GBP/EUR hits €1.42 as Greek rescue falls apart

Wednesday 15th July 2015
In a new twist to the ongoing Greek saga, last night the IMF released a statement saying that they don’t think the proposed bailout goes far enough.

Effectively, this is a warning that the IMF will not take part in any rescue package for Greece unless the other EU creditors agree to much more debt relief than planned. This is a huge complication, and the amazing fact is everyone involved in the negotiations knew the IMF's position, but just ignored it.

Ignoring things doesn't make them go away, and the stunning developments means that the Euro has weakened even further, as nobody knows if this on-going issue is actually ever going to be resolved or not. 

The effect on the currency markets is a Euro that’s getting even weaker. The GBP/EUR reached €1.4240 this morning, before some poor UK employment numbers pulled it back down to the €1.42 mark as the graph below shows: 

 
 
What does all this mean for the Euro? 

It means that even if the Greeks agree to the plan today, it’s likely that the whole package agreed may now need to be re-negotiated, so in effect tomorrow morning we may well be back at square one. What an absolute mess this really is. The banks are still shut. They probably won’t open again for another month until an actual package is re-negotiated and ratified, so the ‘solution’ that came on Monday seems to be nothing of the sort. 

Result - GBP/EUR getting even higher.

Getting the best exchange rates 

These are very uncertain times, and having a good currency broker on your side can save you a lot of money if you are converting a large sum. Therefore if you want to get the best possible exchange rates, contact me for a quote. 

I provide commercial rates of exchange to private and corporate clients looking to trade £5k+.

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Pound falls against Euro after poor economic data

Monday 14th October 2013 
Good afternoon all. Well what a difference a week can make! The change in the weather in the UK has been mirrored by a change in the fortunes of the Pound. In Britain we seem to have very quickly entered autumn, and as the leaves started falling, so did the Pound, after a raft of poor economic data. 

This has pulled exchange rates lower and away from the all year highs seen just recently. In today’s report I’ll look at what has happened to cause the fall, and what else may happen with exchange rates in the coming weeks and months: 

• UK Retail Sales drop 
• Industrial and Manufacturing production fall 
• Trade balance in the UK widens. 
• IMF warn world could enter recession again 

Poor economic figures cause the Pound to fall 

It’s only been a little over a week since my last post, and at that time the GBP/EUR rate and the GBP/USD rate were both around the highest we’ve seen all year. Things can change very quickly in the currency markets however, and that’s exactly what we’ve seen. 

In the last week we have seen some poor UK economic numbers. Industrial and Manufacturing production was worse than expected, coupled with lower than forecast Retail Sales. More worrying was the fact the UK’s trade deficit has widened, meaning we’re importing more and exporting less. All of this had the effect of weakening the Pound and bringing exchange rates into the €1.17’s against the Euro, and back to the $1.60 mark against the US Dollar. 



In recent posts I have pointed out that the market seemed to have peaked, and indeed that now seems to have held true. Those that booked their currency on a Forward contract will be pleased at buying at the peak and will have been protected against the drop we have seen. 

If you are buying or selling currency, the market is very volatile at the moment. Simply hoping the rate will move in your direction is no more than a gamble, and could end up costing you dearly. The best strategy is to get in touch and discuss all the options we can offer you. In this way you can have a detailed chat with me regarding what might move the exchange rate, and make an informed decision on what to do. 

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

Is the world about to be plunged back into recession? 

The head of the International Monetary Fund, Christine Lagarde, has warned that a US default could tip the world into recession, saying that a default would result in "massive disruption the world over". 

So what’s happening in the states? The US Treasury will start to run short of funds on Thursday if no agreement is reached for it to raise its debt limit. The president of the World Bank, Jim Yong Kim, has also expressed his concern over the situation. 

He warned that the United States is just "days away from a very dangerous moment" because of the government's borrowing crisis. 

He warned this could be a "disastrous event" for the world. To explain what has been happening, the US government has been in partial shutdown since Congress missed a 1 October deadline to pass a budget, with politicians being unable to agree funding for current spending. 

