Sterling/Euro drops below €1.20

Wednesday 12th March 2014 
The Pound/Euro exchange rate has continued to fall since my post last week, and has fallen below the €1.20 level for the first time this year. Several weeks ago I warned that there was a good chance the rate was about to drop, and that is what we have seen. 

In today’s post I will analyse the reasons for the drop, go over what options are available to protect against rates moving against you, and look at what other economic data is due this week that could affect rates. 

Pound/Euro drops below €1.20

For the first time this year, GBP/EUR rates have fallen back into the €1.19’s. Only a few weeks ago we were at highs of €1.22+. The rate started to decline last week when the ECB president Mario Draghi gave a very positive press conference about the Eurozone economy, as I outlined in a recent post. 

Since then, industrial production figures from the UK and EU have caused the exchange rate to drop further. The UK released its figures yesterday, and as the number was worse than expected Sterling fell in value. This morning the EU released its industrial production figures, and they were better than expected. This caused the Euro to rise in value and become more expensive to buy, and that’s the reason GBP/EUR rates have dipped into the €1.19’s. This is the lowest it has been all year:

Will rates drop further, or bounce back? 

It’s impossible to predict of course, but my view is in the medium term we will see rates climb back above €1.20 again within a month or two. For those that need to buy Euros, much depends on how much time you have to play with. If you need to secure your currency soon, it may be wise to fix a rate sooner rather than later to protect against it dropping any further. 

If you have some time to play with, then you could gamble on rates recovering, however it is always wise to place a ‘Stop Loss’ order to protect you against rates dropping further. If you need to convert Euros back to Pounds, then the current levels are the best they’ve been all year. I do believe we will see the rate in the mid €1.20’s again later this year, so those with a EUR/GBP requirement may wish to lock in a rate sooner rather than later while we have seen a move in your favour. 

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What could affect exchange rates this week? 

Pound/Euro - Other than the Industrial Production data I mentioned above, it’s been a very quiet week for data releases so far. Tomorrow (Thursday) should be a little more interesting with a BoE inflation report and House price data for the UK. Strong numbers could push rates above €1.20 again. We also have various inflation figures from the Eurozone tomorrow – if low, then the Euro could weaken off which would also cause rates to rise. Friday see’s UK Trade Balance data, and the latest Employment numbers from the EU. 

Pound/US Dollar – In addition to the UK data mentioned above, the US releases Jobless data, Trade Balance numbers and Retail Sales on Thursday, along with inflationary numbers on Friday. These figures could affect the GBP/USD rate. 

Pound/Australian Dollar – We will see the latest Australian Employment figures overnight. The GBP/AUD is very attractive at the moment, and if the figures are better than expected, we could see a slight dent in the Pound/Aussie rate. 

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What goes up must come down...

Friday 10th January 2013 
Well, as is often the case in the currency markets, spikes are short lived and the gains we saw yesterday against the Euro have been eroded. In today’s post I’m going to have a look at what has happened this week with Pound/Euro rates, Pound/US Dollar rates, and Pound/Australian Dollar rates. I'll also take a look at where the rates have been historically, and what may happen during 2014.

If you find my blog useful, then feel free to get in touch with me by clicking here. I can offer you a free consultation on what’s happening with exchange rates to help you make an informed choice on when to fix your rate. In addition to taking advantage of my market knowledge, I can give you a quote for your exchange that could be up to 5% better than your bank or existing broker. 

First things first, let’s see what’s been happening with exchange rates this week. 

Pound/Euro 

The rate is around the best it’s been in 12 months. The ECB meeting yesterday that I touched on in yesterday’s post, caused rates to hit €1.2150. As I explained in my brief post yesterday, the fact that the ECB hinted at lower interest rates significantly weakened the Euro, and this made it cheaper to buy, pushing rates to the mid €1.21’s. 

It was not to last however. This morning we saw some disappointing industrial and manufacturing production figures that were well below forecast. The result was a weakening of the Pound/Euro rate back to where we started the week! 

During the last week though, the fluctuations mean converting £150k netted you a Euro amount differing by up to €2500.00, illustrating that getting your timing right can make a huge difference. 

