Pound/Euro hits €1.35 forecast for 2015

Wednesday 28th January 2015 
In my last post at the end of last week I explained that the European Central Bank (ECB) announcement of a Quantitative Easing (QE programme) had weakened the Euro and pushed the GBP/EUR exchange rate to €1.32. 

I’ve been away from the trading floor on holiday for a few days, but the currency markets have continued to show volatility, with the Pound/Euro rate climbing and briefly touching an incredible new 7 year high of €1.3500 before dropping back away due to growing uncertainty over what the result of the Greek election means for the EU economy.

Greek election causes Euro to weaken further 

At the weekend the Greek Syriza party came to power, and this has caused significant weakness in the Eurozone. You can read a good overview on what’s been happening here on the BBC website.

As far as exchange rates are concerned, the news has caused the Euro to weaken and become cheaper to buy. At one point we briefly saw Sterling/Euro rates hit €1.35 before dropping back to around €1.33 / €1.34. 

Effectively the Syriza party have won because they succeeded in selling an illusion that Greece can stop paying the debt, and still stay in the euro. This is impossible. It’s one or the other, and either option will have further implications to the Euro economy. The Greek people don't seem desperately grateful for the €240 billion they have received in bailouts and are trying to renegotiate their debt. Unless compromise is made there is a real chance Greece could leave the Eurozone, and abandon the Euro to return to the drachma. This would cause massive disruption. There will a government default, corporate defaults and bank defaults. 

In essence it is the uncertainty over what will happen that is causing Euro weakness, and this has presented great buying opportunities for those that need Euros. Rates have climbed to their best in 7 years. To put the recent gains into perspective, this month alone a €250,000 property in Europe is nearly £9000.00 cheaper due to the rise in exchange rates.

Will rates climb higher or drop back towards 1.30? 

It’s impossible to predict exchange rates. However if you need to buy Euros, do consider taking advantage of what are the best rates in 7 years. It may go higher of course, but equally given it has risen by 5 cents already this year alone, it could easily fall back. If you want to hold our for more, then you should have a 'stop loss' in place to cover you should the market go the other way. Get in touch with me today to discuss how these type of contracts work.

I think all the bad news surrounding the Euro has now happened and is therefore reflected in the current rate of exchange. Indeed many in the market believe that a Greek exit from the Eurozone could actually be a good thing for the Euro, so should this become more likely, we may actually see GBP/EUR rates fall. 

It’s also worth noting the Pound isn’t particularly strong. Interest rates are now not l expected to go up for some time and this could hold the Pound back. Also, recently figures showed the best annual UK growth for years, however the rate of growth slowed significantly at the end of 2014, so the Pound is actually a little on the back foot. It's only weakness in the Euro that has caused the gains in the rate, and not any particular strength for Sterling.

Do you have an upcoming currency transaction? 

Whether you’re buying Euros with Sterling, or converting Dollars back to Pounds, whatever your currency needs, I can provide a very competitive quote to compare with your bank or existing broker. I also offer free consultations to discuss which way the market is moving, to help you decide when to fix your exchange rate. In addition, I can explain the various tools and options you can consider to make sure you don’t get lower exchange rate than necessary. 

So if you need to convert one currency to another and are looking for the best exchange rates, click below to make a free enquiry with me today, and take the first step to making the most of your currency. 

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Sterling Euro Forecast 2012; could rates be about to fall?

Thursday 21st June 2012
Good morning. Exchange rates have continued to be quite volatile, with news from the EU and Bank of England key to the future movements of the Pound Sterling to Euro exchange rate forecast. In today’s post, I will look at the following:

• More UK Quantitative Easing (QE) on the cards
• Greece makes deal to form government
• Spain and Italy to seek bailouts
• What all this means for exchange rates

More QE on the way from the Bank of England

Yesterday the Bank of England (BoE) released the minutes to their latest decision to hold off further Quantitative Easing (QE).

They showed that the BoE's Monetary Policy Committee voted 5-4 against restarting the gilt purchases they suspended in June, with Mervyn King , Adam Posen and David Miles all voting for a £50 bn injection. What exatly is QE? There is an excellent article explaining it here on the BBC.

So it seems it was a very narrow call indeed earlier this month not to pursue more QE. The closeness of the vote suggest to me that there will be another round of stimulus at the beginning of July, for between £25 and £50 billion of extra money.

As soon as the minutes were released, the Pound fell sharply against the Euro as the graph shows. If more QE is indeed announced in a few weeks, then expect the Pound to drop further against the Euro and other currencies.

