How could UK GDP numbers affect exchange rates?

Wednesday 24th April 2013

Good afternoon everyone. I'm only putting up a short post today ahead of tomorrow's key UK GDP figures. I thought I would outline what I think may happen depending on the actual numbers that are released tomorrow at 09:30am.

Let's start at the beginning. What is GDP?

Firstly, what is GDP? You can read a comprehensive outline here on the BBC website. In a nutshell, it's a measure of the economy in one simple number. If the GDP measure is up on the previous three months, the economy is growing. If it is negative it is contracting. And two consecutive three-month periods of contraction mean an economy is in recession.

How could the GDP result affect exchange rates?

Now, I'm sure regular readers are now getting a little bored of me talking about the GDP numbers, so you will be pleased to know the final result will be announced tomorrow morning at 09:30am! Markets have been waiting in anticipation for the result, and so we can finally put to bed the question of whether or not we're in recession. 

To summarise, in the last 3 months of last year, the UK's GDP shrank by 0.3%. If the first 3 months of this year also show a decline, then it means the UK is officially in recession for the 3rd time in as many years. 

A recent estimate showed that the economy may have actually shown growth of 0.1%. So not exactly a huge increase, but if confirmed it will mean the UK has avoided recession. So what would happen if the numbers are as forecast, or different than forecast?

Markets generally price in forecasted figures in advance, so the number of 0.1% growth will already be reflected in the current exchange rate. That's why we've seen the Pound make some gains in recent days. So if the number is as expected at 0.1%, then I wouldn't expect huge movements in the rate. We may see some modest strengthening of Sterling, but don't expect rates to shoot up to €1.20. 

If the figure shows a decline and confirms the UK is back in recession, then I would expect the Pound to fall, potentially by some margin. So there is the risk exchange rates could take quite a hit tomorrow if the numbers are poor.

Finally, the number could show growth of more than 0.1%, in which case I would expect exchange rates to rise.

Whatever happens tomorrow, I do expect rates to move in one direction or the other. 

Many clients are booking their currency today to avoid losing out if the market starts to move the wrong way. Send a free enquiry to me today to find out more about the rates that I can source for you - our rates are up to 5% better than banks, so you may be surprised in how much you could save.

Click here to send me a free enquiry on exchange rates. 

What next after the GPD numbers?

We can also start to look forward and talk about something else! It will finally confirm the direction the UK economy is taking, and so I would expect once this release is over and done with, focus will return to the EU debt crisis, and further economic released from the UK will be studied in detail to see how the economy is faring.

I personally expect the Pound to make gains against the Euro in the medium to longer term, but in the short term things may get worse before they get better. 

Getting the best exchange rates

If you need to buy or sell currency in the next 2 years and want to achieve the best exchange rate possible, then send me a free enquiry today. I can discuss your requirements, explain the different options you can consider, and help you make an informed choice on when to fix your rate.

When you decide to do this, the rates I can source are significantly better than banks offer. So find out today how we can help you. 

It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.  

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Pound/Euro outlook forecast April 2013

Tuesday 16th April 2013 

Good morning. Rates remain fairly stable, with GBP/EUR rates only moving around 1 cent over the course of the last week. This are not likely to remain this way for long however, with some important data due to be released over the next few weeks. 

In today’s report, I’ll have a look at the latest economic data releases, and the forecast for where Sterling exchange rates may move in the coming weeks. 

Sterling remains stable against other currencies 

The latest inflation numbers this morning came in as expected at 2.8%. The Bank of England has said it expects inflation to exceed 3% later this year. As the numbers were as forecast, there wasn’t much effect on exchange rates. In the longer term, the Bank had said it expects inflation to remain above its 2% target until early 2016. 

The inflation outlook has prompted caution among policymakers about the increasing use of stimulus to kick-start the UK economy. The Bank's Monetary Policy Committee (MPC) split 6-3 last month against restarting its asset purchase programme.  

So what is Quantitative Easing? You can read a very good summary of it here on the BBC website.

In effect, it is the Bank of England creating money to pump in to the economy. In the past this has significantly weakened the Pound. Tomorrow (Wednesday) we will see the latest Bank of England minutes showing how many voted for QE this time round, and if a 4th member has joined the calls for stimulus then expect the Pound to fall. 

I think that the direction of Sterling will primarily be driven by the GDP numbers out on the 25th of this month. What is GDP? Again, a very concise explanation is available here on the BBC website.

In the final quarter of last year, the UK economy contracted at 0.3% and a second contraction in a row would mean that the UK is officially back in recession. The fact that the Bank of England haven’t ruled out the need for more QE, coupled with an estimate of only 0.1% growth, means investors are still pretty nervous about the state of the economy and are therefore refraining from buying into Sterling. This is stopping any gains in the rate and keeping things stable.

Click here to make an enquiry regarding our exchange rates

Euro remains weak 

Less than a month after securing a bailout at the last minute, Cyprus is now under pressure to secure an additional 6 billion EUR worth of funds. According to the Debt Sustainability Report conducted by the European Commission and the ECB, the cost of the EU-IMF bailout has surged from the agreed upon 17.5 billion EUR to 23 billion EUR. 

Apparently, the number crunchers at the European Commission have concluded that Cyprus has to increase its contribution to the bailout in order to compensate for the potential economic slump that would result from the current austerity measures. At this rate, the total cost of the bailout will now exceed the size of the Cypriot economy. Worrying.

As a country with a enormous debt and a rapidly deteriorating economy, Cyprus has few options left in terms of getting money to pay off its debts. A few market players believe that Cyprus would inevitably need a second bailout while some are considering the possibility that depositors with more than 100,000 EUR at the Bank of Cyprus would lose at least 60% of their holdings. 

This in addition to fears other countries may have to follow the same path is keeping the Euro weak. 

Click here to make an enquiry about our exchange rates

So are rates going to rise, or fall? 