Pound/US Dollar 

Exchange rates to buy US Dollars are close to a 4 year high. The poor UK data this morning, as I outlined in the Euro section above, pulled rates from 1.65 down to 1.64. 

However this afternoon we had some extremely low jobs numbers from the states. Analysts thought nearly 200,000 new jobs would be created, but in fact it was only 74,000. As the number was way lower than expected, the Dollar weakened and pushed the GBP/USD rate back up to 1.65 again. 

Pound/Australian Dollar 

Exchange rates to buy Australian Dollars are currently the best they have been in over 4 years. Remarkably, this time last year the GBP/AUD rate was the worst it has been in decades. This was because the AUD was very strong, Australia avoided recession and China import huge amounts of raw materials from Australia and so this gave the currency support and making it expensive. That all changed 6 months ago and the rate is now the best in over 4 years! 

This is in part due to the UK recovering, so the Pound is strong. I think it's more to do with China though - their growth has slowed massively, so less demand for raw goods from Australia, this in turn has significantly weakened the Aussie and has made it very cheap to buy indeed. 

I think it's going to continue to be china that drives the rate - if their economy starts growing at a ridiculous pace again, then we'll see the rate drop back away. 

To put it in perspective, converting £150k to AUD is netting you nearly $60,000 more than beginning of last year, which is quite amazing really when you think about the fact rates were at the lowest in 30 years 6 months ago. 

Summary 

So there we go, and that’s my view on some of the major currency pairs. If you are looking for the best exchange rates, want to discuss which way the market may go, or simply want to get a quote on the exchange rate I can offer you, then click below to send me a free no obligation enquiry. 

I’ll be back on Monday with a breakdown of how next week’s economic figures might affect exchange rates. 

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Alastair Archbold

This will be an important week for Sterling...

Monday 16th December 2013
Good afternoon. It's been a quiet start to the week, and since my last post Pound/Euro rates remain in the mid €1.18's, and Pound/Dollar rates around $1.63. This week will be key to whether rates continue dropping as they have in the last week, or resume the trend of the last few months which has seen the Pound rise against other currencies.

Sterling has been one of the currency market's surprises since the summer, having risen consistently over the last 6 months. As I've been explaining over the last few weeks, really impressive economic data has strengthened the Pound, and it's also been helped by the view that interest rates may rise earlier than previously expected. 

This week in my view will be key to the direction Sterling takes over the next month, as we have some key economic data releases including inflation data on Tuesday, and minutes from the Bank of England's Monetary Policy Committee and jobless data on Wednesday, followed by Gross Domestic Product figures on Friday.

So in today's post I'm going to list all the things to look out for which may cause volatility in exchange rates this week. 

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This weeks economic data releases that may affect exchange rates

Monday 16th December

This morning we saw EU Manufacturing and inflation numbers, which were better than expected. This caused the Euro to strengthen and pulled GBP/EUR rates lower. 

This afternoon we have Speech by the European Central Bank president Mario Draghi, which may cause further volatility in Euro rates. 

Tuesday 17th December

Starting in Australian we have the RBA minutes and a speech which may cause changes in GBP/AUD rates. Closer to home, at 09:30am we have a raft of inflation data. This is linked to future interest rate movements so could change Sterling’s value. 

In the Eurozone we also have a raft of inflation numbers in addition to some surveys that look at Economic Sentiment. Over in the States we have more inflation numbers and house price data. 

Wednesday 18th December

This is the key day for the Pound. At 09:30am we have the minutes to the recent decision by the Bank of England to hold interest rates and Quantitative Easing. The minutes show what was discussed and often cause exchange rates to fluctuate. We also have the latest unemployment figures. This is key as future interest rate movements have been linked to a drop in Unemployment figures, so if the number is any lower than 7.6% expect the Pound to make gains, and vice versa. 

The rest of today’s data is from the USA – Building Permits, Mortgage Approvals, an Interest Rate decision, and economic projections from the FED. So all in all, a key day for both GBP/EUR and GBP/USD exchange rates. 

