Pound/Euro breaks €1.40 on BoE minutes and Greek uncertainty

Wednesday 22nd April 2015
As you can see from the chart below, today we have seen the GBP/EUR rate climb above the €1.40 mark, after the Bank of England released its latest minutes confirming interest rates will remain on hold at 0.5%. This is the best it's been in over a month, and only a few cents away from an 8 year high.

Bank of England minutes 

Today the Bank of England (BoE) confirmed they would be keeping interest rates at the record low again. This wasn’t a surprise, but the minutes to the meeting were quite hawkish, and it was these comments that have caused the Pound to rise. 2 of the members said their decision was finely balanced, and after some recent uncertainty which way rates will go in the coming months, it is now quite certain that the next move will be up. 

This speculation of higher interest rates, probably in early 2016, boosted the Pound due to the higher return that may be on offer for investors. Consequently we have seen Sterling/Euro break the 1.40 level, and not far at all from the best we’ve seen in 8 years. (Those needing to buy Euros should consider taking advantage of these levels that may not last for long.)

The strengthening Pound also pushed higher against the US Dollar, breaking back above the $1.50 level. 

Greek worries keeping Euro week 

With an election only a few weeks away, it’s surprising the Pound is holding on against the Euro. Most expected it to drop away, however the Euro is very week indeed due to uncertainty over Greece. A Greek exit from the euro could still happen as they on course to run out of money and be unable to make their loan payments net month. There is still faith that European policymakers will avert that scenario, but while no bailout deal is in place, expect the Euro to remain cheap to purchase. 

Getting the best exchange rates 

If you need to convert £5k+ from one currency to another, then it would be prudent to get in touch with me for a quotation. I can source exceptional rates of exchange for any major currency conversion on a bank to bank basis. If you would like a quote or to fund out more about the service I offer, click below to send me a free no obligation enquiry. I regret I cannot help with cash or holiday funds, and can only assist those looking to have currency wired to a bank account. 

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Pound/Euro rates fall after BoE Minutes

Wednesday 23rd April 
We’ve had good news and bad news about the UK economy today, but the bad news won the day and as a result we have seen the Pound fall, as I suggested that it would in my post yesterday, and it was for the reason I predicted, the Bank of England minutes. I’ll give you the good news first after a quick snapshot of today's Pound/Euro movements:

The good news: 

At 09:30am this morning we actually had some very positive UK data – figures showed that Public Sector borrowing by the government was much less than expected. Markets expected a number of £9.1bn, but the actual figure was only £4.86bn. This was very good news, however failed to make any impact on the value of the Pound as everyone waited for the Bank of England minutes. 

The Bank of England's Monetary Policy Committee (MPC) has increased its UK economic growth forecast for the first quarter of the year, from 0.9% to 1%. There was further good news for the economy from a survey by the CBI, which indicated strong growth in orders for UK manufacturers. 

The bad news: 

Now for the bad news, and this is what affected the currency markets today. Focus today was always going to be about the Bank of England minutes. These showed that there is no real consensus within the Monetary Policy Committee, and they highlighted a growing debate between policymakers about slack in the economy and the medium-term inflation outlook. 

The markets took this as a sign that an interest rate hike in the UK is some way off, and as the chart below shows we saw the Pound/Euro level drop from 1.22 down to 1.2130 where it settled. 

What next for Pound/Euro 

I actually think this dip may be short lived. The next main data is tomorrow’s speech by the ECB president Mario Draghi. As I outlined yesterday, he may hint at monetary easing, such as Quantitative Easing, to stop the Euro getting to strong. If he does hint at this in his speech at 11am tomorrow, then expect GBP/EUR to bounce back. 

Those with Euros to sell should therefore consider taking advantage of the dip we have seen today. Euro buyers should hold off for gains, but place a Stop Loss order to protect you in case he says nothing about easing and the rate drops further. 

We also have UK Retail Sales on Friday which I think could be better than many analysts expect, so I don’t think we’ll see the rate drop much further in the short term. 

Do you have a currency transaction to make and want the best Euro rates? 

I can help in a number of ways. Firstly I can source excellent exchange rates, so why not get in touch for a quote to compare with your bank or existing broker. I could get you a rate up to 5% better than you can elsewhere.

I can also discuss what is moving the market to help you to decide when to lock in a rate. I also offer various types of currency contract designed to protect against adverse market movements, and target rates above the current market. 

Whether you are buying or selling property abroad, or need to move one currency to another to pay for goods overseas, I can help you. 

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Why has Pound/Euro surged above €1.22.

Thursday 19th April 2012
Good morning. Well what a day we saw in the currency markets yesterday! The Pound surged higher against all major currencies, breaking €1.22 against the Euro and $1.60 against the US Dollar. So why has the Pound gone up against the Euro? The reason was lower than expected unemployment data and general optimism surrounding the UK economy following the BoE minutes. In today's post I'll look at each event in detail and why it caused Sterling to gain.