As I often point out here on my blog, it’s impossible to predict which way rates will move. Nobody can say where rates will be a week, a month, or a year from now. What I can do is explain what is moving the rate, and coupled with forecasts help you decide when to fix your exchange rate. 

Sterling had weakened significantly early this year, before recovering in the last few months due to better economic figures and the problems in Cyprus. If UK figures continue to be relatively good and we avoid recession, then I would expect rates to continue to rise above 1.20 as the year progresses 

If however it is confirmed that the economy is in recession later this month, then expect the Pound to plummet bringing exchange rates down. The on-going developments in Europe are also a major driver of rates at the moment, so we’re also keeping a close eye on what is happening in terms of bailouts. 

So all in all due to the uncertainty over UK GDP figures, things really are on a knife edge and could move significantly either way.

Have a free consultation to help you achieve the best exchange rates. 

You can contact me and have a free consultation on exchange rates. I can discuss your particular requirements, talk about which way the market is headed, and also run over the different options you have with regards to what type of contract to have. 

In this way you can make an informed decision on when to fix your rate. As I often say, don’t simply sit back and hope rates will move in your direction. As we saw earlier in the year, the currency markets can often move quickly and without warning, making your currency purchase more expensive than it needs to be. 

Take control over your requirements by clicking here and sending me a free enquiry now, and take the first step to making the most of your currency. When you decide to trade, the rates I can source can be up to 5% better than available at banks and other financial institutions. I look forward to hearing from you.   

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Effect of Budget & Cyprus on exchange rates

Wednesday 20th March 2012 

Good afternoon everybody. Much has happened since my last post, including worrying developments in Cyprus that have weakened the Euro, and also news from the Bank of England that has strengthened the Pound, so rates are the best they have been for about a month. The Budget delivered today has also affected exchange rates. So, what have I got in store for you all in today’s post? 

• Cyprus Bailout talks weaken Euro 
• Pound/Euro rises as Bank of England indicate Pound is weak enough 
• Effect of Budget on exchange rates 
• Uncertainty over further Quantitative Easing
• How to get the best exchange rates

So without further ado, let’s look at each of these points in turn, analyse their current and possible future effects on exchange rates, in addition to looking at ways I can help you get the best exchange rates possible. 

So what is going on in Cyprus? 

As I’m sure you have all read in the news, Cyprus is in trouble. The reason I haven’t posted on it until now is that it has been a developing story, and I wanted things to be a little clearer before discussing the effects on exchange rates. In a nutshell, in order for Cyprus to receive a bailout, they decided that up to 10% of peoples savings would be taken as a tax to prop up the banks. 

When markets opened on Monday, the effect was a weakening Euro and a rise in GBP/EUR rates. Why was this? Well it is because the latest EU bailout has dragged the debt crisis back in to the spot light, and the Euro has weakened as a result. Banks are currently closed until at least Thursday, over fears of a run on the banks. 

The ECB (European Central Bank) has made it clear however that without a reform programme for Cyprus there will be no bailout. The plans were voted down recently, but there's now a danger that they won't be able to open the banks again at all. The rescue deal for Cyprus, announced on Saturday, prompted widespread outrage on the island at the prospect of ordinary savers being forced to pay a levy of 6.75%. 

The Cypriot finance ministry announced a change in the plan on Tuesday, to exempt savers with less than 20,000 euros (£17,000), while those over 100,000 euros would still be charged at 9.9%. However, this was not enough to placate critics. The plan to tax bigger deposits at a higher rate has angered Russia, as Russian nationals hold many of those larger deposits. There are rumours that Cypriot Finance Minister Michalis Sarris is in talks with Russia for a possible bailout, in return for gas fields. 

So what does all this mean for exchange rates? The effect is will have is very hard to quantify. Should terms of a bailout be agreed, then it’s likely the Euro will regain some strength and pull exchange rates back down. While no agreement is in place, the uncertainty means the Euro is on the back foot.

Discuss your currency requirements with me today. 

Bank of England warns more QE may weaken Sterling 

This morning, the latest Bank of England minutes revealed that members of the Monetary Policy Committee remain divided over whether to inject more stimulus money into the UK economy. For the second month in a row, 3 of the 6 members voted for further QE, including Sir Mervyn King. 

One member of the MPC also raised concerns about the continuing weakness of the pound, which as we all know, has fallen significantly against the Dollar and Euro since the start of the year because of fears about the weakness of the UK economy. Ian McCafferty warned that a further fall in sterling could raise inflation, which might have "damaging" consequences. 

So what does all this mean? For exchange rates, it’s actually pretty unclear. There seems no consensus on whether more QE will come or not, so for the moment it hasn’t affected rates too much. Should further economic data support the case for more QE, then expect the Pound to fall. Should better numbers be released in the next 4 weeks, then the Pound will likely gather strength. 

Worried about which way the rate may go? Send me a free enquiry.

What effect has the Budget had on exchange rates? 

As is often the case, the budget didn’t have much of an effect on exchange rates. Initially the Pound dropped a little, before quickly recovering the losses. I won’t go in to too much detail on the budget here, other than to look at what affects exchange rate now and in the coming months. You can read a comprehensive breakdown of what was announced here on the BBC website. So what were the main points that may affect exchange rates? 

The official forecast for growth in the UK economy this year has been halved. Revised forecast is for the UK's national debt to rise to 85% of GDP Announced that the Bank of England Monetary Policy Committee had also been given an updated broader remit, but keeps its 2% inflation target. The markets have generally taken budget positively; indeed Sterling has risen against the Euro and the US Dollar. 

The main reasons for this are the fact that the deficit is being reduced, and despite the revised growth forecasts, it now looks like we may avoid a further contraction that would put us back in recession. Also of interest were changes to the Remit of the bank of England to focus on growth; however we don’t yet have the details of this. 