This has resulted in hundreds of thousands of federal employees being sent home and government offices closing. Republicans refused to approve the new budget unless President Obama agreed to delay or eliminate the funding of the healthcare reform law of 2010. 

On Saturday, Jamie Dimon, boss of the American bank JP Morgan said the possible repercussions did not bear thinking about. "You don't want to know what would happen," he said. "It would ripple through the world economy in a way that you couldn't possibly understand." 

What might this all mean for exchange rates? 

So we’re at a crossroads in terms of the global economic recovery at the moment, and this may well have serious implications for exchange rates. The value of one countries currency against another is usually finely balanced, and uncertainty in the global markets could seriously affect exchange rates. 

If you need to covert one currency to another, perhaps to buy property abroad or maybe you buy or sell goods in a foreign currency, exchange rates can have a big impact on your costs. 

How can you get the best rates and protect against adverse currency movements? 

The first step is to get in touch with me to discuss your options. As a specialist foreign exchange broker, the rates that I can achieve are significantly better than banks can offer, by as much as 5%. So if you need to convert funds then the savings can be considerable. In addition to our great rates, we also have expert market knowledge that can help you decide when to fix your rate. 

This combined with the various range of FX contracts we offer mean that you could save thousands of pounds on your exchange. 

Click here to send me a free enquiry now and find out more.

Pound/Euro forecast April/May 2013 ahead of UK GDP figures

Monday 22nd April 2013 

Good afternoon. Since my post last week, there has continued to be volatility in the currency markets. Mid-week last week we saw poor UK Retail Sales and unemployment data weaken the Pound, causing exchange rates to fall. The GBP/EUR rate recovered towards the end of the weak due to rumours of an EU interest rate cut. On Friday, there was the news the UK’s credit rating has been downgraded by a second agency, mirroring concerns about the economy from the IMF. 

So, in today’s report I’m going to have a look at what the downgrades mean for the Pound, and what this week may have in store for Sterling exchange rates. 

Fitch downgrades UK credit rating to AA+ 

The Fitch credit ratings agency has downgraded the UK to AA+ owing to a weakened economic outlook. Fitch said its downgrade "primarily reflects a weaker economic and fiscal outlook" but returned its outlook to "stable", removing the threat of further rate action in the near term. 

It’s the second agency to downgrade the UK, after Moody's became the first major agency to downgrade the UK's sovereign debt rating earlier this year, although Standard & Poor's reaffirmed its AAA rating earlier this month. 

Regarding the latest downgrade from Fitch, the Treasury said: "This is a stark reminder that the UK cannot simply run away from its problems, or refuse to deal with a legacy of debt built up over a decade. “Fitch themselves say the government's 'continued policy commitment to reducing the underlying budget deficit' is one of the main reasons UK debt now has a 'stable' outlook. 

When markets opened this morning, there was an initial drop for Sterling, before recovering all its losses and the mid-market rate sits at 1.1700 at the time of writing. The reason the downgrade hasn’t had much effect on rates is because it was largely expected at some point anyway, and also the fact they still have the UK with a ‘stable’ outlook. In addition, all eyes are on this week’s GDP figures due to be released Thursday. More on that shortly. 

Looking for the most competitive exchange rate? Click here.

Christine Lagarde and New BoE Chief warn over UK growth 

Compounding the poor outlook many have of the UK’s economy at the moment, the head of the International Monetary Fund (IMF), Christine Lagarde expressed renewed concern over the health of the UK economy last week. The UK's growth numbers are "not particularly good", Ms Lagarde said. 

Her comments came as Mark Carney, the next governor of the Bank of England, hinted at his concerns over the UK. In an interview ahead of the meeting between the IMF and the World Bank, he said the US recovery was leaving behind "crisis economies" that included the UK, the Eurozone, and Japan. 

Mr Carney has been reluctant to comment directly on the UK ahead of taking the helm of its central bank in July. But he appeared to back Chancellor George Osborne's view that austerity measures were important to promoting growth. 