Thursday 19th December

UK data today is Retail Sales. This is seen as a good overall barometer of economic activity so it could be another choppy day for Sterling. There are no EU releases of any significance, but over in the USA in the afternoon we do have Jobless Numbers, and Home Sales figures. 

Friday 20th December

Another very important day for the Pound. We have a measure of consumer confidence, but I think the main event will be the latest Gross Domestic Product figures released at 09:30am. GDP is considered as a broad measure of the UK economic activity. This is key as it will indicate whether the UK recovery is sustained, so could push rates higher or lower depending if the number is higher or lower than the expected +0.8%. 

Elsewhere, GDP numbers from the states are released at 13:30pm, and a Consumer Confidence measure for the Eurozone at 3pm. 

Looking for the best exchange rates? Make a free enquiry today

If you are looking for the best exchange rates, and would like to discuss how the above data could affect the exchange rate you're interested in, then send me a free enquiry today. I offer a free consultation service where I can discuss your particular requirements, and explain what could move the rate for or against you. This can help you to decide when to fix an exchange rate. 

In addition to taking advantage of my market knowledge, I can also help you source excellent commercial exchange rates, that are up to 5% better than banks can offer.

If you have a requirement to convert a large volume of funds, the savings can be considerable. Find out how much you could save by clicking below and sending me a free enquiry now. 

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Sterling hits €1.21 but falls back away....

Monday 2nd December 2013 
Good afternoon. Well in my post late on Friday I highlighted the spike in Pound/Euro rates. This actually continued over the weekend, and when I arrived on the trading floor at 08:00am this morning mid-market levels were at an astonishing €1.2100, which is a remarkable run for this currency pair. The question is, will it last...?

Pound/Euro sustained above €1.20, for now...

As you can see from the chart showing todays movements, the market opened at €1.21. The levels were not to be sustained for long however, and throughout the day we saw the Pounds gains becoming eroded, and exchange rates have slipped away throughout the day. 

 

The market is still above the €1.20 mark however. The fact it has broken through this level has surprised many in the market, myself included, who did not expect rates to break €1.20 this year. I did however state in a recent post  that while I didn’t expect it to break through €1.20, if it did it would likely continue rising significantly above it, and that’s what we have seen happen.

What will happen moving forwards depends on this week’s economic data releases. Now levels are above €1.20 I expect them to be supported at that level, unless we get any suprises with the week's economic data.

In today’s post I’ll simply give a brief outline of different strategies you can consider if you are converting foreign currency and need the best rates. In tomorrow’s post, I’ll list the week’s economic data releases that I think will affect exchange rates this week. 

Click here to have a free consultation for your requirement.  

Do you need to buy Euros at the best rates? 

Rates are very good indeed, and the best they’ve been since January; however seem to rise before dropping back away.

If I needed Euros I would place a Stop Loss order to fix a rate should it drop below a pre-agreed level. This means if rates continue to rise you can still take advantage of further gains, but not risk losing out on the 5% gain in rates we have seen in recent months. 


Click here to get a Pound/Euro quote

Perhaps you want to maximise a Euro to Pound transfer?

Rates have been steadily moving against you. It’s impossible to predict where things will go, so in the current climate a Stop Loss again is a very useful tool. 

This fixes your rate if it gets worse than a pre-agreed rate that you can decide, giving you some control over currency markets which are very volatile. 

I can also source Limit Orders, Forward Contracts, and Spot contracts at rates significantly better than banks and other financial institutions. 

Click here to get quote for selling Euros

Other Currencies 

Sterling is currently at the best level in many years against lots of major currencies, including the US Dollar, Euro, and also the antipodean currencies such as the Australian Dollar and New Zealand Dollar. 

If you are looking for the best exchange rates for any major currency, or have a foreign currency you want to convert back to Sterling, then I can help you. 

In addition to the rates I can source that are up to 5% better than the banks, I have extensive knowledge of the currency markets, and various contract types that can protect you against rates moving the wrong way, and help you to budget. Very useful if you are buying or selling property abroad, or buy and sell goods in the Eurozone for example. 

Click here to send me a free no obligation enquiry today. 

I look forward to hearing from you.

Alastair Archbold