So in summary, not many surprises in the budget, but there is still the chance of further QE that could drag the Pound lower. While the EU debt crisis is still in the headlines however, expect Pound/Euro rates to be supported. If and when a bailout is agreed, then expect a reversal and decline in the rate. 

Contact me to discuss how exchange rates may change.

How to achieve the best exchange rates possible. 

These are very volatile times we are living in. This year alone the Pound/Euro rate has been as high as 1.2350 and as low as 1.13. With so much happening all over the world that is impossible to predict and foresee, the result is violent swings in the exchange rate that happen quickly and often without warning, as we have seen recently. 

In my last post I did highlight the risk of the EU debt crisis resurfacing, and pointed out that if it did the Euro could weaken and this is exactly what has happened. Given the economic uncertainty in the UK and Eurozone, going forwards rates could move by as much as 8% in either direction in the next few months. So what to do if you need to buy or sell currency? Do it now? Wait in the hope it might improve? 

Ultimately nobody can predict the market and advise you on when to trade. What you can do however, is use my experience and knowledge and have a full discussion with me regarding what you need to do, and the timescales within which you need to do it. I can then explain the different options you can consider, in addition to giving you an outline of what could happen with rates in the coming weeks. 

Armed with the full knowledge of options available to you, and taking advantage of discussing with me may move exchange rates in the coming weeks, you can then make an informed decision on what to do.

Don’t simply sit back and hope the rate will move in your direction. Hope is not a reliable economic tool. 

Get in touch with me today to have your free consultation, and take the first step to making the most of your currency and getting the best exchange rates. I look forward to hearing from you.  

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GBP/EUR & GBP/USD forecast 2012/2013

Thursday 13th December 2012 

 Good afternoon everybody. In this afternoon’s post I’m going to take a detailed look at Pound/Euro rates, and the forecast for where rates may go in 2012 and 2013. I will also have a look Sterling/Dollar rates. 

I will also run over some of the options and contract types I can offer for any currency requirement you may have in the next 2 years, to help you get the best exchange rates and make the most of your currency. 

Pound/Euro stable in the mid €1.23’s 

 

The Sterling/Euro exchange rate has fallen slightly in recent weeks, but still remains firmly above the 1.20 mark. The reason for the fall is twofold, and will be familiar to regular readers as it’s been the main driver of exchange rates all year! 

Firstly we have the progress made in Europe, which the markets have taken to be positive. This has seen the Euro gain some strength and thus become more expensive to purchase. We also have the threat of the UK’s credit rating being downgraded, which has taken some steam out of the Pound. 

Some in the market are now saying that the euro could gain further support after the European Union agreed to make the European Central Bank the bloc's banking supervisor. This is positive news for the Eurozone, and so could pull rates down further. Of course things are so volatile in the Eurozone, it’s impossible to predict what will happen in the coming weeks. You can read about the new Bank rules here.

What UK news is affecting the Pound?

On the UK side, data has shown that British factory orders rose this month, although there was little reaction in the currency markets with the Pound remaining largely unaffected. Of more important to Sterling at the moment are growth prospects and credit ratings. 

In his recent autumn statement, George Osborne downgraded growth forecasts and said the country will miss debt-cutting goals. This has increased concerns the UK will lose its prized AAA credit rating. Only the UK and Germany retain good credit ratings from all major agencies. This could of course weigh on the Pound should we be downgraded. 

In my opinion however moves in the Pound/Euro rate will be driven more by developments in the euro zone in coming months rather than what will happen in the UK. Markets are waiting to see whether Spain will apply for aid, triggering the European Central Bank's bond-buying scheme that is seen as providing a backstop to peripheral debt markets. 

So which way will Pound/Euro rates go now?

In a nutshell, if things remain positive in Euros, GBP/EUR rates could fall. Should there be any unexpected deterioration of the situation in any of the troubled EU countries such as Spain, Italy, Portugal or Greece, then we could see renewed weakness in the Euro, causing rates to climb again. 

Regardless of whether you are buying or selling Euros, simply sitting back and hoping the market will move in your direction invariably means you are simply chasing the market using hope as your only economic tool. A wiser strategy would be to use tools such as Stop Loss and Limit orders, so you can take control of your requirement and allow you to budget effectively for any requirement you may have in the coming months.

If you would like a free consultation on the types of contract we offer such as Stop Limit orders, then get in touch with me today. I can discuss your requirements, let you know all your options and give you my view on the current market forecasts. In this way you can make an informed decision on what to do and when to buy your currency. Simply leaving things to chance could cost you dearly. 

Click here to send me a free enquiry, and book your free telephone consultation now. 

Pound Dollar remains near 6 week high vs. US Dollar 

 

The Pound has recently been at a 6 month high vs. the US Dollar, however fell a little today during trading. Sterling pulled back somewhat because investors took some profits after the news that the FED has announced a new round of monetary stimulus, which was expected. 

Moving Forwards, rates I think will now remain above the $1.60 mark against the Dollar for the rest of the year, especially if we see hints that the Bank of England wills hold off from signalling further Quantitative Easing in the UK. 

If you need to buy US Dollars at the best exchange rates, there are 2 things you should consider. Firstly, you can fix the rate now while it’s so good, using either a Spot of Forward contract. A spot contract needs to be settled in full within 2 working days of booking your rate. A Forward contract allows you to fix the current rate for up to 2 years, and only lodge 10% of the total to be converted. The remaining 90% becomes due when you want to have your US Dollars transferred. 

A second option is if you think the rate will rise further. You can place a ‘Stop Loss’ order at a level slightly below the current rate. This means if the market drops, your currency is secured at that rate, protecting you from a further decline, and giving you a worst case scenario. The advantage of a Stop Loss is that if the market continues to rise, you can continue to take advantage of any gains, raising your stop level in line with market movements. 

Click here to send me an enquiry to find out more about these types of contracts. 

Pound/Euro rates fall on BoE Inflation report. Forecast.

