been quite significant. Purchasing €250,000.00 today compared to Friday morning would cost you £4,400.00 more, purely due to exchange rate movements over 2 days. This demonstrates how quickly things can change, and how important it is to get your timing right with regards to when to fix your exchange rate. 

Getting the best exchange rates 

If you need to buy or sell any international currency on a bank to bank transfer basis, then get in touch with today by clicking here. I can discuss what is happening with exchange rates, the forecasts where experts expect the rate to go in the coming weeks and months, and provide you a quote to compare with your bank or existing broker. 

It’s free to make an enquiry, and you could save thousands of Pounds by achieve a better exchange rate. 

Click here to make a free enquiry today.

Why has Pound/Euro fallen to €1.19?

Monday 11th November 2013
Last week saw the Pound surge to levels above €1.20 vs the Euro, and as I mentioned in my report on Thursday, I explained that I did not expect levels to remain at these highs for very long. Indeed that has been the case with rates falling throughout trading today.

Sterling drops back away against other major currencies 

As you can see from the chart below, throughout trading today Sterling has lost value against the Euro, steadily falling throughout the morning before settling just above €1.19. 


 

In terms of economic data releases, it's been a very quiet day today. US and some EU markets are closed for veterans day, and there have been no significant data releases. So in the absence of ecostats to drive the market, what has caused the Pound/Euro rate to drop back away?

It is simply market forces that have driven the value of the Pound today. As I explained in my last post, supply and demand drives exchange rates, much like it does in any other market. With rates hitting the highs of €1.20 plus last week, this spurred many people to take advantage of the rate and buy Euros. This demand for Euros then caused it to regain some of it's strength. 

It's often the case that when a rate hits a key benchmark level like €1.20, the spike is very short lived indeed, and rates quickly drop back away again. If you look at GBP/EUR rates over the last 5 years, you can see that this has happened several times. 

So is it worth waiting for rates to get above €1.20 again?
 
Of course this is impossible to predict, but I don't believe so. The reason behind my view that I don't believe the market will have a sustained break above €1.20 is the fact it would not be in the UK's economic interest to have an exchange rate that strong. 

Consider that 50% of our exports go to the Eurozone, and so a high exchange rate would make these exports more expensive. This in turn would affect our largely export led recovery and so could affect our recovery. Manufacturing and Industrial production have been a key driver behind the recovering economy here in the UK, and the Bank of England would not want to risk that by making our goods more expensive. 

So, even if rates had stabilised above this level, I would expect the Bank of England to step in and try to devalue the Pound in order to bring the exchange rate down. In fact we have a key speech by the Bank of England governor late this week - will he follow the previous governors habit of trying to talk the Pound down, or will his speech follow his previous pattern of being very positive and boosting Sterling higher? We will find out on Wednesday.

Do you want to take advantage of the current exchange rate?

When is the best time to buy your currency?

The best time to buy your currency is, of course, at the peak. The problem is that achieving that is more luck than judgement. By its very definition, you can't identify the 'peak' until it has been and gone. So therefore the second best time to buy your currency is just after the peak - this is exactly where we are right now. 

So if you need to buy Euros you could consider locking in the rate now while it's so good. In the last few weeks, a £250k transfer to Euros would have differed by up to €10,000, clearly illustrating the decent gains we have seen of late. Even if you don't need your currency for up to 2 years, you can reserve the currency rate by lodging 10% of what you convert, with the remainder to be paid when you want your currency transferred. 

Click here to find out more about the exchange rates I offer. 

What I think will affect exchange rates this week

I can help you achieve exchange rates that are much better than banks can offer, but that's only part of the service I offer. Exceptional exchange rates is the easy part. The hard part is for you to decide when to exchange your currency. 

For example in the last 2 weeks GBP/EUR has moved over 3.5% equating to a difference of nearly €10,000.00 on a £250k transfer. 

Economic data releases are the main mover of exchange rates. Today has been very quiet, but the rest of the week does have some key economic releases that I think will have an impact on exchange rates. Let's have a look at what the rest of the week has in store:

Tuesday - Lots of UK inflation data today, that can dictate future interest rate movements, and it's all released at 09:30am. Key will be the consumer price index which is forecast to come in at 2.5%. More than this, expect the Pound to gain, and vice versa.

Wednesday - Another key day for the UK and the Pound. Firstly we have some unemployment numbers at 09:30am which is expected to be 7.7%. Again a bigger number will cause rates to rise, a lower number could cause them to fall. At 10.30am the BoE release it's inflation report, and the governor Mark Carney gives a speech; his comments may well alter the value of the Pound. Of lesser importance will be EU Industrial production figures, but the UK news will probably overshadow this.

Thursday - Quieter in the UK today with Retail Sales the only release of note. the EU releases lots of inflationary measures, and over in the USA we have Trade Balance and Unemployment figures, so I expect GBP/USD to be a little choppy today. 

Friday - A quiet end to the week with nothing from the UK, some minor EU trade balance and inflation numbers. I think markets will still be reacting to the UK economic news from earlier in the week. 

To discuss how your currency requirement may be affected by data releases, or just to have a chat about the exchange rates that I can offer, make a free no obligation enquiry today.

By taking advantage of having a brief consultation, I can discuss your requirements, explain the options available to you, talk about what is happening in the market, and in doing so help you to make an informed choice on when to fix your exchange rate. 

Click here to send me a free no obligation enquiry today. 

I look forward to hearing from you.


Alastair Archbold.