So what does all this mean? 

In terms of the currency markets, there has been little impact. You can read a very good outline of why there wasn’t much movement on the markets here on the BBC site in a great article by Stephanie Flanders

In a nutshell, the IMF’s comments are more to do with politics than economics, and so exchange rates have not really been affected. 

What may happen to exchange rates this week? 

There are various data releases, but by far the most important is the UK’s latest GDP release at 09:30am Thursday morning. This will finally confirm whether or not the UK is in recession. 

If confirmed, expect the Pound to drop. If the number shows growth, expect Sterling to make some gains. Either way I expect rates to move one way or the other on Thursday. 

If you're worried about the exchange rate moving against you, send me a free enquiry to find out about how we help protect against this.

So when should you buy or sell your currency?

If you are buying or selling currency, the rate could therefore move in your favour or against you, and as the GDP prediction is so finely balanced.

Therefore you have 3 options: 

• Fix an exchange rate before the decision, and protect yourself against it moving the wrong way. 
• Take a gamble and wait until after the decision, and hope things move in your favour. 
• Hedge your bets and book half your currency before, and gamble on the rest. 

Regardless which currency you need to buy or sell, take advantage of my expert knowledge of the currency markets and send me a free enquiry today. I can discuss your requirements, run over your options, and help you make an informed decision on when to fix your rate. When you decide to do so, the rates I can source are commercial and up to 5% better than you can get at banks or other financial institutions. 

How much could you save? Send me a free enquiry now to find out. 

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Pound/Euro forecast: recovers on Greek worries

24th May 2012
Good morning. It’s been yet another volatile week for Sterling/Euro exchange rates. Early in the week the Pound weakened off, falling into the €1.23’s. This was due to concerns by both the Bank of England and IMF on growth, increasing the chance of further Quantitative Easing. The fall in rates was halted yesterday however, when the Euro weakened again significantly over Greek Euro exit fears, pushing rates back close to €1.25.

In today’s post I’ll look at these events in detail and analyse what may cause Pound Euro rates will go up or down in the coming months.

Pound/Euro rates gain on Greek concerns

GBP/EUR rates surged yesterday after a report saying that the Greek government may be making preparations for leaving the euro. Also weakening the single currency was Germany’s central bank saying that the developments in Greece were "highly alarming".

"Greece is threatening not to implement the agreed reforms and consolidation measures," the Bundesbank said in its latest monthly report. It said that scenario could create substantial challenges for the Eurozone.

Many analysts think that Greece may abandon the austerity measures and be forced out of the euro. Ms Lagarde from the IMF said that they did not like that prospect, but that it was "prepared for all possible situations". But she said that the costs of Greece leaving could be so high that other members of the Eurozone might be prepared to pay more to keep Greece in the euro.

The continued worries have pushed rates back up as the chart demonstrates.

Bank of England: More QE on the cards?

Yesterday we saw the latest Bank of England (BoE) minutes on their recent decision to hold off further Quantitative Easing. Policymakers voted by 8-1 this month against pumping more money into the economy, but the decision was "finely balanced" for some members.

One interesting thing the minutes showed was that the crisis in the Eurozone could hit the UK's economy, which would make the case for extra stimulus more compelling. This is what will likely stop GBP/EUR rates continuing to surge towards €1.30, as any further QE will likely weaken the Pound significantly.

IMF also pushing for more QE

On Tuesday, the International Monetary Fund (IMF) said the UK's continuing economic weakness meant authorities should consider more QE and even cutting interest rates. The IMF said the BoE should “reassess the efficacy” of cutting rates below 0.5 per cent and called for “further monetary easing”, adding that while monetary stimulus has helped, the economy remained flat.

This again shows that while the EU problems are weakening the Euro, they may also start weakening the Pound which may actually cause rates to fall back away.