BoE Governor Mervyn King said in a speech last week that the economic outlook had darkened under a "black cloud" of worries about the euro zone debt crisis, and that the case for further QE had increased.

QE would weaken the Pound as it floods the market with Sterling, and when there is an excess of anything it usually loses value. I certaintly think this will happen.

Greece makes a deal to form government

It emerged yesterday that a deal has been struck to form a new Greek coalition government. Antonis Samaras of New Democracy, the party which narrowly won Sunday's elections, has met President Karolos Papoulias to confirm the deal. This puts to rest some uncertainty over the future of Greece within the single currency, however it is yet to be seen whether they will try to renegotiate their terms of the bailout.

Greece has endured nearly seven weeks of political uncertainty which threatened to spark turmoil throughout the eurozone and beyond. The country is in its fifth year of recession, and there is growing antipathy to the tough terms of Greece's huge bailout from the EU and the International Monetary Fund (IMF).

For the time being, it gives some calm back to the markets and for the moment secures Greece’s place within the Eurozone. I do expect the parties involved to try to get a better deal, however the only thing I think that Germany will negotiate on is the timescales, not the overall terms.

This should give some strength back to the Euro, after weeks of uncertainty had weakened the single currency and pushed GBP/EUR exchange rates up.

Spain and Italy to seek bailouts

In other Eurozone news, there are plans to announce a £600 billion deal to bail out Spain and Italy. It is hoped that the move will send a strong signal to financial markets that Europe’s biggest economy is finally prepared to back its weaker neighbours. What the markets will make of it we will have to wait and see, but if the move is seen as positive, it could give the Euro strength and pull GBP/EUR rates back down. If it is interpreted as just kicking the can down the road a little further, we might see the Euro get weaker.

At a press conference to mark the end of the G20 summit, David Cameron welcomed the assurances given by eurozone leaders. He said: "What I've sensed at this summit is that there is a fresh impetus - using all the mechanisms, institutions, firepower they have." He added that European leaders would put the future of the euro "beyond doubt". White House sources indicated that a "new framework" to shore up the single currency would be unveiled at next week's summit in Brussels.

So what does all this mean for exchange rates?

It removes some of the uncertainty that we have seen in recent weeks. With a clearer framework in place it could be that Pound/Euro rates now start to drop back away. Many ill informed articles in the press are still suggesting rates may hit €1.30, which was indeed forecast several weeks ago. However this was purely based on the Euro continuing to weaken, which may now not be the case.

Even if the latest ‘solution’ to Europe's woes does not come to fruition, a weakening Euro would not necessarily push GBP/EUR rates higher anyway. Escalating problems in the single currency would affect our exports and weaken Sterling along with it.

Couple this with the very high chance o further monetary stimulus in the UK as explained at the top of this article, and we could well see Pound/Euro rates fall. Indeed we have not tested the highs of €1.25+ seen several weeks ago, and in fact we have seen rates slip into the €1.22’s.

If you need to buy Euros

With more chance of rates now falling, you may wish to secure your rate now to protect against falling in the wake of possible QE. Even if you don’t need your currency for some time, you can fix today’s rates for up to 2 years with a Forward contract, and only lodge a small percentage of the total to be converted.

If you need to sell Euros

The EU crisis is having unprecedented effects on the rate, with the Euro getting weaker. You could take the safe approach and fix rates now to protect against the uncertainty. If you hope rates will move in your favour, then don’t leave yourself totally exposed; speak to us about Stop Loss and Limit orders.

Don’t just hope for the best rates; make it happen

With much volatility and conflicting opinions on where markets are headed, it’s more important than ever to know your options, and take advantage of the expert knowledge I can offer you for no cost. I have worked in the FX markets for nearly 10 years and so have a very good knowledge of not only what moves exchange rates, but strategies and tools you can use to help you achieve the best possible exchange rate.

If you need to buy or sell any international currency, send me a free enquiry now to find out what your options are.

Everybody’s requirement & attitude to risk is different, but in having a free consultation and gaining full knowledge of all the options available to you, you can make an informed choice on what is best for you.

Click here to send me a free enquiry

How does Greek election affect exchange rates

Monday 18th June 2012
Good morning. Today's post is a little later than usual, as I wanted to wait until the markets had opened this morning to gauage the reaction to the Greek elections, and the effect it is having on exchange rates. So what do we have in this week’s Report?