Wednesday 14th November 2012 

Good afternoon everybody. It’s been quite a mixed week so far in the currency markets, with big swings in the Pound/Euro rate along with other currencies. As the week started, Sterling was at a 6 week high against the Euro, and things were looking very good for Euro buyers. As is often the case with sharp upward spikes however, it was not to last. By Wednesday, a dire report from the Bank of England took the wind out of the Pounds sails, and we saw GBP/EUR rates drop by over a point.

In today’s report I’m going to take a look at what caused the Pound to fall, and what the events in the EU may mean for rates going forward.

Sterling/Euro highs were not to last 

Sterling hit its best rates against the Euro in 6 weeks recently after the Bank of England left interest rates and the size of its bond-buying programme unchanged, as outlined in my last post. The decision had been broadly expected by most analysts after a great run of UK data.

However the gains were not to last, firstly due to a dire report from the Bank of England this morning, and fears over what effect the deepening EU crisis will have on the Pound. Let’s take a look at what the Bank of England governor said and what effect it had on Sterling.

Pound falls after BoE Inflation report 

This morning, Sir Mervyn King gave the latest Bank of England inflation report, and during this he has downgraded the growth forecast and warned the economy will be below pre-financial crisis levels for the next three years as it continues its recent "zig-zag'' pattern. The comments did not bode well for Sterling.

Often when Mervyn gives a speech he talks the Pound down, and today was no exception. He said that the Pound/Dollar rate had gained by 8% and the Pound/Euro rate by 12% in recent times, and that these gains were unsustainable. I think he is worried what effect the strong Pound will have on exports, and so purposefully caused some weakness to try and drive the economy.

In the report he said that the Bank of England expects GDP growth of just 1% in 2013, and also said that inflation would to fall back towards the Government's target of 2% in the latter part of next year.

“There seems a greater risk that the UK economy may be in a period of persistent low growth,” Sir Mervyn said. He added that the outlook for inflation was the main reason why the policymakers decided to stop the purchases of gilts - or quantitative easing - in November. There is a real chance more QE could be on the cards however in December or early next year, so those that need to buy Euros should seriously consider their position now.

EU fears could also affect Pound/Euro rates

Little sign of a recovery in the euro zone any time soon is likely to weigh on the single currency against sterling. Weakness across the board would normally cause GBP/EUR rates to rise, however there are real concerns about whether the UK's economic recovery can be sustained, given a deepening recession in the euro zone which is one of our key trading partner.

If the EU economy continues to struggle, then it’s going to affect the Pound and this could keep rates in check.

The Greek economy is doing very poorly. It shrank 7.2% in the third quarter compared with the same period a year earlier, and has now been in recession since late 2008. They’ve had 2 bailouts from the EU and IMF, and there will probably be more to come.

Eurozone finance ministers will meet next week to discuss releasing the latest 31.5bn euros as they seek agreement on how to make Greece's debt sustainable going into the next decade. In the shadow of all of this, workers across the European Union are staging a series of protests and strikes against rising unemployment and austerity measures. General strikes in Spain and Portugal have halted transport, businesses and schools, and led to clashes between police and protesters in Madrid. Smaller strikes were reported in Greece, Italy and Belgium, and rallies were planned in other countries.

Summary 

Many clients are convinced that the problems in EU will drive rates back towards the 4 years highs of €1.28 we saw in the summer. I don’t agree with this. These were the highest rates for years, and despite much better expected UK data we have failed to get back to them.

Rates have fallen further this week due to fears over the UK economy, so if I needed to buy Euros I would give serious consideration over what to do now. We are still trading comfortably above the 1.20 level, and this time last year rates were as low as 1.13. Holding out for more gains could easily mean you lose out.

A wise strategy in this climate would be to place a Stop Loss order. This is where you can instruct me to purchase your currency should it drop below a pre agreed level. For example, 1.22. You can then take a bit of a gamble on rates recovering, but have a safety net in place should rates fall. This is a good way to approach the current market, as it means you don’t lose out on all the recent gains and can still trade at a reasonable level.

If you're looking for the best exchange rates, or just want to have a chat about the options open to you, then send me a free enquiry by clicking below. There is no cost or obligation involved, and you could be very surprised on how much you can save through the commercial rates I can source for my clients.  
 
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Pound/Euro forecast outlook October 2012

Monday 1st October 2012
Good morning everybody. It's the start of a new week and a new month. Today I'm going to have a look back over what has been happening with Pound/Euro rates in the last week. In short, we've seen a slight recovery in Pound/Euro rates, however during the next month there are some key decisions in both the UK and EU that could pull the rate in either direction. I will also touch on tools and strategies you can use to protect against the rate moving the wrong way.

In this week’s Report: 

• Sterling/Euro remains choppy due to debt crisis
• EU problems now spreading to Spain 
• What will October hold for GBP/EUR rates
• Round up of the week’s other data that may affect rates 

Sterling vs. Euro; 

After losing ground against the euro in recent weeks, the pound started last week strongly as worries over Spain once again took centre-stage. The pound subsequently rose to its highest level in two weeks against the euro over fears that Spain would become the latest member of the Eurozone to request a bailout. Renewed concerns over Greece and a weaker-than-expected German sentiment survey also weighed on the single currency.

The pound was also lifted by talk of a €3 billion injection of farm subsidy payments, which the Eurozone pays the UK once a year. All of the above resulted in Sterling/Euro rates making a slight recovery. "The thing that is dominating market sentiment is when Spain will apply for a bailout. And, until that happens, it is weighing on both the euro and sterling, but especially the euro," said currency strategist Adam Myers of Credit Agricole.

The euro weakened further mid-week with Spanish ten year bond yields rising to 6 % on Wednesday. There was no let-up on the Euro either, with the Bank of Spain warning that gross domestic product for the Eurozone’s fourth largest economy would keep falling at a "significant rate" in the third quarter of 2012.

