Pound gains on strong data, but spike is shortlived

Thursday 10th April 2014 
Good afternoon. It’s been a busy week since my last post on Monday, and we’ve seen a raft of impressive UK data that caused Sterling exchange rates to rise nicely. We saw the GBP/EUR rate hit around €1.2150 and the GBP/USD rate as high as $1.6820; however in trading today we have already seen rates start to slide back away. 

In today’s post I will explain in detail why the figures caused Sterling to rise, and ways in which you can take advantage of spikes like this, which are often very short lived and hard to catch! 

UK manufacturing figures cause Sterling to rise 

On Tuesday we saw the latest UK manufacturing figures released. Analysts were expecting the figure to show output growing by 0.3%, but in fact output grew by 1%! As the figure was much better than expected, and as you can see in the chart above the Pound spiked hitting as high as €1.2150. 

Output now stands at its highest level in more than 2.5 years, and is a sign the UK economic revival is quote strong. 

UK Growth forecasts also good for the Pound 

Also this week we saw the International Monetary Fund (IMF) says the UK economy will be the fastest-growing in the G7 this year. It said that the UK will grow by nearly 3% this year. So this is quite an upbeat forecast for the UK and helped Sterling gain against other currencies. Only 12 months ago, the IMF forecast 1.5% growth for this year, illustrating how good things are at the moment. 

Pound’s gains are short-lived 

As is often the case in the currency markets, a sudden rise in the exchange rate can often be very short-lived, and indeed the chart above shows how things have now tailed off, with Pound/Euro back just below €1.21. This is partly due to profit taking, as so many worldwide investors flock to take advantage of the gains, the flurry of buying pulls the rate lower again. 

The rate has been getting to these sorts of levels many times this year, only to drop back away again. I expect this trend to continue. In order to take advantage of spikes in the market without watching the rate 24/7, you need to have a good currency broker on your side. If you need to convert one currency to another and targeting a specific rate, then I can monitor the market for you and let you know if your target rate becomes available. Click to here to find about more about the kind of services I offer. 

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Will the Pound go back up against the Euro 2014?

Monday 10th February 2014 
Good afternoon. It’s been a very quiet start to the week, with no significant data releases, and so exchange rates haven’t varied much today. 

Sterling/Euro remains a little above €1.20 and Pound/Dollar sits at $1.64. Other currencies such as the Australian Dollar (AUD), New Zealand Dollar (NZD), and South African Rand (ZAR) etc. are still very cheap to buy, following a weakening of many of the world’s emerging economies.

This week will be key for how the Pound/Euro rate in particular performs over the coming weeks and months, as we have key data from the Bank of England (BoE) and European Central Bank (ECB). 

Below I have listed all this week’s data that I think will have an effect on exchange rate. To discuss your particular currency requirement, and how economic data could affect your rate, click below to send me a free enquiry. I can explain the options, discuss which way the market may go, and provide you a quote that could be up to 5% better than your bank or existing broker will offer you. 

Click here to make a free enquiry now. 

This weeks economic data releases that could affect exchange rates

Monday 10th February 2014 

It has been very quiet today, with the only release of note Investor confidence data from the Eurozone. Despite this being a little better than expected, it hasn’t had any effect on exchange rates. 

Tuesday 11th February 2014 

Today will probably also be quite quiet as there are no EU or UK releases of any interest. Over in the USA however, we have a speech by the new FED chief Janet Yellen. It will be interesting to see if her approach differs from her predecessor, and any hints on what direction she will take with the economy could be reflected in GBP/USD rates 

Wednesday 12th February 2014 

I think today is the most important of the week for exchange rates. In the UK we will see the Bank of England governor Mark Carney deliver the BoE’s quarterly inflation report. The recent strength of the Pound has been on the back of good data increasing the chance of an interest rate hike. I think he will use his speech to clarify their ‘Forward Guidance’ policy. If he hints rates will not rise soon, expect the Pound to fall in value. 

We also have the ECB president giving a speech at 15:30pm, and again his comments on inflation and interest rates could change the value of the Euro. So all in all it’s likely to be quite a volatile day for Sterling/Euro rates. 

Thursday 13th February 2014 

Today is quiet in the UK, but we do have some important data from elsewhere. The ECB releases its monthly report, and Germany has a raft of inflation numbers. In Australia, we have the latest unemployment figures that could affect GBP/AUD. 

Over in the states at lunchtime we also have Jobless numbers, along with their latest Retail Sales numbers and another speech by FED chief Janet Yellen. 

Friday 14th February 2014 

Europe releases GDP figures for Germany, France and the EU as a whole today. This will give investors a good idea how the economy is faring, so bad news could cause the Euro to weaken. We end the week with Industrial Manufacturing data from the United States. 

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