• Greek election result reduces chances of Euro Exit
• Bank of England warn on more stimulus
• Elsewhere in EU Spain/Italy could seek bailout
• Round up of the week’s other data that may affect rates

(For currencies other than GBP, EUR and USD, contact us for a consultation)

Sterling vs. Euro;

Yesterday saw the results of the Greek election as we saw a close victory for Antonis Samaras and the New Democracy party with 29.6% of the vote. The party has now been given three days to come up with and build a coalition government ready to tackle the on-going debt crisis, something that couldn’t be done just six weeks ago in the first election.













After inconclusive elections in May, world leaders have welcomed the narrow election victory of Greece's pro-bailout New Democracy party. Now, they will try to form a coalition and create a stable government with a stronger popular mandate. So, problems solved?

Not necessarily. The recent vote was eagerly anticipated amid fears that Greece could exit from the euro should the anti-austerity party win. While an exit now looks much less likely, problems could now spread to other Eurozone members and deepen the turmoil in the global economy

The next three days could be very volatile depending on what happens and it will be a case of watch this space to see how investors react to upcoming news over the next few days.

Election aside, last week was a very volatile one with GBP/EUR rates moving between 1.2265 and 1.2470 at mid-market. The movement we saw last week alone would have meant a difference of €2000 between the high and the low on a typical trade of £100,000 to Euros.


Spain Downgraded

Through the week we saw Moody’s downgrade Spain’s rating by three notches to BAA3, one level above junk. The increased debt burden, weakening economy and limited access to capital markets were cited as being the reasons for the downgrade. Moody’s followed on the sentiment of financial markets after the 100 billion-euro bailout of Spanish banks.

Cyprus’s bond rating was lowered by two levels, Moody’s attributed the downgrade to the likelihood of a Greek exit from the euro and the amount of support the government may have to extend to the Cypriot banks. The downgrades show weakness within the Euro zone which in turn drives the rates up and makes it cheaper to buy Euro’s.

Bank of England stimulate economy

As the week progressed, Bank of England Governor Mervyn King unveiled measures to fight Europe’s debt crisis as global policy makers prepared for the impact of the Greek election. The announcement that the case for more UK stimulus is growing, caused the GBP/EUR rate to instantly drop 0.3% when markets opened at 8.00am Friday morning. The GBP/EUR rate soon recovered through morning’s trading.

The Mexico Summit this week will give EU Leaders the opportunity to discuss concerns with the heads of other major economies and should give fuel to increased volatility as the leaders will either agree or disagree on how to combat the escalating Sovereign debt crisis.

So despite the election being out of the way, the future is far from certain. We could well see the Euro weaken more as larger countries such as Spain seek bailouts. Of course the effect the escalating problems in Europe will have on Sterling is impossible to forsee, so all in all nothing has really changed since last week.

To discuss the options available to you, and how the latest news from the EU could affect exchange rates, send me a free enquiry now.


Weekly Economic Data that may affect exchange rates

Monday – Markets will be reacting to the Greek election result, which will likely overshadow fundamental data today. Data is light anyway today, with only some Housing Market Data from the USA. There is of course the G20 meeting this week which may affect rates.

Tuesday – Quite a bit from the UK today including Consumer Confidence Measures, inflation data, House Price info and Retail Sales. Lots that will show how the UK economy is faring so expect Sterling volatility. In the Eurozone we have some Economic Sentiment measures and Construction data. Over in the states we see Housing Starts and Building permits.

Wednesday – Again a very busy day for the UK: Average Earnings, The Bank of England minutes & a raft of unemployment figures. In addition we have the BoE quarterly bulletin. In the EU Germany releases Inflation data. Elsewhere we have some GDP figures from New Zealand, and Interest Rate decision for the USA, and a press conference from the FED.

Thursday – The EcoFin meeting starts today, which looks at the EU economy. We also have Inflation data from the Eurozone and Germany. The only UK release of note is the latest retail sales. In the USA we will see the latest Jobless Claims and unemployment figures, in addition to Homes Sales and a Manufacturing Survey.


Friday – The EcoFin meeting continues, and there is also a summit of EU leaders, which will no doubt be dominated by Greece and the debt crisis. There are no UK releases today, but we do have an assessment of the German economy. To end the week Canada releases Inflation data which could affect the countries future interest rate movements.

