Pound/Euro rates jump to 2 week high of €1.18

Friday 1st November 2013 
Good morning.  It’s only been 2 days since my last post, but things can move very quickly in the currency markets. For most of this week exchange rates have been very stable, however yesterday was saw some significant negative data from the Eurozone that has weakened the Euro and pushed Pound/Euro rates back up. This is what we will look at in today’s report.

Why have Pound/Euro rates jumped to a 2 week high?

This week we’ve moved from a 2 month low to a 2 week high, due to poor data from the Eurozone. So what has caused the surge in rates? The single currency's weakness was caused by a number of factors, and we have seen the single currency fall pushing Pound/Euro rates to their highest in 2 weeks.

Data on Thursday showed euro zone inflation fell to the lowest in 4 years, which increases the chance of an interest rate cut in the EU.  We also saw German retail sales fall by half a percent, against a forecast of gains of half a percent. EU unemployment was also worse than expected, and all of this combined weakened the Euro significantly.

“In light of those inflation numbers, we have changed our call and are now expecting the ECB to cut its main refinance rate at next week's meeting," said Geoffrey Yu, currency strategist at UBS.

ECB about to cut interest rates?

Next Thursday both the Bank of England (BoE) and European Central Bank (ECB) announce their decision on interest rates. I expect the BoE to leave things on hold, but in light of the poor inflation numbers from the EU, there’s now a good chance the ECB could cut the rate.

This is the reason the Pound/Euro rate has risen. An interest rate cut would mean less return for savers and investors in the EU, and so these investors have been selling Euros in anticipation of the cut. This means the cut has now started to be priced into exchange rates, and Pound/Euro has climbed by over 1% as a result.

What does this mean if you are converting Euros to Pounds?

Those that took note in my last post of my suggestion to take advantage of the 2 month EUR/GBP high will be pleased, as it was short lived. Moving forwards, if the ECB do indeed cut rates, we could see the market continue to get worse for you. Some forecasts suggest rates will climb to €1.20 by the end of the year.

Looking for the best Euro to Pound rates? Click here.

What does the latest news mean for those converting Pounds to Euros?
 
It’s good news as we have seen rates rise significantly. We’re now 2 cents below the best it’s been all year. A rate cut in the EU could push things higher, however for the most part this may now be priced in. Next week’s GDP estimate for the UK will also have an impact, as it will indicate whether the UK economy is still growing.

So good GDP and a rate cut could push things higher, but as we’ve seen this week trends can change very quickly. If I needed to buy Euros, I would place a ‘Stop Loss’ order, so if rates drop below a certain level my currency is purchased. In this way, you can still take advantage of further gains should the rate rise further, however have a worst case scenario should rates start to drop again. Stop Loss orders are very useful when markets are moving in a positive direction for you.

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Pound/Dollar rates fall

In contrast to the euro zone, U.S. data was far more encouraging this week. A strong Chicago activity survey strengthened the US Dollar, and the good data means there still may be the case for the Federal Reserve scaling back its QE stimulus programme.

This has boosted the US Dollar, making it more expensive to purchase, and as a result Pound/Dollar rates have dipped back below $1.60 again.

Look for the best Pound/Dollar exchange rates? Click here.

Have a free consultation to help you get the best exchange rates
 
Regardless whether you are buying or selling a foreign currency, market movements such as we have seen this week can have a huge impact on the cost of your currency.

I can offer you a free consultation on your currency requirement, and explain the current trends and forecasts for which way rates will go. This, combined with the excellent rates of exchange I can offer can save you a significant sum on your conversion.

Therefore if you need to get the best exchange rates, why not take advantage of a free consultation with me. Click below to send me a free no obligation enquiry today, and I can get in touch to explain the options available to you. Our rates are up to 5% better than banks can offer, so find out today how much you could save.

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Sterling gains after strong GDP. What's the currency forecast going forwards?

Friday 26th April 2013 

Good afternoon. As I’m sure you have all seen in the news already, the UK has avoided recession and the GDP numbers were a little higher than forecast. This has pushed the Pound higher against other currencies, which will be welcome for those looking to buy currency with Sterling. 

In today’s post I will take a look at the numbers and their effect on exchange rates. I will also look at what may cause rates to fall back away in the coming weeks, and also make the case for further gains. 

In today’s report: 

• UK avoids recession and Pound strengthens 
• Possible ECB Interest Rate cut could weaken Euro 
• US GDP disappoints, weakening the US Dollar 
• Bank of England could resume weakening Sterling
• Case for rates continuing to rise 
• Case for rates dropping back away 
• How to get the best exchange rates 

UK avoids recession, pushing the Pound higher against other currencies. 

The UK economy has avoided falling back into a recession after figures released yesterday surpassed expectations, showing growth in the first three months of the year. The Office for National Statistics said its first estimate for gross domestic product (GDP) showed the economy grew 0.3% during the first quarter of 2013, which Chancellor George Osborne said it was an "encouraging sign". 

