GBP/EUR falls 4 cents in a week. GBP/USD also set to drop

Tuesday 28th July 2015
Sterling has fallen sharply against the Euro of late, and in the last week had slipped from €1.44 down to €1.40. As you can see from the chart below, the rate has recovered slightly this morning, getting back above €1.41: 

The main reason for the gradual slide in Sterling is partly due to renewed optimism surround Greece, but also the global economic picture. If you look at the global economy, you will see that the Chinese market is in turmoil, and there has also been a sharp drop in Commodity prices. This is giving investors serious doubts over the strength of economic growth worldwide, and in turn this casts some doubt over whether the Bank of England will actually raise interest rates at the turn of the year. 

The global picture means that the Bank of England may well have to tighten their monetary policy, and this has pulled Sterling lower against other currencies. 

This morning however, strong UK Growth figures have shown that the economy has grown by 0.7% in the last few months, which is an improvement over recent measures. This positive news has pushed the Sterling/Euro rate up by 1% comfortably over the €1.41 mark. 

Sterling/Dollar 

It is interest rates driving this currency pair too at the moment. Today, the US Federal Reserve starts a 2 day meeting, with an announcement due tomorrow. If they give further signals that interest rates are going to rise within the next few months, then expect the US Dollar to gain strength and pull rates lower.

 
Currently GBP/USD is trading at around $1.56. I don’t expect the level to remain at these levels. As the US are widely expected to be the first western economy to start pushing up rates, this could mean the USD strengthens. I still expect rates to drop below the key $1.50 mark by the end of the year. 

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GBP/USD & GBP/AUD Currency Forecast

Tuesday 7th July 2015 
In recent posts I’ve been focusing on Sterling/Euro exchange rates and the Greek crisis that is the reason for the current buying levels for the Euro being around the best in 8 years. Nothing has really changed for GBP/EUR and while a deal is yet to be made, the rate remains supported around the €1.41 level. 

For something a little different, in today’s report I’m going to take a look at Sterling/US Dollar, Sterling/Australian Dollar, and also some of the other commodity based currencies, including the forecast for where analysts think rates could go. Many readers are unaware that this site not only provides a market commentary on Euros, but also most major international currency pairs. (If there is a particular currency pair that you would like to chat about, then get in touch for a free consultation.)

In addition to the market reports I provide for free, I can also provide you a quote on your currency exchange. I can access commercial rates of exchange for over 30 currency pairs that are up to 5% better than you can achieve at the bank. If you have a currency exchange to perform this year, then click here to find out what rates I can offer you. 

Sterling/US Dollar

GBP/USD was down in the $1.40’s a few months ago, however recently it had been climbing. In the last 3 months the rate climbed over 10 cents higher, as you can see from the chart below: 

In the Spring, markets expected the USA to raise interest rates at some point this year. This along with strong US economic data strengthened the US Dollar and made it more expensive to buy. However in the last few month's economic data was coming in worse than expected. Also, the expectation of an interest rate rise has now been pushed back, and this is what caused the USD to weaken and exchange rates to rise. 

Today however, we have seen the rate slide from $1.5625 to $1.5425. This is because interest rate differentials are starting to move in the Dollars favour. Also, while the crisis in Greece deepens, the US Dollar is seen as a ‘safe haven’ for investors in times of uncertainty. In my view I think this slide will continue, and we may well see rates down at or below the $1.50 mark again by the end of this year. 

GBP/AUD, and GBP/NZD, GBP/CAD, GBP/ZAR 

Sterling/Australian Dollar rates are currently around their best in 6 years. Part of this is due to a robust UK economy, but mostly this is due to weakness in the Australian Dollar. 

The Aussie Dollar is a commodity based currency, which is a name given to currencies of countries which depend heavily on the export of certain raw materials for income*. Australia is just such a country as a large part of its economy relies on exports of raw materials to China. China's economy has been slowing down recently, and their stock market is falling.

This has resulted in less demand for these raw materials, and commodity prices are low anyway due to the Greek crisis. The result is a weak Aussie Dollar, and at the moment £1.00 will buy you $2.08 AUD, which is around a 6 year high. To be honest, while commodity prices continue to suffer, we could see all commodity based currencies like the AUD, CAD, NZD, NOK and ZAR continue to weaken and exchange rates may rise further for those buying these currencies with Sterling. 

*Other Commodity based currencies are the Canadian Dollar, New Zealand Dollar, Norwegian Kroner, South African Rand. All of these currencies are currently weak and very cheap to buy due to low commodity prices. 

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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! 

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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. 

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Pound recovers after Bank of England Minutes

Wednesday 19th November 2014 

Sterling/Euro recovers to €1.25 

Just a quick update this morning, as we have finally seen the Pound recover slightly after the last week in which we saw rates drop from €1.28 to €1.24. 