The rise in GBP/EUR rates continued, with the pound hitting a three week high against the euro on Thursday, helped by news Britain's economy contracted less than expected in the second quarter and as worries grew about Spain's debt and economic problems.

However, the trend was reversed on Friday as the euro gained around 0.5% against the pound over the course of the day after investors gave a cautious welcome to Spain's 2013 draft budget. This demonstrates how quickly trends can change. Also last week, the troubled southern European nation of Spain unveiled a 2013 budget based on spending cuts that many saw as an effort to pre-empt the likely conditions of a bailout – which could be seen as a positive for the euro and other riskier currencies, as it would allow the European Central Bank to start buying the country's bonds to try and lower yields, effectively lowering borrowing costs.

So, what does all of this mean if you need to buy or sell euros in the near future? 

Is the rate likely to go up or down? With so much uncertainty in both the Eurozone and the UK, it is almost impossible to predict which way the markets will move. On the one hand, the talk of Quantitative Easing in the UK could potentially weigh heavily on the pound. QE effectively floods the market with Sterling, weakening the pound in the process and bringing exchange rates down.

On the other hand, with problems in Greece starting to resurface, and the fear Spain will soon be forced to seek a bailout, GBP/EUR rates could easily move in the opposite direction. When we had some negative news out of Greece back in October 2011, the euro lost 3 cents against the pound over the course of 10 days. Regardless which way the markets will move in the coming weeks, there are tools at your disposal to help protect yourself from adverse movements and wild swings in rates of exchange.

Forward Contracts, Limit and Stop Loss orders are all handy tools to help make the most of your currency. Using these to take control of your currency requirement is a wise strategy to consider, as simply hoping the market will move in your direction can often prove very costly indeed.

To find out more about how you can limit your exposure to fluctuating exchange rates, send me a free no obligation enquiry today.

Weekly Economic Data that may affect exchange rates 

Monday – Starting in the UK, today we will see the latest House Prices from the Halifax, following by mortgage approval numbers and measures of manufacturing and consumer Credit. Over in the Eurozone there are Spanish inflation numbers, and manufacturing data for Italy and France. We also see Italian unemployment numbers. Across the pond we have US Manufacturing and Construction figures, in addition to a Speech by one of the FED’s FOMC members. 

Tuesday – Further UK House prices are released today, this time from the Nationwide. We also have construction data and the shop price index from the British Retail Consortium. In the Eurozone we have some inflation numbers. Further afield there is an interest rate decision in Australia, and Vehicle sales numbers from the United States. 

Wednesday – Fairly quiet in the UK today with only PMI data being released. In Europe we also have PMI in addition to the latest Retail Sales which is a good barometer of overall economic health. In the USA there are mortgage approval numbers and the latest unemployment measures. 

Thursday – As always for the first Thursday in the month we have the latest interest rate decisions for the UK and EU, in addition to possible change in the UK’s Quantitative Easing plan. It’s likely to be quite important as any changes could make a big difference to the GBP/EUR rate. In the USA we will see the latest FOMC minutes, in addition to the most recent Jobless Claims numbers. 

Friday – We end the week on a quiet note, with no releases for the UK. We will see some Factory order numbers from the Eurozone but they don’t usually have much of an impact on rates. In the USA we have various measures of unemployment, and as we touched on in the USD report, the all-important Non-Farm Payrolls.  

Getting the best exchange rates

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you.

It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.  

Click here to send me a free enquiry

Pound/Euro exchange rate forecast for September 2012

Monday 10th September 2012
Good morning everybody. I'm back from sunny Kos in Greece, so let's get cracking and see what's been happening with exchange rates. In a nutshell, the Euro has been gaining strength and as a result Sterling/Euro exchange rates have fallen further from their recent highs. Today I'll take a look at what's been happening in Europe, why the Pound/Euro rate has fallen, and what the coming weeks may hold. If you need to buy or sell Euros at the best exchange rate, read on....

In this week’s Report:

• Euro gains strength pulling GBP/EUR rates down
• Is a solution to the debt crisis imminent?
• Pound/Dollar rates climb steadily to $1.60
• Round up of the week’s other data that may affect rates

Sterling vs. Euro;

Speculators waited in anticipation last week as a relatively stable few days led up to Mario Draghi’s long awaited ECB press conference. Today I will consider the major announcements from both the UK and Euro-zone that drove the sterling-euro cross price since I've been away.


Last week began with a UK Manufacturing data report that was greater than predicted; lifting the pound as speculators concluded that the announcement would reduce the chance of more Bank of England stimulus. Sterling gains were offset, however, as on that day Angela Merkel stood before Bavarian beer drinkers to announce her support for a unified euro.

The inference of her speech appeared to be that the hard line taken with troubled Euro-nations, such as Greece, was ultimately to bring about an end to the crisis, rather than to simply protect German interests. The markets took the signal as an affirmation that a plan was on its way and this, coupled with a buoyed sterling, kept the markets relatively constant around the €1.26 level.













Just as the steam from Chancellor Merkel’s comments began to wane, and European stocks slipped again, Mario Draghi set the cat amongst the pigeons when he explained to lawmakers that if the ECB were to purchase two to three year sovereign debt from troubled nations, this was not tantamount to outright quantitative easing; a breach of their mandate.

All eyes fell on Draghi and Thursday’s announcement; the euro had tentatively held its ground, never quite weakening back to the four year high levels, but not quite strong enough to warrant the sterling-euro cross to fall below the 1.26 mark. Speculators were divided as to the fate of the euro; the broad strokes of the ECB plan were relatively well known by this point, what was not, were the details. Draghi could announce an insubstantial plan, such as capped bond purchases, that would disillusion markets in a similar vein to his prior press conference. A stronger message however, would settle investors, buoy the euro and reduce the dreaded bond yields of nations such as Spain.

Although the ECB President delivered with respect to content, Draghi’s speech was perhaps not the vitriolic call to arms many expected, or hoped, it would be. The markets did respond, albeit eventually, as an initial weakening of the Euro during the speech ultimately saw the single currency close in on two-month highs against the US dollar stealing momentum from the yen.