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 falls sharply on news of more BoE Stimulus

Friday 15th June 2012
Good morning everybody. Why has the Pound fallen against the Euro this morning? Things can change very quickly in the currency markets, and in my last post GBP/EUR rates were getting close to €1.25. The facts have now changed, and so has the exchange rate; the Pound has fallen sharply this morning, after The Bank of England announced yesterday evening that it will launch two new stimulus packages in response to the worsening economic outlook:


Sterling falls sharply on news BoE to pursue more stimulus

When the markets opened at 8am this morning the reaction was severe, and Sterling has dropped sharply across the board, as the chart above shows.

In the new developments, it was announced that together with the government, it will provide billions of pounds of cheap credit to banks to lend to companies. Banks will also have access to short-term money to deal with "exceptional market stresses". The chancellor said the measures would "inject confidence".

In the announcement, the governor Mervyn King said that "We are not powerless in the face of the eurozone debt storm. Together we can deploy new firepower to defend our economy from the crisis on our doorstep,"

Indeed on this blog I have been warning for some time that the EU debt crisis could well start to affect the UK, and this is what we are now seeing.

The Bank has already pumped £325bn into the economy through its quantitative easing (QE) programmes, hoping that the institutions that sell bonds to the Bank then use the money to buy up other assets, but that hasn’t always been the case. Some have said that they have held on to the money undermining the effectiveness of QE. Regardless the additional currency in the system has weakened the Pound in recent months.

You can read more about the £140bn scheme to kick-start stagnant economy here on the telegraph website.

Euro crisis deepens and affects Spain

As expected, Spain is the latest country to be dragged into the debt crisis, having earlier in the week taking a €100 billion bailout of its banks. Yesterday it was seen that Spain's borrowing costs hit 7% which is a level widely seen as unsustainable. Italy's borrowing costs also rose sharply meaning we could now see bailouts for these two countries.

Greek elections this weekend

With Greek elections taking place this weekend in what is being seen as a referendum on the euro, analysts have warned of potential further shocks to the financial sector. If the anti austerity Syriza party succed, then they may well effectively be voting themselves out of the single currency.

What is certain is that whatever happens this weekend, the market reaction on Monday morning is likely to be quite severe, as for many weeks investors have been waiting for this event before deciding what to do with their currency.

On Monday I will post a full analysis of the results, and what the Greek elections could mean for the Pound/Euro exchange rate forecast.

Pound/Euro exchange rate forecast

Many clients have been convinced that the Euro debt crisis would continue to weaken the Euro making the GBP/EUR exchange rate higher. Indeed on this very blog I have been warning for some time that this may not be the case, and in fact the UK is not immune to the EU’s problems. Sterling is at risk of falling if more stimulus is needed. This is now what has happened, and the 3.5 year highs seen recently now seem a distant memory.

Where rates will go moving forwards is impossible to predict, but with so much uncertainty surrounding the UK and EU economies, rates could go either way. Currently there is not much support for Sterling in the wake of yesterdays announcements, and so in the short term I don’t expect rates to rise back to €1.25 any time soon. I would expect rates to stay in the €1.22 to €1.2350 range for the moment, but on Sunday when the election results are seen, I'm sure the market will correct accordingly. Of course I will post a full analysis of what the election results mean on Monday morning.

What to do if you need the best exchange rates

With much volatility and conflicting opinions on where markets are headed, it’s more important than ever to know your options, and take advantage of the expert knowledge I can offer you for no cost. I have worked in the FX markets for nearly 10 years and so have a very good knowledge of not only what moves exchange rates, but strategies and tools you can use to help you achieve the best possible exchange rate.

If you need to buy or sell any international currency, send me a free enquiry now to find out what your options are. Everybody’s requirement & attitude to risk is different, but in having a free consultation and gaining full knowledge of all the options available to you, you can make an informed choice on what is best for you.

Click here to send me a free enquiry

Pound/Euro hits 3 year high above €1.24 - why?

Tuesday 9th May 2012
Good morning. Pound/Euro rates are at a 3 year high after the weekends French, Italian and Greek elections caused significant political uncertainty, weakening the Euro and pushing rates to €1.24+; the best buying levels in 3 years, amid widespread discontent with the austerity drive.

In today's post I will have a detailed look at the effect of the elections on the Pound/Euro exchange rate, and the forecast for where Sterling/Euro rates may go in the coming months.

Elections in Europe weaken Euro significantly

Over the weekend we saw elections in France, Italy and Greece. The results plunged the Eurozone into a fresh crisis, as the new and potential governments have cast doubt on the durability of austerity plans aimed at tackling the euro zone debt crisis. When UK markets opened this morning, the GBP/EUR rate surged to a 3 year high. Let's have a detailed look at each country in turn, and why the rate has gone up.