Earlier this morning the Bank of England released the minutes to its recent meeting where they decided to leave rates on hold. Of the 9 member committee, 7 voted to hold rates, with 2 voting to raise them, which has been the case for the last few months. You can read the full minutes here on the BoE website.

Why did this cause the Pound to rise? 

Given inflation numbers have been lower recently, some analysts including me thought that the 2 members that had been voting for a hike would not do so. The market had also been expecting this and it starting getting priced into rates in advance, and before the release of the minutes GBP/EUR rates were as low as €1.2440. As you can see from the chart above, as soon as the result was out Sterling exchange rates jumped to €1.25 where it now stands. 

This is a key technical level so I expect rates to remain at around €1.25 in the short term. 

Sterling/Dollar 

Focus will now be on Pound/Dollar rates. Currently this sits at around $1.57, but there is some key data out in the next few days that could change this. This evening at 7pm we have the US Federal Reserve minutes, and if there are hints at an interest hike in the states we could see the exchange rate drop further. Tomorrow we have a host of inflation data and jobless claims from the states and quite simply, good economic news could strengthen the US Dollar and cause the exchange rate to drop. 

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Pound/Euro exchange rate forecast for 2014 changes after BoE comments

Wednesday 19th March 2014
It’s been a very busy day in the markets today, with UK Unemployment being released, along with the Bank of England minutes, a speech by governor Mark Carney, and of course the budget statement. This afternoon I will look at the effect each event had on exchange rates, and how this has affected my view on where rates are headed. 

First, let’s look at today’s GBP/EUR chart that reflects how exchange rates were affected: 

Mark Carney warns against strong Pound 

As you can see from the chart above, as soon as the market opened at 8am this morning, the Pound started to strengthen as I predicted it would yesterday. This was due to comments last night by BoE governor Mark Carney, in which he said the current low interest environment won’t be around forever. This gave the Pound strength on speculation of interest rates going up. 

It didn’t last long, and as you can see from the chart above, when the MPC minutes were released, it shows that many of the BoE members are concerned about a strong Pound. Sterling strengthened by 1.5 percent in the month running up to the March MPC meeting, hitting its highest in several years, but in the last week or so has weakened to the lowest it’s been all year. 

The MPC members noted the further strength in sterling, with Deputy governor Charlie Bean recently saying the BoE could keep interest rates lower for longer if sterling strengthens much more, adding that its current level was "fine". Another member recently said that that further strength in sterling would be a worry. 

What does this all mean? To me this means if you need to buy Euros at the best exchange rate, the current levels could be as good as it's going to get for some time.

UK Unemployment 

The latest Unemployment figures were released at the same time, and while the overall rate remains at 7.2% as I expected it would, the number of overall people in employment hit record highs. This did little to help the Pound, as all focus was on the BoE warning against the Pound getting stronger. 

UK Budget Statement 

As I predicted, it had absolutely no effect on exchange rates. Here I will only look at what could affect currency – basically Growth forecasts were up a little, and we’re getting a new Pound coin. Yay.

Look at the chart above, and you can see the markets were, as usual, underwhelmed by the Budget, with the Pound barely moving at all throughout the speech. The rest was mostly guff, and if interested you can read a full report on the budget here on the BBC site.

What does this mean for those looking at the best exchange rates? 

I have changed my view since my forecast yesterday. I now think it will take a few months before we get back through €1.20, in light of the BoE warning about the Pound getting stronger as I've outlined above. If I needed to buy Euros I would look to fix a rate now, or put protection in place against adverse movements.

They have hinted that they won’t let the rate get too much higher, so if you need to buy or sell Euros, consider doing something sooner rather than later. I don’t think it will drop much either due to the economy being fundamentally strong, so for the next few weeks I expect rates to remain range bound between 1.19 and 1.20 

Find out more about the rates and service I offer 

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I am a senior Currency Broker, and the firm I represent is fully authorised by the FCA to ensure security of client funds. With an annual turnover of £500m I have access to the best foreign currency rates. If you need to convert currency I could save you a significant sum on your exchange. 

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Pound falls further in what is an important week for Sterling

Monday 17th March 2014 
Good afternoon everybody. The UK has been basking in unseasonable sunshine over the weekend, however Sterling has remained firmly in the shade. We have seen the Pound drop further today against the Euro and other currencies, ahead of what I think will be a key week for UK economic data releases, and therefore Sterling exchange rates.

Pound/Euro has fallen to 1.1940. Pound/Dollar remains in the mid $1.66’s. In today’s report I am going to run over the week’s economic data and how it might affect exchange rates. 

There are lots of very important releases this week that will affect the Pound, including a Bank of England report, the latest Unemployment data, and George Osborne's budget just to name a few.

• Will the Pound fall further?
• Could it bounce back? 
• How to know when to fix a rate? 
• Do you want to get the best exchange rates? 

