How to get the best Pound/Euro exchange rates

Wednesday 21st August 2013 
Good afternoon everybody. Pound/Euro rates have steadied since my last post, and remain a little above the €1.17 level. Against the Dollar, Sterling sits just under $1.57. This is around 2 month highs in both cases. In today’s post I will look at how recent economic releases have affected exchange rates, and whether Pound/Euro rates are likely to go up or down in the coming weeks. In today’s report: 

• UK Public Sector borrowing worse than expected, but Pound remains strong
• Greece may need another bailout, how would this affect GBP/EUR? 
• Growth forecasts are increased for the UK, supporting Sterling 
• US Fed minutes this evening may affect exchange rates 
• Getting the best exchange rates

UK borrowing disappoints, but Pound remains strong

I’m going to start in the UK today. This morning we saw the latest Public Sector borrowing figures, and they were actually quite a bit worse than expected. Despite the numbers disappointing, Sterling has not weakened, and in fact has risen slightly against the Euro. 

This is partly due to the fact the data remains subject to revision. For example, the £823m surplus recorded in July last year was originally reported as a deficit, so the markets haven’t taken much notice of the numbers. 

Indeed financial analysts played down the importance of the figure, with many saying they still expected to see steady improvement in the government's finances over the rest of the year, as the economy continued to recover. So due to this, the data did little to take the steam out of rally that has seen sterling rise 3% against the dollar and 2.3% against the euro this month, driven by improving UK economic data that has suggested interest rates may rise sooner than the Bank of England has indicated. 

Britain is doing quite well. The economy grew 0.6% in the second quarter of this year, up from a 0.3% rate during the previous three months, with the faster pace expected by economists to continue into the autumn. Also helping the Pound is he CBI business lobby group, which has increased its forecast for UK economic growth for 2013 from 1% to 1.2%. 

It also increased its forecast growth for 2014, from 2% to 2.3%, saying that the forward guidance on interest rates recently given by new Bank of England governor Mark Carney should add to positive sentiment. 

"The economy has started to gain momentum and confidence is picking up, but it's still early days," said CBI director-general John Cridland. 

Recent figures and surveys have shown activity in manufacturing, services, construction and the housing sectors all gathering pace. The most recent official figures for the UK economy from the Office for National Statistics showed it grew by 0.6% in the three months to June. The figure means that the economy has now recouped more than half the 7.2% of output lost in the 2008-09 recession. 

So all in all, things are looking much better for Sterling than they have of late. If you look at the chart showing GBP/EUR rates over the last 3 months, you can see the decline has been reversed, and exchange rates are looking much better for those that need to buy Euros. 

Looking for the best exchange rates for Euros? Click here. 

Another Greek Bailout on the cards?

Over in the Eurozone, debate about whether Greece will need another bailout has intensified, after the EU's economic and monetary commissioner declined to rule it out. Greece has received two bailouts totalling about 240bn euros (£205bn). A condition of the current bailout deal is that Greece makes cutbacks and restructures its economy. 

Yesterday Germany's Finance Minister, Wolfgang Schaeuble, said: "There will have to be another programme in Greece." The Euro weakened a little, but not too much because the news is not a surprise. Economists have long predicted a third rescue package for Greece, which is struggling to control its mounting debt burden as the economy shrinks under tough austerity measures. 

US FOMC minutes this evening 

The next main data release that will affect exchange rates is the latest FOMC minutes which are released this evening. Investors braced for a U.S. Federal Reserve report which may shed light on when it will trim its QE stimulus policy. 

Confirmation that the Federal Open Market Committee is veering towards slowing its bond buying programme in September could see strengthen the Dollar, which would probably cause GBP/USD rates to drop, however if we see a more cautious approach by the Fed, I would expect to see the US Dollar weaken, pushing GBP/USD rates higher. 

It will likely affect other currencies such as GBP/EUR, as sentiment towards the US Dollar often drives other currency pairs due to its safe haven status.

Do you want to get the best exchange rates? 

Hopefully my blog is a useful resource for those that are keen to know what moves exchange rates, in order to help decide when to fix an exchange rate. I have been a commercial foreign exchange broker for 8 years, and have a very detailed knowledge of the currency markets. 

I currently work for one of the UK’s leading foreign exchange brokerages, and the rates I can source are up to 5% better than banks of other brokers can offer. 

