Sterling continues to fall against the Euro

Wednesday 26th August 2015
Following ‘Black Monday’ there continues to be volatility with Sterling exchange rates. Looking at Sterling/Euro in particular, the recent 8 year highs of €1.44 are now a distant memory. Rates have plunged in the last few weeks, and despite recovering a little yesterday, it fell again last night at is now stable around the €1.36 level as you can see from the chart below:

Further volatility expected on currency markets 

This all began Monday when a global rout in the stock markets was prompted by a huge share sell off in China. Fears of a global slowdown intensified in recent days after China devalued its currency and data pointed to further signs of weakness, triggering volatility in global stock and currency markets. 

Interest Rates 

China cut its interest rates this week in an effort to avert disaster, and investors are now questioning whether the Federal Reserve in the USA and the Bank of England in the UK can change interest rates. Much of the Pound’s strength in recent months was on expectations interest rates would rise later this year. Even the recent Bank of England inflation report gave investors’ confidence rates would rise within 6 months, boosting the value of Sterling. However with the latest global developments, it’s now likely to be late next year, or even 2017 before rates rise from their current 0.5%. As a result the Pound has weakened. 

Experts expect market volatility to continue until at least next month when the USA decides what to do on interest rates. Just a few weeks ago, most thought they would raise their interest rate, but now it’s more likely up to a year away. 

Safe Haven Currencies 

An unlikely benefactor of the recent turmoil has been the Euro. Now that Greece is out of the news following an agreement to provide an €86bn bailout, the Euro has gained strength as I had predicted it would do for some time. Their stimulus programme seems to be working, and actually the EU economy is looking more and more robust. This has meant that due to the global turmoil, investors view the single currency as a safe place to park their funds while avoiding stock market turmoil and this strength is also a factor in the GBP/EUR rate falling away sharply. 

Do you have a currency transaction to perform? 

If you have a foreign exchange need in the next 6 months, then the current volatility should be of concern and you should take steps explore all the options available to you. You can get in touch with me by clicking here, to get a quote and find out about how you can protect yourself against adverse market movements. 

Whether you are buying or selling property abroad, a business that deals in foreign currencies, or simply need to top up a foreign bank account, I can help. I have been a currency broker helping private and business clients get better rates than their banks or existing brokers offer for more than 10 years. 

Get in touch today for free, have a brief chat, and get a quote on your exchange to see how much you could save. 

Alastair Archbold

Pound/Euro starts to plummets as election uncertainty takes hold

Thursday 2nd April 2015
Since my post a few days ago, we have seen the general downward trend in Sterling/Euro rates resume, falling from €1.38+ to €1.36 in the last couple of days. As the chart below shows, in the last 3 weeks alone the Pound has lost nearly 5% against the Euro: 

Economic data from the UK has actually been quite good! Growth has been revised up, manufacturing has picked up, and the UK is now the fastest growing major western economy. Despite this, it looks like the Pound is going to drop further against the Euro. 

The main reason as I’ve touched on a few times in the last few weeks is the general election. The latest polls suggest a hung parliament and it was this that was the catalyst for the drop earlier in the week. If we cast our minds back to last year’s Scottish referendum, the uncertainty that created pulled Sterling significantly lower against other currencies. The election is likely to have the same effect, and it could potentially be a much greater one. Tonight will also be interesting with the televised debate for 7 leaders, and could also cause the pound to come under pressure. 

Nearly every forecast I’m reading suggests a drop. As an overall majority is highly unlikely, this uncertainty is likely to continue for at least several weeks after the election, which means a very volatile couple of months for the Pound. 

When is the best time to buy Euros? 

If you have Euros to buy in the next 6 months, then you’re still doing very well. Yes the rate has dropped from the recent 8 year high, but the rate is still very good indeed and around 10 cents higher than the start of the year. 

If you need to buy Euros then you can lock in the current rate for up to 2 years by lodging 10% of the Sterling you want to convert. You are then protected against further declines in the rate and know exactly where you are. 

To discuss this or any other Euro purchase we can help you with, click here to make an enquiry. 

When should you sell Euros back to Pounds? 

If you need to convert funds back to Pounds, perhaps from a property sale overseas, then there is every chance the rate could get better for you as the Pound gets weaker. You should just hope this is the case though. 

You can utilise what’s called a Stop Loss order, which means if the market moves against you your rate is fixed at a pre-agreed level, while still allowing you to take advantage of any gains in the market.  

To discuss this or get a quote for your exchange, click here. 

Getting the best Exchange rates 

I work for one of the UK’s leading Foreign Exchange Brokerages; one of the few to be granted an e-money licence from the FCA, which gives you significantly more protection than a firm that is simply authorised by them. Clients that have contacted me directly from this blog over the last 6 years have now converted over £350m Sterling, and saved around 2 to 3% compared to their bank/existing broker. 

I can trade over 35 currency pairs on a bank to bank basis for both private and business clients. We also have segregated client accounts, so you can trade with us safe in the knowledge your funds are very safe and secure. 

If you need the best rates, are converting over £5k and needs funds wired to a bank account, then it is certainly worth getting in touch to see what rate I can offer you. It costs nothing to get in touch for a quote and you will likely be pleasantly surprised how much I can save you by getting you a better rate. I can also talk over various options and strategies you can consider so you can take control over your requirement. Don’t simply sit back and hope an exchange rate will get to a particular level; hope is not a reliable economic tool. Take advantage of my 15 years of experience in Financial Services today. 

Click here to send me a free no obligation enquiry. 

We will be closed over the Bank Holiday weekend, and will be back in action on Tuesday. Enjoy the break!