The below data will determine the answers to these questions, so read on to find out more about how this week could affect you getting the best foreign exchange currency rates. 

If you need to to buy or sell currency and want to get the best exchange rates, then you can get in touch with me for a free quote by clicking below.

Contact me to discuss your currency requirement in detail. 

This weeks economic data releases that could affect exchange rates 

Monday 17th March 2014 

Today has been relatively quiet data wise, with only some EU inflation data released earlier this morning. The numbers were not that different to the forecast, and so didn’t affect GBP/EUR rates too much. 

Tuesday 18th March 2014 

GBP/EUR could be affected by the EU ZEW survey at 10am. Basically this measures economic sentiment and how investors see the economy. A high reading could strengthen the Euro and pull GBP/EUR rates lower. 

GBP/USD could also be choppy today, as we have a raft of inflation data from the USA at lunchtime. 

At 17:45pm there is a speech by the Bank of England governor Mark Carney. This could be very important. It’s impossible to know whether he will be upbeat and positive about the economy, but if he is it could cause the Pound to rise. Many think they he wants the Pound lower however, in order to help UK exports. So he may use this opportunity to talk the Pound down which would cause exchange rates to fall also. 

Wednesday 19th March 2014 

The most important day of the week for the Pound in my opinion. Firstly we have all the latest unemployment figures. I expect the figure to be at 7.2%. Lower than this would cause the Pound to rise, and vice versa. 

Along with unemployment we also have the latest BoE minutes which will show what was discussed and how they voted in their recent decision to hold interest rates. The key will be whether this report hints at a rate cut early next year or not, and this report is likely to affect Sterling one way or the other. 

At 12:30pm chancellor George Osborne delivers the budget report, so just how could the budget affect exchange rates? The last few haven’t really affected the value of the Pound at all, but it all depends what he says. As we’re getting closer to an election, I expect some positive noises, but nothing that will really surprise the markets, so it’s the unemployment and BoE data today that you want to keep your eye on. 

Late in the afternoon the USA has an interest rate decision and a press conference, so GBP/USD may also be affected today. 

Thursday 20th March 2014 

After yesterday’s incredibly busy day, things settle down a little. There is nothing of note from the UK or EU, but the USA does have some manufacturing data and a bank stress test in the afternoon. 

Friday 21st March 2014 

The latest UK Public sector borrowing figures are released today and is expected to come in at around £7.8bn. As always, if the number differs from this then the Pound may rise or fall accordingly. 

Find out more about the rates and service I offer 

If you have a currency transaction to perform and would like to find out how I can help you, get in touch in the following ways: 

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Ask for Alastair Archbold, and quote ref ‘FERF’

Pound remains above €1.20 vs the Euro

Friday 29th November 2013
Good afternoon everyone. A quick update before the weekend to outline what's been happening with exchange rates, and in particular the Pound/Euro exchange rate forecast.

BoE Governor causes Pound to rise above €1.20

Yesterday the governor of the Bank of England, Mark Carney, gave a speech. You can read a report here on the BBC website that outlines what he talked about. Most of the press has been reporting on the move of the 'Funding for Lending' scheme which has been moved from individuals to small business. 

What we're interested in however is what effect his words had on exchange rates. Mr Carney's predecessor Mervyn King had a habit of 'talking down' the Pound to such an extent that usually as soon as he opened his mouth, Sterling fell before he had actually said anything!

Mr Carney in contrast seems to do exactly the opposite. In recent speeches his comments have been very UK positive and have therefore caused the Pound to rise. This is what we saw yesterday, and the Pound rose to over €1.20 again against the Euro, but this time rates remained just above this level all day on Thursday. 

What's happened today to Sterling exchange rates?

Today, Sterling slipped from a 11-month high against the dollar and fell against the single currency as investors digested the Bank of England's surprise move to scale back stimulus for the housing sector.

Initially, investors had concluded the Bank might be taking the first step towards tightening its ultra-loose monetary policy, and the pound rose. But some analysts said not using conventional monetary policy to curb housing prices meant interest rates could remain low for longer.

However in the last few minutes, Pound/Euro has shot up to €1.2022 and Pound/Dollar has risen to $1.6364. I put this down to profit taking: as the European markets closed at 4pm a few minutes ago, investors wound up their positions ahead of the weekend, causing a spike in the value of the Pound:

  

"Boom!"

• So will these levels now be sustained against the Euro? 
• Will rates drop back away as they have been doing over several weeks?

I'll be back in action on Monday with a full analysis and round up of the future forecasts for exchange rates. 

In the meantime, if you're looking for the best exchange rates, or would simply like to discuss the current market to help you decide when to convert your funds, then send me a free enquiry. 

The rates I can help you achieve can be up to 5% better than banks and other financial institutions, so by getting in touch you can save yourself a considerable sum. 

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I look forward to hearing from you. Have a great weekend.

Alastair Archbold