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. 

Click here to send me a free enquiry now. 

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

Alastair Archbold

Pound remains at €1.19 vs Euro, near 8 month high

Tuesday 17th September 2013 
Good afternoon. Sterling remains strong, however has failed to rise significantly above the €1.19 level against the Euro. GBP/EUR rates remain around the best since January. The Pound has however hit an 8 month high against the US Dollar after Lawrence Summers, perceived by the market as more likely to favour a quick scaling back of monetary stimulus, pulled out from the race to be the next Fed chief. So in today’s report: 

• UK inflation drops weakening Pound 
• Pound/Euro remains close to best it’s been since January 
• US Fed member drops out of race to be FED chief, weakening US Dollar 
• German Economic figures better than expected, weakening Euro. 
• UK Retail Sales and BoE Minutes this week expected to affect Pound 
• How to get the best exchange rates 

UK inflation drops weakening Pound 
 

Figures this morning showed a slight fall in inflation, which has pulled the Pound lower. Inflation measured by the consumer prices index (CPI) fell to 2.7% in the year to August, from 2.8% in July. 

CPI is important because it is the measure targeted by the Bank of England's interest rate-setters, while the RPI is used for annual adjustments in some benefits and rail fares. The Bank targets CPI inflation of 2%, but is currently holding off raising interest rates to control inflation because the unemployment rate is too high. 

A high figure usually strengthens the Pound, and because the number was slightly lower than expected the Pound weakened slightly, pulling down exchange rates. 

Find out more about our exchange rates

German Economic figures better than expected, weakening Euro. 

 Also pulling GBP/EUR rates down was better than expected numbers from Germany. Economic sentiment is better than analysts had been predicting, and so this gave the Euro strength, making it more expensive. As a result we have seen GBP/EUR rates fall slightly. 

Pound/Euro remains at a good level 

As you can see from the chart, the Pound/Euro rate remains close to the best it’s been since January. It’s been at this level for a week or two now, and for a few days it rose above the €1.19 level, however the figures mentioned above have pulled it back to €1.19 again. 

 
This is a very good buying level, but seems to have levelled off and we haven’t seen any significant gains. The main thing that I think will move the rates next will be tomorrow’s minutes from the Bank of England, and UK Retail Sales on Thursday. 

Tomorrow the BoE will release its minutes, showing how the members voted at their recent decision to keep interest rates and QE on hold. They will be interesting because it will show what was discussed, and could indicate future decisions on QE and interest rates. If there are any indications any of the members wanted more QE, we may see the Pound fall. 

Retail Sales on Thursday are important as they are a good barometer of overall economic activity. I expect the figures to show a month on month gain of 0.5%. If the actual figure is higher than this, then expect exchange rates to rise. If the number is lower, then we will probably see the Pound fall in value. 

If you are looking for the best exchange rates, click here to get a free quote.

US Fed member drops out of race to be FED chief, weakening US Dollar 

The Pound rose to an 8 month high against the US Dollar earlier this week, after Lawrence Summers, perceived by the market as more likely to favour a quick scaling back of monetary stimulus, pulled out from the race to be the next Fed chief. The dollar fell broadly as it means it will probably be Janet Yellen that takes over the next chair of the Federal Reserve - she is expected to rapidly reduce U.S. bond-buying. This meant the US Dollar weakened, became cheaper to purchase, and GBP/USD rates rose. 

Due to the poor inflation numbers today however, we’ve seen the rate drop back away. 

Are you looking for the best exchange rates? 

I update this blog to keep my existing and potential clients abreast of what is happening with exchange rates. If you need to convert Pounds into another currency, or indeed move a foreign currency back into Sterling, I can help you achieve the best possible exchange rates. 

The rates I can achieve are up to 5% better than banks can offer, so if you are buying or selling property abroad, need to top up your Euro account, or need to pay for goods or services in a foreign currency, why not find out what rates I can offer. 

• You can send me a free enquiry now by clicking here. 
• You can email me directly by clicking here. 
• You can call me directly on +44 (0) 1442 892 066 

When you get in touch, ask for Alastair Archbold and quote the reference ‘AJA’ to receive reduced transfer costs. 

