Sterling/Euro rises from €1.3350 to €1.3550

Thursday 15th October 2015 
Sterling/Euro rates have recovered very well in the last few days, rising from the €1.33’s to €1.3550 today. In today’s post I’ll explain the reasons for the gains, and what action those with Euros to buy or sell can take to help achieve the best exchange rates. First, a quick look at this week’s GBP/EUR graph: 

Why have Sterling/Euro rates risen? 

As you can see from the chart above, early in the week Sterling/Euro fell to €1.3350, the lowest it’s been since February. As I explained in my recent post, the drop was due to very low inflation numbers that weakened the Pound. 

Since, then we’ve seen the rate gain nearly 2 cents to €1.3550, so what’s been going on? Yesterday morning it looked like the Pound would continue to drop, as UK jobs data was released at 09:30am. The Claimant count was pretty dire, and showed that there were nearly 7000 more people claiming benefits than forecast. The Pound fell to €1.3350 on the news, but quickly recovered. 

This is because when you actually look at the figures in more detail, you see that the number in work actually rose by 140,000, bringing the employment rate to 73.6% - the highest rate since records began in 1971. This caused the Pound to gain, and in addition, wage growth has gathered pace much faster than the Bank predicted earlier this year, and this may allow the Bank of England to deliver the first hike in May next year, according to the chief economist at BNP Paribas. 

This morning, European Central Bank policymaker Ewald Nowotny said that it was now "obvious" the bank must do more to stimulate the euro zone economy. This signals further Quantitative Easing may be required in Euro, and the single currency has weakened further this morning pushing rates up to the mid €1.35’s. 

Do you have Euros to buy or sell? 

Many clients that had Euros to sell that read my post on Tuesday decided to fix a rate then, and that was a prudent move given the rebound we’ve seen. If you look back at the movements in GBP/EUR this year, you can see the rate has dropped to €1.35 several times, and every time it’s bounced back. This is what we’ve seen happen again this week. 

In contrast, it’s a difficult time for Euro buyers unsure whether to wait to see if rates will recover, or just get the rate locked in now to protect against a further decline. Nobody can foresee whether rates will recover as they did earlier this year, or if the recent trend of Sterling weakness will continue causing rates to drop back away again. It’s important to remember that past performance is not indicative of future trends, however it’s the most salient data that many with a currency transaction to perform will rely on. 

But simply looking at the trend and hoping things will get better could end up costing you dearly. A more proactive approach would be to ensure you are fully informed of both what is moving the market, and the contract types at your disposal to help you take advantage of any spikes we may see in the exchange rate. 

I would welcome the opportunity to speak to any clients about the currency markets, discuss your requirements, assess your needs, and help you to make an informed decision on when to fix a rate. Click below to get in touch, and I will get in touch personally to explain the mechanics of how our service works. 

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Why has Sterling fallen into the €1.18's? Will it recover?

Wednesday 11th December 2013 
Sterling has been falling today, and exchange rates have dropped further from recent highs. In today’s post I’m going to examine the reasons why the Pound has dropped, and also give my views on where rates may head for the remainder of 2013. If you need to buy or sell currency in the near future, you're in the right place, so read on...

On Tuesday we actually saw rates rise slightly on the back of Bank of England governor Mark Carney’s comments on the economy, but the gains were short lived, and today rates have steadily dropped. So before we look at the reasons for today’s fall, let’s examine what happened yesterday. 

Pound rises on Tuesday, but not for long... 

The Pound hit a 2.5 year high against the US Dollar and also rose against the Euro yesterday, after upbeat comments from the Bank of England, and also strong house price data. These were taken as signs that interest rates in the UK could rise sooner than previously thought. Higher interest rates strengthen a currency as it provides a better return for investors. 

Bank of England Governor Mark Carney's commented earlier in the week saying that the economic recovery is showing signs it can reach self-sustaining momentum, although he also said monetary policy will need to remain exceptionally loose for some time. This caused slight gains through trading on Tuesday. 

Also recent data out of the UK showed slightly stronger than forecast industrial output data while the National Institute of Economic and Social Research released figures yesterday showing the economy grew an estimated 0.8 percent. 

Why has Sterling fallen against the Euro today? 

As you can see from today’s chart below, the Pound has fallen against the Euro and has dropped into the €1.18's; several points down from the highs of €1.21 we saw last week. 

So why was this if UK economic news is good?

There are a number of reasons the Pound has fallen today. We haven’t seen any significant economic data releases, and I thought today would actually be quite uneventful. However we have seen UK gilt yields fall which has caused the Pound to fall slightly against other currencies. 

The main reason GBP/EUR rates have fallen however is due to events in the Eurozone. I have read reports today that there is very tight liquidity in the euro zone, and European banks have been repatriating funds to shore up their capital bases for an ECB asset quality review. What this means is EU banks have been buying Euros, and the demand has strengthened the single currency, making it more expensive to buy. 