UK unemployment much better than expected

UK unemployment has registered its first fall since last spring, according to official figures released yesterday. Unemployment fell by 35,000 to 2.65 million over the 3 months since December, and the Claimant Change was 3600 against a forecast of 7000 - so much much better than the markets had forecast.

The data was released by the Office of National Statistics and presents the number of unemployment people in the UK. There is a tendency to influence the GBP volatility. Generally speaking, a rise in this indicator has negative implications for consumer spending which discourage economic growth, so because it was much lower than had been anticipated, we saw Sterling make significant gains when the actual figures were released. It was the start of a good rally for the Pound, which was compounded when the latest BoE minutes were released...

Bank of England Minutes

Signs more stimulus from the Bank of England is now off the cards. Yesterday morning, minutes from the bank's last policy meeting showed it voted 8-1 against further Quantitative Easing, with one policymaker who had voted for QE several times seemingly changing his stance and not voting for it this time, and another now seeing the decision as "finely balanced".

The results were a big surprise to the currency markets. Most analysts, myself included, expected quite a bit of negativity surrounding the minutes. The fact that they were very positive caused Sterling to push much higher against other currencies.

Pound vs Euro

Sterling pushed through the €1.22 level against the Euro after yesterday mornings news.

When the trading floor opened rates were sat at around €1.2130, but at 09:30am when the data was released, we sat rates shoot upwards, peaking at 1.2231 before settling back at around the €1.22 level.

This is a fresh 19 month high, and if you look at weekly averages over the last few years, we're pretty much at the best exchange rates to buy Euros since the end of 2008 when the financial crisis hit.

General Outlook for Sterling/Euro

With rates so good, many clients will want to fix the exchange rate now while it is favourable. Others may want to wait hoping it will go further up. So what is my view? I think sterling could well strengthen further due to the fact further QE is no longer on the cards. However, this is not a given.

The UK's labour market is at best sluggish, domestic demand patchy and an economic recovery uneven. So while the signs of a slight recovery lessen the need for further stimulus, a rapid deterioration in the euro zone crisis could worsen the UK's outlook and drive the BOE towards easing thus pushing the Pound back down.

What you should do if you need to buy Euros

You could fix a rate now while it's so good. Even if you don't need your funds for some time, for a small deposit you can lock in the current rate for up to 2 years. If you want to gamble on rates continuing to rise, then you could place a 'Stop Loss' order. This is where you place an order to buy your currency should it fall below a pre-agreed level, for example 1.20. In this way you can still take advantage of any gains, but have a safety net and worst case scenario should we see rates start to drop.

If it were me I would want to fix the rate now while it is good, but then I am quite risk averse and not much of a gambler!

Of course each clients situation, needs and attitude to risk will be different, so to discuss the best option for you click here to send me an enquiry, and take advantage of a free consultation where I can run through all your options. Simply leaving it to chance is not a good strategy; chance is not a reliable economic tool.

Today's Data

Unusually for a Thursday there are no UK releases today. In the EU there are consumer confidence measures which in the absence of any other EU or UK data could have a bigger impact than normal. In the USA we have Home Sales data and the Philadelphia Manufacturing Survey.


Getting the best exchange rates

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Sterling falls after BoE minutes signal QE

Thursday 22nd September 2011
Good morning. Sterling fell to a new 8 month low against the US Dollar, fell below the €1.14 level vs the Euro and hit a 2 and a half year low versus the yen yesterday. This was after Bank of England minutes showed an increasing chance the central bank will soon opt for more monetary easing, as we predicted in yesterdays post. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1416
• GBP/USD 1.5465
• GBP/AUD 1.5485
• GBP/NZD 1.9479
• GBP/CHF 1.4019
• GBP/CAD 1.5700
• GBP/ZAR 12.586
• GBP/JPY 118.33
• GBP/DKK 8.4977
• GBP/NOK 8.9457
• EUR/USD 1.3548

Sterling falls on Bank of England (BoE) minutes

Yesterday the BoE released the minutes to the recent decision to hold interest rates, and hold off on further Quantitative Easing. Adam Posen voted for an extra 50 billion pounds in asset purchases but the minutes showed most members felt it was increasingly likely more asset purchases would be warranted at some point. As a result, Sterling fell across the board during trading yesterday.

Some members also felt the recent weakness in the economy was sufficient to justify more quantitative easing "at a subsequent meeting", raising the prospect that the BoE could start pumping money into the economy in October.

QE is widely seen to be negative for the pound as it would flood the market with the UK currency, cutting demand while increasing the BoE's balance sheet. For this reason Sterling has dropped significantly against other currencies.

If you are selling currency for Sterling, it's looking very good at the moment. With the Pound so weak it's a good time to convert currency back into Pounds. However if the Euro debt crisis continues to cause worries, rates could start to recover.

If you have currency to convert to Sterling, contact me today to discuss the options we have available to help you achieve the best exchange rates possible.

Today's Data

Canadian Retail Sales are released at lunchtime, followed by Jobless numbers from the USA. There are no releases from the EU or UK today.

