Pound/Euro & Pound/Dollar May 2014 forecast

Monday 1st May 2014
It’s been a little quiet on the markets today, with an EU bank holiday meaning trade is thin, and economic statistics are also thin. 

We have seen Sterling rise a little this morning however after UK Consumer credit and net lending figures were quite a bit higher than expected. This means if people are borrowing more money, there is in turn more confidence in the economy, hence the spike for Sterling. This has pushed GBP/EUR close to €1.22 and GBP/USD to $1.69. 

Today we will have a look at what might happen to exchange rates in the coming weeks. Remember also that if you need to convert currency, perhaps to buy or sell property abroad, then get in touch with me for a free quote and a chat about which way the rate could move. I can source excellent rates of exchange that could save you a considerable sum.

What next for Pound/Euro rates? 

Sterling/Euro is trading around the best it’s been since January 2013. It’s being kept strong by robust UK data, and the threat of monetary easing in the Eurozone. 

Next Thursday, we have the latest decision by the European Central Bank. While I don’t think that they will announce any change to interest rates, in the press conference afterwards they may well hint at some sort of monetary stimulus such as Quantitative Easing or a negative deposit interest rate. If they do, then this could well weaken the Euro a bit and push the rate higher. 

For those buying Euros, I think that’s your best hope of an increase, and I can’t see it going too much higher, as the Bank of England have also warned that if the GBP/EUR rate goes too high, it will hurt the UK recovery and so they may in turn take action to weaken the Pound. 

Contact me to discuss GBP/EUR or EUR/GBP.

What next for Pound/Dollar rates? 

It’s been a little quiet on the markets today, with an EU bank holiday meaning trade is thin, and economic statistics are also thin.

Sterling/Dollar rates are trading at their highest level in 5 years! Again, much of this is to do with the strength in the Pound, and weakness in the US Dollar. This week US growth figures came in at 0.1% - it was forecast to be 1.2% so it’s much worse than thought. This has caused the Dollar to weaken, become cheaper to buy, and push rates above $1.69 today briefly. 

If you need USD, it would be wise to consider fixing the rate while it’s so good. Their economy will recover at some point, and when it does expect them to taper their stimulus measures which could give the Dollar back to strength and bring rates back down. How long this will take to happen though is impossible to know. 

Contact me to discuss GBP/USD or USD/GBP

Getting the best exchange rates 

The chances are that if you are reading this blog, you are keen to know what is moving the exchange rate, which way it may go in the future, and also that you want to get the best possible rate. 

I update this blog to keep people up to date with exchange rates in simple terms. In this way I hope I can help people decide when to fix their rate. I work for one of the UK’s leading foreign exchange brokerages and have over 8 years’ experience as a currency broker. 

So if you need the best rates, click below to get in touch with me for a quote to see how much I can save you on your exchange. 

Send me a free no obligation enquiry by clicking here.

Alastair Archbold

Why has the Pound dropped from €1.22 to €1.2050?

Monday 3rd February 2014 
Since my last post we have seen further volatility in the Pound/Euro exchange rate. On Friday we saw rates hit €1.22, but the spike was short lived as has often been the case in the last few months. In trading today, rates fell quite a bit, falling to €1.2048 at the time of writing. 

In today’s post I’m going to explain what caused rates to rise only to quickly fall back away again. I will also look at what data is due this week that I think will affect exchange rates. 

Pound/Euro hits €1.22 on EU inflation data. 

On Friday we saw some very low inflation figures from Europe, which mean the European Central Bank may take action to help protect the eurozone's fragile recovery. Official figures showed that eurozone inflation fell to 0.7% in January, down from 0.8% in December and further below the ECB's 2% target. 

It has fuelled worries about whether the euro bloc could suffer deflation, potentially de-railing economic growth. As such, the only tool in the ECB’s box to combat this, is cutting the EU interest rate or possible the deposit rate. This would help combat deflation, but due the lower return on offer, it would also weaken the Euro. 

Mario Draghi, president of the ECB, has said that although inflation was "subdued, and expected to remain subdued" for about two years, he was confident that it would return to target. But he added that the ECB was ready to act if necessary. 

It was this comment that hints at lower interest rates in the EU, and we saw this being priced into the market on Friday, and it was this that caused rates to climb to €1.22 as the Euro lost value and became cheaper to buy.

Looking for the best GBP/EUR or EUR/GBP rates?

Why have rates fallen today to €1.2050? 

There are 2 reasons for the drop in rates today. Firstly we saw some better than expected data from Euros. Eurozone manufacturing grew strongly in January on the back of new orders, a closely-watched business survey suggests, with Germany leading the way. This counteracts the bad news we saw on Friday, and so the Euro regained some strength and has become more expensive to buy. 