Also the European Central Bank's reluctance to cut interest rates any further has also helped the euro make gains, pulling GBP/EUR rates down into the €1.18's.

So what next? Will the Pound fall further or recover to €1.20? 

I personally feel this is a temporary dip. The reason rate were as high as €1.21 was speculation on interest rate cuts in the EU, that now seem much less likely, and the exchange rate has corrected itself accordingly. In the medium term I expect rates to break back above €1.20 although possibly not until next year. This of course depends on continued positive economic news from Britain. 

So for those needing to convert Euros to Pounds, I would consider taking advantage of the 2 cent move in your favour. You can fix the current rate for up to 2 years even if you don’t need your currency for some time. 

If you are buying Euros, I expect rates to recover. However this may take some time, so whether to hang on or not depends on how long you have until you need your Euros. It took repeated attacks on the €1.20 level before we broke through last time, and I expect the same. A Stop Loss order is useful in these conditions. 

If you have found my insight useful and are looking for the best rates, or want to discuss which way the rate is moving and would like to discuss how I can assist you, click below to send me a free enquiry today. I provide exchange rates up to 5% better than banks can offer, and have over 8 years’ experience in the currency markets. 

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Alastair Archbold

Pound falls against Euro after poor economic data

Monday 14th October 2013 
Good afternoon all. Well what a difference a week can make! The change in the weather in the UK has been mirrored by a change in the fortunes of the Pound. In Britain we seem to have very quickly entered autumn, and as the leaves started falling, so did the Pound, after a raft of poor economic data. 

This has pulled exchange rates lower and away from the all year highs seen just recently. In today’s report I’ll look at what has happened to cause the fall, and what else may happen with exchange rates in the coming weeks and months: 

• UK Retail Sales drop 
• Industrial and Manufacturing production fall 
• Trade balance in the UK widens. 
• IMF warn world could enter recession again 

Poor economic figures cause the Pound to fall 

It’s only been a little over a week since my last post, and at that time the GBP/EUR rate and the GBP/USD rate were both around the highest we’ve seen all year. Things can change very quickly in the currency markets however, and that’s exactly what we’ve seen. 

In the last week we have seen some poor UK economic numbers. Industrial and Manufacturing production was worse than expected, coupled with lower than forecast Retail Sales. More worrying was the fact the UK’s trade deficit has widened, meaning we’re importing more and exporting less. All of this had the effect of weakening the Pound and bringing exchange rates into the €1.17’s against the Euro, and back to the $1.60 mark against the US Dollar. 



In recent posts I have pointed out that the market seemed to have peaked, and indeed that now seems to have held true. Those that booked their currency on a Forward contract will be pleased at buying at the peak and will have been protected against the drop we have seen. 

If you are buying or selling currency, the market is very volatile at the moment. Simply hoping the rate will move in your direction is no more than a gamble, and could end up costing you dearly. The best strategy is to get in touch and discuss all the options we can offer you. In this way you can have a detailed chat with me regarding what might move the exchange rate, and make an informed decision on what to do. 

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

Is the world about to be plunged back into recession? 

The head of the International Monetary Fund, Christine Lagarde, has warned that a US default could tip the world into recession, saying that a default would result in "massive disruption the world over". 

So what’s happening in the states? The US Treasury will start to run short of funds on Thursday if no agreement is reached for it to raise its debt limit. The president of the World Bank, Jim Yong Kim, has also expressed his concern over the situation. 

He warned that the United States is just "days away from a very dangerous moment" because of the government's borrowing crisis. 

He warned this could be a "disastrous event" for the world. To explain what has been happening, the US government has been in partial shutdown since Congress missed a 1 October deadline to pass a budget, with politicians being unable to agree funding for current spending. 

This has resulted in hundreds of thousands of federal employees being sent home and government offices closing. Republicans refused to approve the new budget unless President Obama agreed to delay or eliminate the funding of the healthcare reform law of 2010. 

On Saturday, Jamie Dimon, boss of the American bank JP Morgan said the possible repercussions did not bear thinking about. "You don't want to know what would happen," he said. "It would ripple through the world economy in a way that you couldn't possibly understand." 

What might this all mean for exchange rates? 

So we’re at a crossroads in terms of the global economic recovery at the moment, and this may well have serious implications for exchange rates. The value of one countries currency against another is usually finely balanced, and uncertainty in the global markets could seriously affect exchange rates. 

If you need to covert one currency to another, perhaps to buy property abroad or maybe you buy or sell goods in a foreign currency, exchange rates can have a big impact on your costs. 

How can you get the best rates and protect against adverse currency movements? 

The first step is to get in touch with me to discuss your options. As a specialist foreign exchange broker, the rates that I can achieve are significantly better than banks can offer, by as much as 5%. So if you need to convert funds then the savings can be considerable. In addition to our great rates, we also have expert market knowledge that can help you decide when to fix your rate. 