The case for Pound Euro rates going up

Looking at the Euro on its own, there is a logical case for rates rising further. The Euro will likely continue to weaken; it’s highly unlikely the Greek problems will be solved any time soon. This continued weakness will likely mean a cheaper single currency which means exchange rates would rise. However we’re not just looking at the Euro on its own, we have to factor in the value of Sterling…..

The case for Pound Euro rates going down

While the EU problems continue, the Bank of England and IMF have warned that it will soon start to affect the UK. 50% of our exports go to the EU, so a strong pound is not attractive to the BoE. For this reason, further EU problems will affect the UK economy, and with more QE now looking very likely, the Pound will weaken off and exchange rates could fall.

How to get the best exchange rates in a volatile market

As outlined above, future rate movements are highly uncertain and there are logical arguments to show both gains and falls in the rate in the coming months. Of course it can’t do both things, so for clients looking to buy or sell Euros, some could lose out significantly if rates move drastically one way.

The best option is to send us an enquiry and have a free consultation on the current market conditions, and to find out what options you have to protect against the market moving the wrong way. When converting a large sum, exchange rate movements can have a huge impact on the cost.

In knowing what options are available to you, and armed with sound market knowledge, you can make an informed decision on what action to take to help you make the most of the market. Don’t just follow the rates hoping it will move in your direction. Contact us now and take control of your currency requirement, rather than letting it control you.

Our exchange rates are much better than you can achieve at the bank, so get in touch now for free and see how much you can save.

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Pound down vs Euro ahead of BoE minutes

Wednesday 20th July 2011
Good morning. Sterling rose against a weaker US Dollar yesterday, but fell against the Euro ahead of today's BoE minutes which could hurt the Pound further. Also buried in the news under the hacking scandal was the fact the IMF have warned on the global economy. Despite the BBC leaping onto the scandal with glee, giving it wall to wall coverage to the detriment of other news stories, markets took note of the IMF's warning. We'll look at all this in a moment after the usual rate snapshot as at 08:30am this morning:

• GBP/EUR 1.1345
• GBP/USD 1.6076
• GBP/AUD 1.4971
• GBP/NZD 1.8786
• GBP/CAD 1.5257
• GBP/ZAR 11.098
• GBP/JPY 126.80
• GBP/DKK 8.4573
• GBP/NOK 8.8700
• EUR/USD 1.4166

Sterling up against US Dollar

A recovery in equities yesterday helped Sterling rise against the US Dollar, as this created sovereign demand for the Pound. This was also helped by a rebound in UK banking stocks, however gains are still limited due to the UK's exposure to the EU debt crisis. Sterling is particularly vunerable against safe haven currencies like the USD and CHF, due to the concerns over the banking sector and our close links with the EU.

Pound down vs the Euro

Despite EU leaders struggling to reach an agreement on the debt crisis, the Pound fell against the Euro due to the interest rate differentials. The EU have raised interest rates twice this year to 1.5%, while in the UK our rates remain low at 0.5%. The better return on offer for Euros mean Sterling is struggling against the single currency, despite all the problems with EU debt.

BoE Minutes today - Sterling to fall against Euro?

Minutes of the Bank of England's July meeting are expected to add to the view that interest rates will stay chained at a record low 0.5%, and this could hurt the Pound today. Short-term interest rate markets do not price in another UK rate rise until late 2012 and concerns are growing that policymakers may edge towards considering further quantitative easing.

"At the moment there are few reasons to buy the pound apart from medium-term valuation concerns, and the many reasons to sell the pound still exist: low yield, the full effects of austerity yet to be felt and non-existent consumer activity," Commerzbank analysts said in a note.

If they mention further Quantitative Easing, expect Sterling to fall against other currencies. If however the minutes suggest that they are unwilling to pursue further QE, then we may see GBP/EUR rise back towards the €1.15 we saw recently.

Today's Data

Today we see the minutes to the recent BoE decision to hold interest rates. Any talk of Quantitative easing in the notes may cause Sterling to fall. Germany has some inflation numbers today, and the EU releases consumer confidence measures, which are unlikely to be good in light of the debt problems.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.