Friday delivered weaker than forecast Non-Farm payroll data from the US which will have driven speculators from the dollar to the euro as the ECB’s recent actions, and the risk of Fed stimulus, has seen more traders drop their risk-adverse positions on Europe. The news also caused GBP/USD rates to rise above the $1.60 level for the first time in quite a while.

With the euro increasingly gaining on its counterparts we have seen the Pound/Euro rate start to drop further away from the recent highs, on Friday falling over a point down towards €1.25. As such it has never been a better time to consider your currency options if you need to buy or sell Euros. We have a range of contracts to cater to many Forex requirements. Whether you are buying or selling Euros, we can provide you will all the information to help you make an informed decision and make the very most of your currency.

Make the first step now, click here to make a free enquiry.

Weekly Economic Data that may affect exchange rates

Monday – Today is all about the EU. We have various releases including Italian GDP data, Greek Inflation numbers, EU investor confidence, French Industrial Output and Portuguese Trade Balance. Elsewhere there are some House Price figures for the UK, and GDP figures for New Zealand.

Tuesday – Today we have some Trade Balance figures from the UK showing imports and exports. A little quieter in the Eurozone with German wholesale prices the only data of note. In the USA we have Trade Balance figures.

Wednesday – An important day for GBP/EUR. Starting at home we have a host of earnings and unemployment data at 09:30am. In the Eurozone we have Inflation data from Germany, Spain and France. There are also some industrial production figures for the EU. Over in the USA there are several Import and Export numbers being released at 13:30pm.

Thursday – The only UK data of note is the BoE Quarterly Bulletin. It’s relatively quiet in Europe also with only Greek unemployment and Italian inflation data. Most figures today are from the USA: Jobless Claims, Interest Rate decision, FOMC minutes & a monthly budget statement.

Friday – The G20 meeting starts today, which is a gathering of finance ministers and central bank governors and thus could add a new dimension to the currency markets. Scheduled releases today include EU inflation and unemployment numbers, US inflation and Retail Sales figures.

Getting the best exchange rates

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you.

It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.

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Pound/Euro exchange rate forecast

Tuesday 28th August 2012
Good morning. Today I'll take my usual retrospective view on what caused the Pound/Euro rates to drop away, and the events in the coming weeks that will dictate the direction of exchange rates and the Pound Sterling forecast in the coming months.

In this week’s Report:

• Pound/Euro rates decline as ECB poised to take action
• UK Economy didn’t shrink as much as thought
• Pound/Dollar rates hit 3 month high on QE threat
• Round up of the week’s other data that may affect rates

Sterling vs. Euro;

Last week we saw the single currency strengthen significantly, causing the pound euro rate to drop away. Trading opened Monday morning around the 1.2760 mark and steadily dropped throughout the week closing on Friday afternoon around 1.2630 as the graph below shows. In this week’s report we will look at the causes as to why the Euro has reached a two week high against Sterling, and what the coming weeks and months may have in store for the GBP/EUR rate.













Last week’s trading opened with sterling holding firm in the mid 1.27’s, relatively close to the best rates in 4 years. As is often the case though, spikes such as this are usually short lived. The great exchange rates didn’t last long, as expectation grew within the markets that the ECB will take action to ease Spanish and Italian borrowing costs.

The renewed expectations of some progress on the debt crisis saw investors pre-empting the ECB’s next move, and resulted in investors moving their funds from the safe haven of the Greenback and back into the single currency, giving it strength and pulling the exchange rate down. The possibility of ECB action came in tandem with the news that public net borrowing in the UK has increased unexpectedly, in a time where the UK government is continuing to make cuts, weakening the Pound.

It's not all bad news!

There was some good news for the UK however on Friday, when figures showed that the UK economy shrank by less than previously thought between April and June. Revised data from the Office for National Statistics (ONS) show the economy contracted by 0.5% during the quarter, less than the 0.7% it announced last month. It didn’t have much of an effect on rates however, as many economists had expected the figures to show a smaller contraction and so for the most part, this was already priced in to rates, and was overshadowed by events in the Eurozone.

So what next for the Euro?

After a summer lull, the euro zone faces two months that will go a long way to dictate whether its debt crisis, now into a third year, will spiral out of control or finally be contained. The ECB appear to have temporarily stopped the rot and are now looking towards fast effective austerity measures.

In the next few weeks, we will see ECB inspectors travel to Athens to assess its debt cutting targets. There is also an ECB meeting where Mario Draghi will try to garner support for the Central Banks plan to bail out struggling economies, the ECOFIN meeting in Cyprus will see EU finance ministers thrash out plans to help Spain and Italy, and Spain will conduct an audit of its banks to see how much of the available bailout funds it will need. So, the future of the GBP/EUR rate hinges on what results from the above events.

What you can do if you need to buy or sell Euros.

With so much uncertainty over what will happen in the EU, the exchange rate could move significantly in either direction in the coming weeks. Due to this, many clients are choosing to remove any risk from the market and lock into a Forward Contract. This enables you to fix today’s exchange rates for up to 2 years into the future, allowing you to budget effectively, protecting against adverse exchange rate movements, and most of all give you peace of mind in a volatile and confusing market.

To discuss this and other options available to you, contact me now.

Weekly Economic Data that may affect exchange rates

Monday – UK Markets were closed for Bank Holiday, but there were some numbers from Germany showing Import Prices and Business Climate expectations. In a quiet market the figures had little effect on exchange rates.

Tuesday – UK Markets reopen but there are no data releases of note. In the Eurozone we will see German Retail Sales and Consumer Confidence, in Spain the latest GDP numbers are released. In the United States we will see Consumer Confidence and a Manufacturing Survey.