Economists say the news should give a small psychological boost to consumers and businesses, but the broader picture of the economy remains the same. Poor growth has already led to two international credit rating agencies stripping the UK of its top-notch triple-A rating. 

As a result, Sterling has strengthened nicely against the Euro, US Dollar and other currencies, and exchange rates are now the best they’ve been since January. 

Want to buy Euros at the best rate? Click here to send me a free enquiry. 

Possible ECB Interest Rate cut could weaken Euro next week 

There is increasing pressure for the European Central Bank to cut interest rates, possibly as soon as next week. German confidence is down, banks are reducing lending, and after the council discussed the possibility of a rate cut last month, data next week will be watched very closely, and the chances of them reducing the rate from 0.75% to 0.5% is now quite high. 

If they do go ahead and cut rates, then I would expect the Euro to weaken, causing it to become cheaper to purchase so we may see an increase in rates should this happen. 

Selling Euros? Click here to find out how to avoid adverse rate movements. 

US GDP disappoints, weakening the US Dollar 

In contrast to the UK’s better than expected GDP, the US economy grew at a slower rate than expected, figures showed today. The US economy grew 2.5% in the first three months of the year, helped by the strongest consumer spending figures in two years. While the growth figure was lower than analysts' expectations, it was better than the 0.4% rate recorded in the final quarter of last year. 

What effect did this have on exchange rates? It weakened the US Dollar, making it cheaper to buy, and the rate rose as a result as you can see from the daily chart. 

Bank of England could resume talking the Pound down to lower rates 

So the question on everyone’s lips now is will rates continue to rise towards and above €1.20? There is no way to predict exchange rates, and of course should UK data continue to be positive, rates may climb further. One risk however is the Bank of England purposefully talking the Pound down. 

In recent months they have taken opportunities to be negative about the UK economy, in order to weaken Sterling. They do not want the exchange rate to be as high as it currently is, as it makes our exports more expensive. Therefore don’t be surprised if the governor Mervyn King talks the Pound down to try to bring exchange rates back towards 1.15. 

Summary – will rates now go up or down? 

As I often say here on my blog, there is no way of second guessing and predicting which direction the market will take. If I knew what the market was going to do, I would be a millionaire! What I can do is explain the case for rates moving each direction, and in doing so help you make an informed decision on when to fix a rate....

Case for rates rising further

The UK is growing at a faster pace than predicted and economic numbers have impressed in recent weeks. Should this continue then we may see the Pound get even stronger. We also have a possible interest rate cut in Europe, which would further weaken the single currency and push rates higher.

Finally, if the debt crisis over in Europe spreads to other countries, the Euro may weaken even more. One or more of the above would likely lead to an increase in exchange rates. 

Case for exchange rates falling back away 

The GDP numbers released recently will be subject to two revisions in the coming months, and so it may transpire that the economy didn’t grow quite as much as 0.3%. We also have the Bank of England who openly want a lower exchange rate, as I outlined above.

Also, should the markets become more confident of progress in Cyprus and elsewhere, we may see the Euro become stronger again, and therefore more expensive to buy. Once again, one or all of the above would likely cause exchange rates to plummet. 

If you need the best exchange rates, click here to find out more. 

How to make the most of your currency and get the best exchange rates, at the best time. 

The first step is to take advantage of a free consultation. You can make a free enquiry by clicking here, and I can then get in touch to discuss your particular requirements, and explain the different options you can consider to protect yourself against adverse rate movements. 

In this way you can make an informed decision on when to fix your rate, and when you want to do this, I can source commercial rates of exchange that are up to 5% better than the banks, so you can save a considerable sum of money in using my services to get a better rate. 

Make your free enquiry now by clicking here.

Weekly Pound/Euro forecast report. Rates are looking good!

Monday 9th July 2012
Good morning everybody. Well, what a difference a week makes - I've been on holiday in Greece for a week, and much has happened in my absence. The Bank of England announced more Quantitative Easing as expected, but surprisingly it had no effect on the market. The interest rate cut in the EU however was a surprise, and has pushed GBP/EUR rates to new 3.5 year highs of €1.26+. I have much to catch up on, so in today's post I'll give a quick overview of what has happened while I've been away.

• UK announce an additional £50bn of Quantitative Easing
• Euro suffers its worst week in a year
• Dollar gains against the pound in light of jobless claims figures
• Round up of the week’s other data that may affect rates

Sterling vs. Euro;

Last week saw a very flat start to week for the GBP/EUR cross with no significant movement in the rates. The market awaited the Bank of England’s decision on whether more Quantitative Easing (QE) will be required and the European Central Banks interest rate decision on Thursday lunchtime.













The Bank of England made the expected decision to print more money and to add another £50bn to the £325bn already agreed previously. The last time Quantitative Easing was announced we saw a large drop in the value of the Pound; this was not the case with Thursday’s announcement.