Also this morning, we saw some poor UK Manufacturing data that was a little lower than expected. This weakened Sterling, and combined with today’s EU data has pulled rates from the high of €1.22 on Friday, to €1.2050 this morning. 

What other data could affect exchange rates this week? 

For Pound/Euro rates, I think that Wednesday and Thursday will be important dats. There are various inflation and Retail Sales numbers on Wednesday, and on Thursday we will see the latest Bank of England (BoE) and European Central Bank (ECB) interest rate decisions. We probably won’t get any surprises from the BoE, however there is a small chance the EU could cut rates. 

I think it’s probably unlikely, but we may see the president Mario Draghi hint at action in the coming months. Either of these things would push Pound/Euro rates higher. 

On Friday we also have some further Manufacturing data from the UK, along with the latest Trade Balance figures. If better than expected then the Pound could gain, but anything that disappoints the market would caused the Pound to fall away quite sharply. 

To discuss your requirement with me in detail, click here.

Getting the Best Exchange Rates 

• Looking for the best exchange rates? 
• Want to know if your rate will go up or down this year? 
• Unsure when to go ahead and fix a rate? 
• Keen to get a quote to compare with your bank or existing broker? 

Click here to send me a free no obligation enquiry now and I can get in touch to discuss any of the above with you to help you decide what to do. 

I look forward to hearing from you. 

Alastair Archbold

Why has Sterling fallen into the €1.18's? Will it recover?

Wednesday 11th December 2013 
Sterling has been falling today, and exchange rates have dropped further from recent highs. In today’s post I’m going to examine the reasons why the Pound has dropped, and also give my views on where rates may head for the remainder of 2013. If you need to buy or sell currency in the near future, you're in the right place, so read on...

On Tuesday we actually saw rates rise slightly on the back of Bank of England governor Mark Carney’s comments on the economy, but the gains were short lived, and today rates have steadily dropped. So before we look at the reasons for today’s fall, let’s examine what happened yesterday. 

Pound rises on Tuesday, but not for long... 

The Pound hit a 2.5 year high against the US Dollar and also rose against the Euro yesterday, after upbeat comments from the Bank of England, and also strong house price data. These were taken as signs that interest rates in the UK could rise sooner than previously thought. Higher interest rates strengthen a currency as it provides a better return for investors. 

Bank of England Governor Mark Carney's commented earlier in the week saying that the economic recovery is showing signs it can reach self-sustaining momentum, although he also said monetary policy will need to remain exceptionally loose for some time. This caused slight gains through trading on Tuesday. 

Also recent data out of the UK showed slightly stronger than forecast industrial output data while the National Institute of Economic and Social Research released figures yesterday showing the economy grew an estimated 0.8 percent. 

Why has Sterling fallen against the Euro today? 

As you can see from today’s chart below, the Pound has fallen against the Euro and has dropped into the €1.18's; several points down from the highs of €1.21 we saw last week. 

So why was this if UK economic news is good?

There are a number of reasons the Pound has fallen today. We haven’t seen any significant economic data releases, and I thought today would actually be quite uneventful. However we have seen UK gilt yields fall which has caused the Pound to fall slightly against other currencies. 

The main reason GBP/EUR rates have fallen however is due to events in the Eurozone. I have read reports today that there is very tight liquidity in the euro zone, and European banks have been repatriating funds to shore up their capital bases for an ECB asset quality review. What this means is EU banks have been buying Euros, and the demand has strengthened the single currency, making it more expensive to buy. 

Also the European Central Bank's reluctance to cut interest rates any further has also helped the euro make gains, pulling GBP/EUR rates down into the €1.18's.

So what next? Will the Pound fall further or recover to €1.20? 

I personally feel this is a temporary dip. The reason rate were as high as €1.21 was speculation on interest rate cuts in the EU, that now seem much less likely, and the exchange rate has corrected itself accordingly. In the medium term I expect rates to break back above €1.20 although possibly not until next year. This of course depends on continued positive economic news from Britain. 

So for those needing to convert Euros to Pounds, I would consider taking advantage of the 2 cent move in your favour. You can fix the current rate for up to 2 years even if you don’t need your currency for some time. 

If you are buying Euros, I expect rates to recover. However this may take some time, so whether to hang on or not depends on how long you have until you need your Euros. It took repeated attacks on the €1.20 level before we broke through last time, and I expect the same. A Stop Loss order is useful in these conditions. 

If you have found my insight useful and are looking for the best rates, or want to discuss which way the rate is moving and would like to discuss how I can assist you, click below to send me a free enquiry today. I provide exchange rates up to 5% better than banks can offer, and have over 8 years’ experience in the currency markets. 

Click here to send me a free no obligation enquiry. 

Alastair Archbold

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.