Wednesday – Relatively busy today. In the Eurozone we’ll see German Inflation Data, Italian Retail Sales and Consumer Confidence, Greek Inflation numbers and French Business Climate assessment. In the USA the Fed’s Beige Book looks at the current economic satiation, in addition to GDP numbers released at 13:30pm.

Thursday – In the UK today we have Mortgage Approvals, measures of Consumer Credit and Consumer confidence numbers. In the Eurozone we see German Employment figures, Consumer Confidence numbers from Spain and the whole EU, and EU wide measures of Consumer Confidence, Industrial Confidence and Economic sentiment. Stateside sees Jobless Claims.

Friday – A quiet end to the week. Spanish and Greek Retail Sales, Italian Unemployment and inflation numbers, EU Consumer Price Index. In the USA we have a Speech by the FED chairman and a measure of consumer sentiment.

Getting the best exchange rates

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you.

It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.

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Pound/Euro falls: August 2012 forecast

Wednesday 1st August 2012
Good morning. Today I'll give a quick mid-week update on what's been happening in the currency markets in the run up to tomorrows policy decisions by the Bank of England (BoE) and European Central Bank (ECB), after we saw Sterling/Euro rates take a tumble throughout trading yesterday.

Pound/Euro rate falls on positivity from EU leaders

This week we have seen some robust comments from EU leaders that the EU debt crisis will be tackled, and this has strengthened the Euro and pulled exchange rates down. So what was said?

French President Mr Hollande said they agreed that the euro should be "defended, preserved and consolidated" and added there had been "significant progress" in recent weeks. Italy's Prime Minister Mario Monti has said he sees "light at the end of the tunnel" on the eurozone debt crisis.

As well as his meeting with Mr Hollande, Mr Monti is also travelling to Finland and Spain, and he said he hoped his meetings would help "secure the euro and give a decisive boost to European growth".

Over the weekend, a joint statement from Chancellor Angela Merkel and French President Francois Hollande was thought to indicate that Germany had softened its opposition to using the ECB and European bailout funds to buy government debt.

The comments have caused the Euro to strengthen and pull GBP/EUR rates down over a point yesterday as the graph below shows.
















So what does it all mean?

These comments come amid speculation in recent days that European authorities are set to take action to lower borrowing costs for Spain and Italy. Tomorrow we have the BoE and ECB decisions on monetary policy. The ECB meeting is now expected to overshadow policy decisions by the Bank of England and the Federal Reserve after last week's pledge by ECB President Mario Draghi to do "whatever it takes" to protect the euro.

If the ECB delivers credible measures, it could boost investor appetite for taking on risk, helping sterling against the dollar, but if it disappoints markets it could lead to sharp falls in the euro and other trades perceived as higher-risk.

So we all await what will happen on Thursday. Expect volatility in GBP/EUR rates - if the markets think action taken is good news, expect Pound/Euro to fall further. If however it's just a case of them kicking the can further down the road, then I think rates will climb back up.

Getting the best exchange rates

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you.It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.

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How does Greek election affect exchange rates

Monday 18th June 2012
Good morning. Today's post is a little later than usual, as I wanted to wait until the markets had opened this morning to gauage the reaction to the Greek elections, and the effect it is having on exchange rates. So what do we have in this week’s Report?

• Greek election result reduces chances of Euro Exit
• Bank of England warn on more stimulus
• Elsewhere in EU Spain/Italy could seek bailout
• Round up of the week’s other data that may affect rates

(For currencies other than GBP, EUR and USD, contact us for a consultation)

Sterling vs. Euro;

Yesterday saw the results of the Greek election as we saw a close victory for Antonis Samaras and the New Democracy party with 29.6% of the vote. The party has now been given three days to come up with and build a coalition government ready to tackle the on-going debt crisis, something that couldn’t be done just six weeks ago in the first election.













After inconclusive elections in May, world leaders have welcomed the narrow election victory of Greece's pro-bailout New Democracy party. Now, they will try to form a coalition and create a stable government with a stronger popular mandate. So, problems solved?

Not necessarily. The recent vote was eagerly anticipated amid fears that Greece could exit from the euro should the anti-austerity party win. While an exit now looks much less likely, problems could now spread to other Eurozone members and deepen the turmoil in the global economy

The next three days could be very volatile depending on what happens and it will be a case of watch this space to see how investors react to upcoming news over the next few days.

Election aside, last week was a very volatile one with GBP/EUR rates moving between 1.2265 and 1.2470 at mid-market. The movement we saw last week alone would have meant a difference of €2000 between the high and the low on a typical trade of £100,000 to Euros.


Spain Downgraded

Through the week we saw Moody’s downgrade Spain’s rating by three notches to BAA3, one level above junk. The increased debt burden, weakening economy and limited access to capital markets were cited as being the reasons for the downgrade. Moody’s followed on the sentiment of financial markets after the 100 billion-euro bailout of Spanish banks.

Cyprus’s bond rating was lowered by two levels, Moody’s attributed the downgrade to the likelihood of a Greek exit from the euro and the amount of support the government may have to extend to the Cypriot banks. The downgrades show weakness within the Euro zone which in turn drives the rates up and makes it cheaper to buy Euro’s.

Bank of England stimulate economy

As the week progressed, Bank of England Governor Mervyn King unveiled measures to fight Europe’s debt crisis as global policy makers prepared for the impact of the Greek election. The announcement that the case for more UK stimulus is growing, caused the GBP/EUR rate to instantly drop 0.3% when markets opened at 8.00am Friday morning. The GBP/EUR rate soon recovered through morning’s trading.

The Mexico Summit this week will give EU Leaders the opportunity to discuss concerns with the heads of other major economies and should give fuel to increased volatility as the leaders will either agree or disagree on how to combat the escalating Sovereign debt crisis.

So despite the election being out of the way, the future is far from certain. We could well see the Euro weaken more as larger countries such as Spain seek bailouts. Of course the effect the escalating problems in Europe will have on Sterling is impossible to forsee, so all in all nothing has really changed since last week.