French Elections/effect on exchange rates

Mr Hollande won Sunday's election in part due to his hostility towards the excessive focus on austerity pursued by his predecessor and Mrs Merkel. For Europe this is a momentous event. For a long time the centre right has held the stage; now a socialist has won and European politics will feel the shudder.

The truth is that if France is to bring its budget deficit down to 3% by 2013 then 18bn euros of cuts will have to be found next year. How that will be done did not receive much attention during the campaign. Hollande has promised to make growth rather than austerity his priority. In saying this he challenges the German prescription for solving the eurozone crisis.

He simply does not believe that austerity first is working. His first official meeting after he is sworn in will be with German Chancellor Angela Merkel - she has already written to the newly elected French President saying "necessary decisions" must be taken to resolve the debt crisis.

Mrs Merkel said she was sure the co-operation between the two countries would "continue to strengthen". She has resisted calls from Francois Hollande to renegotiate a European pact requiring government budget cuts. A meeting of EU leaders has also been scheduled to discuss the pro-growth reforms preferred by Mr Hollande.

Greek Elections/effect on exchange rates

The leader of Greece's left-wing Syriza bloc has said he will try to form a coalition based on tearing up the terms of the EU/IMF bailout deal. Alexis Tsipras, whose bloc came second in Sunday's vote, said Greek voters had "clearly nullified the loan agreement". He has three days to reach a coalition deal and has told the two major parties to end their support for the austerity terms if they want to take part.

Again like in France, this severely dents the progress made over the last year in Europe, with markets now very wary over future EU bailouts.

Italian Elections/effect on exchange rates

Centre-left and protest parties have made gains in Italy's local elections, amid widespread discontent with the government's austerity drive. The centre-right People of Freedom (PDL) party of former Prime Minister Silvio Berlusconi did particularly badly, with most votes counted.



Why have the elections pushed the GBP/EUR exchange rate up?

It's because of the fact is has cast doubt on the durability of austerity plans, aimed at tackling the euro zone debt crisis. The EU has been plunged back into crisis with Italy, France and Greece assuming with new leaders they can ignore the necessary cuts and start spending again. Spain and Portugal will then assume if those countries don't pursue austerity, why should they?

Things could get a little worse if politicians in Greece fail to form a new government, and this has left questions over the country's ability to avert bankruptcy and stick with the common currency. Also, the eurozone is widely expected to return to recession this year, with some blaming spending cuts and tax rises by national governments, particularly those of southern Europe who are struggling to get their borrowing back under control. Unemployment in the eurozone rose to 10.9% in March. In Spain it rose above 24%, while the youth unemployment rate is greater than 50%.

Pound/Euro exchange rate now at 3 year high

All of the above has pushed Sterling to Euro rates to their best in 3 years, which is great news for anybody that needs to buy Euros at the current rate. If you want to take advantage of the current rate, get in touch today.

We don't deal with holiday cash, only bank to bank transfers for amounts £5000 and above. Our rates much better than banks can offer so the savings can be considerable - find out how much you can save now.

Will the Pound continue to gain? GBP/EUR forecast May June 2012

It's quite remarkable the Pound is so strong, despite the UK being back in recession! In the coming weeks, GDP figures will be revised though, so it's likely markets are waiting for this. For the time being however, the Pound is seen as a safe haven alternative to the Euro.

Indeed the Pound may also come under pressure if debt contagion and economic slowdown in the euro zone started to affect the UK economy and fuel speculation the Bank of England could extend its asset purchase programme to boost growth. It's important to remember that the UK and EU are trading partners, so any continued issues in the Eurozone could have a knock on effect on the Pound.

Most analysts still seem to be forecasting continued gains for the Pound, and given the information currently available I would agree. Of course, it's impossible to predict exchange rates and with economic surprises coming from all quarters at the moment, while it is likely Pound/Euro rates may climb further, it's not a given.

A 'Stop Loss' order is useful in this kind of market. This is where you can instruct us to convert your currency if it falls below a pre-agreed level, for example 1.21. You can then continue to take advantage of any further gains should rates climb, but if things move against you there is a safety net - a very useful tool when the market is moving in a favourable direction. These type of orders are available for transactions £10k and above - find out more now.

Pound falls against US Dollar

To demonstrate this, we saw GBP/USD rates fall over the weekend. This is partly due to the uncertainty in Europe causing flow back to the safe haven US Dollar, but it also shows that Sterling is not exactly a powerhouse - it's simply stronger than the beleaguered single currency.

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 here to send me a free enquiry