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Sterling makes gains against Euro/US Dollar

Thursday 18th August 2011

Good morning. Yesterday morning Sterling fell after poor unemployment data, however in the afternoon the Pound surged back against other currencies, creating close to the best exchange rates for several months. At 08:30am this morning rates are as follows:



• GBP/EUR 1.1462

• GBP/USD 1.6515

• GBP/AUD 1.5755

• GBP/NZD 1.9849

• GBP/CHF 1.3136

• GBP/CAD 1.6230

• GBP/ZAR 11.758

• GBP/JPY 126.44

• GBP/DKK 8.5391

• GBP/NOK 8.9267

• EUR/USD 1.4402



BoE Minutes



Yesterday the Bank of England released the latest minutes to the recent decision to hold interest rates. They voted 9-0 to keep rates on hold, surprising many in the markets that thought 2 would vote for a hike in rates.



It didn't affect exchange rates too much, as we already know that rates in the UK are going to be left on hold for at least a year. The minutes also showed the policy-setting committee considered a new round of stimulus given a worsening economic outlook, acknowledging that problems in the euro zone were the biggest threat to the UK economy.



UK Unemployment



Data surprised yesterday, when the number of Britons claiming unemployment benefit jumped by more than expected last month, and the rate hit the highest level since February 2010. Immediately after the results, Sterling fell around 0.5% against other currencies.



Sterling surges in the afternoon



Despite the dovish BoE minutes and the higher than expected unemployment figures, Sterling surged in the afternoon, making gains against the Euro and US Dollar. After initial selling of the Pound after the poor data, traders were forced to cover these positions leading to a short squeeze on Sterling, helping push rates up nearly a cent against the Euro.



Summary



Those that need to buy Euros should consider taking advantage of these rates, as several times in the last month we have reached these levels, only for rates to quickly drop back away. With uncertainly surrounding the UK economy rates could easily drop back away.



Conversely, if we get further poor news from the EU, we could see the Euro weaken and rates climb, so it's certainly very volatile at the moment. Regardless which currency you need to buy or sell, contact us today to discuss the tools we have to help you achieve the best possible exchange rate.



Today's Data



Today’s UK data is Retail Sales, which are a barometer of consumer confidence. From the USA we have unemployment figures, Jobless Claims and Home Sales. There are no major releases from the EU today.



If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

Pound down vs Euro ahead of BoE minutes

Wednesday 20th July 2011
Good morning. Sterling rose against a weaker US Dollar yesterday, but fell against the Euro ahead of today's BoE minutes which could hurt the Pound further. Also buried in the news under the hacking scandal was the fact the IMF have warned on the global economy. Despite the BBC leaping onto the scandal with glee, giving it wall to wall coverage to the detriment of other news stories, markets took note of the IMF's warning. We'll look at all this in a moment after the usual rate snapshot as at 08:30am this morning:

• GBP/EUR 1.1345
• GBP/USD 1.6076
• GBP/AUD 1.4971
• GBP/NZD 1.8786
• GBP/CAD 1.5257
• GBP/ZAR 11.098
• GBP/JPY 126.80
• GBP/DKK 8.4573
• GBP/NOK 8.8700
• EUR/USD 1.4166

Sterling up against US Dollar

A recovery in equities yesterday helped Sterling rise against the US Dollar, as this created sovereign demand for the Pound. This was also helped by a rebound in UK banking stocks, however gains are still limited due to the UK's exposure to the EU debt crisis. Sterling is particularly vunerable against safe haven currencies like the USD and CHF, due to the concerns over the banking sector and our close links with the EU.

Pound down vs the Euro

Despite EU leaders struggling to reach an agreement on the debt crisis, the Pound fell against the Euro due to the interest rate differentials. The EU have raised interest rates twice this year to 1.5%, while in the UK our rates remain low at 0.5%. The better return on offer for Euros mean Sterling is struggling against the single currency, despite all the problems with EU debt.

BoE Minutes today - Sterling to fall against Euro?

Minutes of the Bank of England's July meeting are expected to add to the view that interest rates will stay chained at a record low 0.5%, and this could hurt the Pound today. Short-term interest rate markets do not price in another UK rate rise until late 2012 and concerns are growing that policymakers may edge towards considering further quantitative easing.

"At the moment there are few reasons to buy the pound apart from medium-term valuation concerns, and the many reasons to sell the pound still exist: low yield, the full effects of austerity yet to be felt and non-existent consumer activity," Commerzbank analysts said in a note.

If they mention further Quantitative Easing, expect Sterling to fall against other currencies. If however the minutes suggest that they are unwilling to pursue further QE, then we may see GBP/EUR rise back towards the €1.15 we saw recently.

Today's Data

Today we see the minutes to the recent BoE decision to hold interest rates. Any talk of Quantitative easing in the notes may cause Sterling to fall. Germany has some inflation numbers today, and the EU releases consumer confidence measures, which are unlikely to be good in light of the debt problems.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.