I look forward to hearing from you.

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.

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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

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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/Euro exchange rate forecast/outlook

Monday 23rd July 2012
Good morning. It appears the jet stream has shifted to bring some warm weather to the UK at long last, however one thing that has not shifted is the resilience of the UK pound against the Euro, which surged to new 4 year highs last week, touching €1.2870 at one point. In today's report I will give a detailed overview of the Sterling/Euro exchange rate forecast, and analyse whether rates will get higher or not.


Sterling vs. Euro;

Below is a graph spanning the last four years showing the journey that sterling has gone on to reach the point we are at today.












In the past nine months, sterling has strengthened by 12% against the Euro and the culmination of this movement was felt last Friday when the mid-market price hit €1.2858. This meant that we were back at levels not seen since the middle of 2008, which was just before the pound’s decline to near parity with the Euro.

So what has caused the rise in rates?

There has been a constant threat of collapse in the Euro zone for a while now and endless problems with Greece, Italy, Portugal, Ireland and Spain have contributed to the fact that investors refuse to back the beleaguered single currency.

Spain was caught up in the latest drama last Friday with news that finance ministers in the Euro zone will soon need to approve a deal to lend up to 100bn Euros to Spain so that it can re-capitalise its banks. Investors continue to worry about Spain's financial health which is pushing its borrowing costs higher. There are also fresh signs in Spain of public opposition against the demands being imposed on the country by Euro zone leaders, with more than a week of violent demonstrations and the very real threat of contagion spreading throughout the country and potentially spilling over into neighbouring nations.


So the UK economy is faring well then?

The problems in the Euro zone are well documented, but it is not like the British pound is without its issues. For example the UK government borrowed more than expected in June, leading some analysts to question whether it will meet its deficit reduction target this year. Last Thursday, the International Monetary Fund (IMF) said the government should slow the pace of budget cuts next year if growth does not recover and earlier last week Prime Minister David Cameron admitted that austerity measures may have to last until 2020.

The IMF and Bank of England continue to warn that interest rate cuts may be necessary in the UK, so while rates may keep going up due to the UK debt crisis, it's by no means a given.

So with this in mind it is a surprise to see Sterling sitting at such a high against the Euro. It is argued that this cannot last forever and there are murmurs from market analysts that there will soon be a shift in rates. The pound may continue to make further gains against the Euro but it is hard to believe that the Bank of England will let things continue like they are because it makes UK exports so expensive and ultimately an unattractive option.

The chart below shows the cost of a €200,000 property abroad over the last 4 years, and you can see that it has become much more affordable. To ensure you don't lose out on the current rates, get in touch with us today.











With so many conflicting opinions on where markets are headed, it’s more important than ever to know your options, and take advantage of the knowledge we can offer you at the Foremost Currency Group. We have an expert understanding of not only what moves exchange rates, but strategies and tools you can use to help you achieve the best possible exchange rate.

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Weekly Economic Data that may affect exchange rates

Monday – The only UK data of note today is the Nationwide Housing Prices. Elsewhere we have some inflation data from Australia, and some Consumer Confidence from the United States.

Tuesday – It’s quiet again for the UK today with UK Mortgage Approvals the only data of note. It’s busy in Europe however with various data including Manufacturing, Services, Inflation data, and a Spanish bond Auction.

Wednesday – Nothing of note from Europe or the UK today. Stateside we have housing prices and manufacturing data. New Zealand releases its trade balance data showing imports and exports.

Thursday – We finally get going with some UK data today with the latest GDP figures being released at 9.30. The Eurozone has some consumer confidence figures, along with German assessment of the current business climate. Over in the USA we see home sales and mortgage approvals. Lastly, New Zealand has an interest rate decision at 10pm UK time.

Friday – The EcoFin meeting is in Europe today, which could give further clues on the direction of the debt crisis. Also in Europe are some confidence numbers from Germany. At lunchtime we see jobless claims and home sales from the United States.

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