• So, are you looking for the best exchange rates?
• Keen to know when to buy your currency? 
• Worried about rates moving against you? 
• Want to know what your options are? 
• Unsure how data releases may affect your exchange rate? 

If you have considered any of the above, then I think you would find a free consultation with me very useful indeed. It’s free and carries no obligation at all, and simply means you can discuss your requirements with an expert. In this way you can learn about all the options available to you and make an informed choice on when to fix your rate. 

And of course when you decide to do this, the rates you can achieve using my services could save you thousands of Pounds. 

Make your free enquiry with me now by clicking here. 

I look forward to hearing from you.

Pound/Euro rates falling. December forecast

Wednesday 21st November 2012 

Good morning. In today’s post I’m going to look at the developments so far this week that have affected exchange rates, including the Bank of England minutes, UK public sector borrowing, The latest on the Greek bailout, and the downgrading of Frances Credit rating. Of course I will also take a view on how this could affect exchange rates in the coming weeks and months. Let’s start in the UK. 

Bank of England minutes 

This morning the Bank of England released the minutes from the latest decision to hold off any more Quantitative Easing (QE) and leave interest rates on hold.

There were no real surprises; only one member voted for QE, so the vote was split 8-1. 

This indicates there is less chance of further stimulus in December, however many think it’s only a matter of time before more funds are needed, so I think depending on economic figures, we could see further QE in January. If so, then expect the Pound to weaken if it starts to look more likely stimulus will be needed. The decision to leave interest rates at 0.5% was unanimous. 

Public Sector borrowing increases 

The Pound hasn’t fared very well this morning though, falling half a point so far from the open this morning. One reason is the news that the government borrowed much more than expected in October, reducing the chances that the UK will hit its deficit reduction target in 2012-13. 

UK public sector net borrowing hit £8.6bn in October, which is a blow to the government as they were hoping that the deficit would fall by around 5%. At the moment this is moving in the wrong direction, and this is causing the Pound to lose out to other currencies, pulling exchange rates down. 

No Greek deal – what does this mean for Euro? 

Over in the Eurozone, the main concern continues to be Greece. They have failed to reach a deal to give Greece its latest bailout payment, and this threatens the whole bloc, leaders have said. Following nearly 12 hours of talks in Brussels, the Eurogroup said it needed more time for technical work. Greece needs the next tranche of its second bailout worth 130bn euros ($166bn; £104bn) to avoid insolvency. 

The Eurozone "would be threatened if we did not reach" a deal, French Finance Minister Pierre Moscovici said, before adding that "we are very close to a deal." The news initially caused some weakness in the Euro, pushing exchange rates up slightly. 

These gains were short lived however, and rates have already dropped below the level we have been sat at for most of the week. The reason that a weak Euro is not really pushing up GBP/EUR rates is the fact that problems in the EU have a knock on effect on the UK, so even if more problems arise, don’t expect Pound/Euro rates to shoot up. 

French credit rating downgraded 

In a further blow to the EU, Moody's downgraded France's debt from Aaa to Aa1, and kept its negative outlook, meaning it could be cut again. Moody's blamed stalled economic growth, the risk of a Greek euro exit and the risk that France has to contribute to bailing out other Eurozone countries. This leaves only Germany and the UK with AAA credit ratings from all agencies, reflecting the health of the 2 large economies. 

So what does all this mean for exchange rates? 

Surprisingly it hasn’t really affected rates that much. Pound/Euro rates have been range-bound around the 1.24 to 1.2450 level for a while now, and the markets are not reacting too much to the latest news. The main driver continues to be investor confidence, and at the moment the UK is not performing too badly. 

What is a concern is the Bank of England’s determination to weaken the Pound to try to help our exports. Also, problems in the EU will affect the Pound, as I’ve already talked about in detail over the last week or two. 

If you need to buy Euros, consider a Forward contract 

I think it’s unlikely we will see any gains in the GBP/EUR rate any time soon, so if you need to buy Euros then consider a Forward contract. This is where you can fix today’s rates for up to 2 years, and only pay 10% of the Sterling now. The remainder would be due when you want to take delivery of your currency. 

In this way you can protect against adverse exchange rate movements and budget effectively for any purchase either soon or in the future.

Click here to send me a free enquiry now, and find out more about our commercial exchange rates.  

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