This combined with the various range of FX contracts we offer mean that you could save thousands of pounds on your exchange. 

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Why has Pound fallen against Euro? JUL/AUG 2013

Wednesday 31st July 2013
Good afternoon.  Sterling has not had a very good run in the last few weeks, and exchange rates have continued to fall since my last post. This is a bit of a surprise, as the most recent economic figures for the UK have actually been pretty good. It’s all down to speculation on what the Bank of England will do with interest rates, and in today’s report I will explain why the Pound has been falling against the Euro to the lowest rate since February. In today’s post:

• Why the Pound has fallen against the Euro
• How will the Bank of England move forwards?
• What data releases could affect rates in the next week?
• Find out how good our exchange rates are. 

Why the Pound has fallen against the Euro? 

The Pound has fallen to its lowest levels since February, and at the time of writing GBP/EUR rates sit at 1.1425. Just a few months ago rates were approaching 1.20. In some respects it’s quite a surprise the Pound has fallen as there have been some decent economic numbers out of the UK. Let’s take a look at these in more detail… 



Above shows the decline in GBP/EUR rates over the last 3 months. Last week we saw the latest UK GDP figures. These showed that the UK economy is "on the mend" after figures showed it grew by 0.6% in the three months to June.  The latest growth estimate implies that the economy has now recouped almost half of its total 7.2% contraction during the 2008-09 recession, with output remaining 3.3% below its pre-recession peak. 

Great, so good growth means a strong Pound, right?

Not necessarily, and this hasn't been the case this week. The growth figure was in line with market expectations, and share prices on the London Stock Exchange did not react to the news. However, the pound did drop on the currency markets. This was partly due to some market participants believing the data may support further monetary intervention by the Bank of England. Mostly though, the numbers gave little reason to buy the Pound. Some thought the figure would be above 0.6% and because the numbers weren’t a surprise, Sterling lost value. 

This trend has continued with the Pound falling most days since, mainly due to speculation on what the Bank of England will do to keep growth going.

Are you buying or selling Euros? Worried about rates moving against you? Looking for the very best exchange rates? Click here to send me a free no obligation enquiry now. 

How will the Bank of England move forwards?

At the most recent bank of England meeting all 9 members voted against more Quantitative Easing. This indicates that in the short term at least, there will not be any further money pumped in to the economy. Again you would think this would strengthen the Pound, but you have to look at what other tools are left in the box now QE is off the table. 

The tool kit is very thin to say the least! Another good explanation for the drop in rates is speculation the Bank of England are going to announce tomorrow (Thursday) some "guidance" on the future of interest rates; specifically, that it will set out a framework to keep rates at near-zero levels for up to 4 years. So, investors are dumping the Pound ahead of this. Keeping rates at near zero is all they can do. 

This would mean little return for anyone holding Sterling, and so despite better economic figures, the Pound has fallen as a result, and could well continue to do so. At 12pm tomorrow we will see the latest decision from the BoE on interest rates and QE. 

While I don’t expect any change for either, watch for any accompanying statement from the governor that may dictate future moves, as this could impact on the value of the Pound. In 2 weeks’ time we will see the minutes from tomorrow’s meeting to see how the 9 members voted, and if all 9 are still against QE. 

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What data releases could affect rates in the next week? 

Thursday 1st August – The BoE and ECB both announce their interest rate decision. There are also some inflation numbers from the Eurozone. IN the USA we have jobless numbers and inflation data. 

Friday 2nd – We will see UK House prices today, which are a good barometer of overall economic activity. Most data today however is from the USA – Non Farm Payrolls, Earnings and Unemployment data. 

Monday 5th – Lots of numbers from the Eurozone today, mostly comprising inflation, but also Retail Sales and investor confidence measures. The UK releases its Retail Sales numbers. 

Tuesday 6th – Today is busy in the UK, with Industrial Production and Manufacturing numbers being release, in addition to Trade Balance numbers. At 2pm we have a GDP estimate, which could well move the Pound. 

Wednesday 7th – It’s the Eurozone’s turn for Import and Export numbers today. The only UK data of note is House Price data. And the Bank of England inflation report. 

To find out how data releases could affect the currency you need to buy or sell, click here for a free consultation. 

Find out how good our exchange rates are. 

• Are you buying Euros? 
• Converting Euros back to Sterling? 
• Looking for the best exchange rates? 
• Buying or selling property abroad? 
• Have business requirements to take or make payments in a foreign currency? 

 
If you have answered yes to any of the above questions, I can help you achieve much better exchange rates than you can get at the bank. We trade amounts from £5k+ on a bank to bank basis, at rates up to 5% better than the banks. 

In addition to better rates, we can also help with various contract types that can help protect against adverse rate movements, or help you target a rate not currently achievable. Most importantly though is my market knowledge. With over 10 years in the FX industry, I can help explain what is moving exchange rates in order to help you make an informed decision on when to fix a level. 

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