To discuss the options available to you, and how the latest news from the EU could affect exchange rates, send me a free enquiry now.


Weekly Economic Data that may affect exchange rates

Monday – Markets will be reacting to the Greek election result, which will likely overshadow fundamental data today. Data is light anyway today, with only some Housing Market Data from the USA. There is of course the G20 meeting this week which may affect rates.

Tuesday – Quite a bit from the UK today including Consumer Confidence Measures, inflation data, House Price info and Retail Sales. Lots that will show how the UK economy is faring so expect Sterling volatility. In the Eurozone we have some Economic Sentiment measures and Construction data. Over in the states we see Housing Starts and Building permits.

Wednesday – Again a very busy day for the UK: Average Earnings, The Bank of England minutes & a raft of unemployment figures. In addition we have the BoE quarterly bulletin. In the EU Germany releases Inflation data. Elsewhere we have some GDP figures from New Zealand, and Interest Rate decision for the USA, and a press conference from the FED.

Thursday – The EcoFin meeting starts today, which looks at the EU economy. We also have Inflation data from the Eurozone and Germany. The only UK release of note is the latest retail sales. In the USA we will see the latest Jobless Claims and unemployment figures, in addition to Homes Sales and a Manufacturing Survey.


Friday – The EcoFin meeting continues, and there is also a summit of EU leaders, which will no doubt be dominated by Greece and the debt crisis. There are no UK releases today, but we do have an assessment of the German economy. To end the week Canada releases Inflation data which could affect the countries future interest rate movements.

Getting the best exchange rates

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you.

It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.

Click here to send me a free enquiry

EU Debt crisis & Pound/Euro forecast

Wednesday 13th June 2012
Good morning everybody. We started the week down in the €1.22’s against the Euro, which was supported by news of Spain’s Bank bailout over the weekend. It was hailed as great news for the Euro, and initially the single currency seemed supported. The spin did not last long however, and soon after markets opened the Euro started to weaken again. By yesterday fears that the crisis that has spread from Greece to Spain is now on the way to Italy and Ireland – this caused the Euro to weaken yet again, pushing rates higher.

In today’s post I’ll have a detailed look at the EU problems, the UK’s exposure to them, and what it all means for the Pound/Euro exchange rate forecast.

EU worries push Pound/Euro close to €1.25

Over the weekend it was announced that Spain became the fourth country in the crisis-torn Eurozone to ask for international aid when it was forced to ask for a bailout to prop up a banking system saddled with £150billion of toxic property loans.

The financial markets initially welcomed the deal but investors soon sounded the alarm over the impact the bailout will have on the country’s mountainous debts. On Monday morning everyone was hailing it as great news for the Euro. Hmmmm.

The initial optimism proved short-lived when the markets started trading in earnest on Monday and Tuesday. The Euro suffered considerably as fears over how the money would be funneled to banks hit sentiment, as questions surrounded the terms of the deal, which will add to Spain’s debt burden.

Indeed Spain's borrowing costs have risen to the highest rate since the launch of the euro in 1999, and also Italy's 10-year bond yield rose to 6.28%, a rate not seen since January, as concerns about its finances rose. The interest rates are seen as unsustainable in the long run for two countries weighed down by huge debts. So there could be more bailouts for other countries.

Crisis Spreading to other countries?

While the Eurozone debt crisis has been a cause of concern for some time, it has so far affected relatively smaller economies such as Greece and Portugal. However, as the crisis spreads to bigger nations such as Spain and Italy, there are fears that growth in the region may slow even further.

Cyprus, which is heavily exposed to Greece, hinted it may become the fifth country in the single currency to need a bailout following the rescues of Greece, Ireland, Portugal and now Spain.

It is this spread that has spooked the markets and caused the Euro to fall in value yesterday, getting close to €1.25. So maybe the bailout wasn’t the ‘great news for the Euro’ that the spin doctors had hoped for on Monday morning. Indeed they are, in my opinion, still simply 'kicking the can down the road' and hoping the problem will go away.

Pound remains vulnerable

Following a string of recent weak UK data, a growing number of analysts think the BoE could opt for another bout of asset purchases under its quantitative easing programme, possibly as early as next month. It remains uncertain whether or not the BoE will opt for further QE.

Although the economy is weak, some policymakers have expressed concern that inflation remains too high. But BoE policymaker Adam Posen struck a dovish tone on Monday, saying the central bank should buy assets other than government bonds in order to boost the UK's ailing economy. I for one think we will see further QE, and in fact the IMF and BoE have hinted as much in recent weeks. More QE would weaken the Pound, and of course if the EU debt crisis continues to spread then it will also affect the Pound due to our exports.

What does all this mean for exchange rates?

They key question everyone wants to know is will the GBP/EUR rate keep going up past €1.25 testing new highs, or will it drop back away again as it has now done several times since hitting the 3.5 year high several weeks ago.

One thing I am certain of is that the Euro will continue to lose value. What is impossible to quantify is how the Pound will fare in the shadow of the EU problems. 50% of our exports go to Europe, and of course our banking industry is heavily tied to the EU, so a further escalation of the crisis could start to affect the Pound.

Couple this unknown quantity with the threat of further QE and there is a strong case to be made for the Pound/Euro rate to struggle to make further gains and indeed drop back away.

Don’t just hope for the best rates; make it happen

With much volatility and conflicting opinions on where markets are headed, it’s more important than ever to know your options, and take advantage of the expert knowledge I can offer you for no cost. I have worked in the FX markets for nearly 10 years and so have a very good knowledge of not only what moves exchange rates, but strategies and tools you can use to help you achieve the best possible exchange rate.

If you need to buy or sell any international currency, send me a free enquiry now to find out what your options are. Everybody’s requirement & attitude to risk is different, but in having a free consultation and gaining full knowledge of all the options available to you, you can make an informed choice on what is best for you.

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