The pound inched higher as the market awaited the Euro zone rate decision from European Central Bank President Mario Draghi. The policy move by the BoE and the interest rate cut from 1.0% to 0.75% had mostly been priced into the markets. The cut in the Banks deposit rate to 0.0% was unexpected and by the end of the London session the Euro had lost 1 cent against the Pound with the market closing at 1.2530 (mid-market). Decreasing the commercial bank deposit rate to zero is an attempt to try and boost growth within the Euro zone and get bank’s lending to customers or at least one another to bump start struggling economies.

UK manufacturing data surprised investors when it recovered by nearly three points to 48.6, beating even Switzerland's 48.1. Anything under 50 is seen as contraction although it is more the case off being the better of a bad bunch.

Friday saw the release of German Industrial Production figures which were much higher than expected at 1.6%; although the Euro did continue to weaken even further with the high of the day reaching 1.2606 (mid-market) as the deposit rate change seemed to over shadow all other news for the UK and Euro zone.

With the continuing problems across the Euro zone now is the time to get in contact with me to discuss your options and the types on contract you can use to your advantage when the markets are this volatile. The rate move on Thursday alone would have meant a difference of €2000 in a typical trade of £200,000.

The only other news from last week is that I have a nice suntan - 35c every day and not a cloud in the sky. I can highly recommend the Greek Islands for anybody who is not enjoying the British Summer, and the rates are very favourable too due to the issues in the country.

Weekly Economic Data that may affect exchange rates

Monday – A relatively quiet day for data releases but two important speeches, the first from ECB President Mario Draghi, and then MPC committee member Tucker discusses the resent decision to inject more stimulus into the UK economy.

Tuesday – German, French and UK industrial production figures released followed by trade balance figures and manufacturing data in the UK.

Wednesday – A quiet day for the Euro zone but important trade balance data from the US and Canada, followed by minutes from the FED.

Thursday – The monthly ECB bulletin and industrial production data make up the most important releases in the Euro zone, we see unemployment claims in the US which are a good indicator of where the market stands.

Friday – Friday 13th sees no releases from the Euro Zone but some important releases from the US in the form of PPI data, consumer sentiment, and also a speech by Federal Open Market Committee (FOMC) member Lockhart.

Getting the best exchange rates

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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 dips below €1.20 / $1.60 - Interest Rates today

Wednesday 4th April 2012
Good morning. As I have been warning in recent weeks, the levels of €1.20 on the Euro and $1.60 on the US Dollar may not last forever, and indeed yesterday so the Pound fall slightly against both currencies, however upbeat manufacturing and construction data gave some support which limited the drops, as the better than expected data tempered concerns over a lack of growth in Britain's economy.

ECB Interest Rate decision; how could it affect GBP/EUR exchange rates?

Later today we will see the latest EU Central bank decision on whether they will make any changes to the base rate of interest. My forecast is that no monetary policy changes are expected from the European Central bank today. The same is true of the majority of the experts, with the general consensus that it is highly unlikely for the ECB to change interest rates.

45 minutes after the decision however, we have a press conference with ECB president Mario Draghi. In this he gives his opinions on the current state of the economy, and we often see his comments interpreted as an indication of future interest rate moves. So while I don't expect a rate change in the EU today, I will be closely watching the press conference for any hints of future monetary policy.

Some analysts are saying a hawkish message from the bank wouldn't be a surprise, as they need to get back to concentrating on quelling inflation instead of helping Europe's economy and financial system out of crisis may give the euro a brief boost. This could give the Euro strength and push exchange rates further lower. However some investors were still looking to sell the euro as concerns grew about a fragile outlook for the euro zone and high debt levels in Spain.

So, yet again there are views to both sides and so it's impossible to predict what effect today's ECB decision will have on rates.

Will the Bank of England announce more Quantitative Easing today?

I don't think that the BoE will decide to increase its bond purchase program, despite the fact that two of the MPC members called for it at the last meeting. The minutes from the BoE MPC March meeting revealed that David Miles and Adam Posen voted in favor of extending the bond purchase program. Unless there is a very sudden deterioration in the UK economy, I think the central bank will hold off on further stimulus for now.

"Sterling looks like an okay bet for now as most of the bad news for the UK has been priced in," said Geoffrey Yu, currency strategist at UBS. "But I don't think investors are actively (favouring) sterling and in the next few months we think it is likely to head lower."

Sluggish growth in the midst of a strict fiscal austerity programme has already forced the Bank of England into pumping 325 billion pounds of stimulus in the shape of quantitative easing into the economy. Other data from the service sector due this morning will be closely scrutinised for UK growth prospects and could have more of a lasting impact on the pound.

Today's Data

Staring in Australia again today, we see some Trade Balance figures that could affect GBP/AUD rates. In the UK there are PMI figures released which as mentioned above could have an impact on the Pound. Of more importance will be the latest announcement on any Quantitative Easing. The EU also has an interest rate decision today, followed by a press conference. This often causes more volatility than the decision itself, so we will be watching it closely.

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