Weekly Pound/Euro & Pound/Dollar forecast

Monday 24th December 2012, Christmas Eve.
Good morning. Firstly I would like to wish everyone including my regular readers a very merry Christmas and a Happy New Year! Today I will take a look at last weeks movements, and what may happen this week. 

In this week’s Report:

•  Pound/Dollar rates reach fresh 1 year high
• Sterling/Euro is still near lowest since May 
• Round up of the week’s other data that may affect rates

Sterling vs. Euro; 

A much quieter week last week as expected with the run up to Christmas as investors unwound positions and the markets generally traded flat. On the Sterling v Euro cross we saw only half a cent between the high and low of the week as the mid-market generally hovered around the 1.2275 level. 

On the data front there were mixed readings from both sides of The Channel as UK inflation read slightly higher than expected and German IFO Business Climate figures were released slightly higher also. 

Wednesday’s main release was the Bank of England minutes from the December meeting where the 9 member MPC voted to hold interest rates at the current all-time low that we have been at since March 2009. The vote on the asset purchase programme (QE) however showed one of the members voting for a £25million increase in the current level which shows that we could perhaps see more QE next year should the current growth levels not be sustainable. 

This started to weigh on Sterling and bought it down from a weekly high of 1.2325. Thursday came with a drop in monthly UK retail sales which will probably be better next month with the Christmas period factored in.  

Next week will be very quiet with no data released Monday followed by 2 bank holidays and finally some UK mortgage approvals and house price data on Thursday. With this in mind the rate will probably remain pretty flat and over the next fortnight most moves in GBP/EUR will be down to how investors view the current Eurozone crisis and more importantly how the ECB are managing it. 

At present they seem to be making all the right noises about keeping things under some form of control which has helped strengthen the Euro over recent weeks but not only do we normally see confidence erode eventually, it could be months or even years before we know the true scale of the crisis in Europe.

Sterling vs. US Dollar; 


Things tend to be quieter during the Christmas week due to the fact volumes are down with most traders enjoying their turkey sandwiches rather than worrying about ichimoku clouds and candlestick charts. 

The Dollar has weakened against Sterling in the last week giving a nice little gift for all those Brits jetting off to Aspen for a skiing holiday this festive period, mainly due to the impending fiscal cliff in the US. The uncertainty as to whether new fiscal policy will be put in place before 1st Jan to resolve the cliff will mean US politicians may not have as relaxing a Christmas as they are used to with this decision seemingly going to the wire. 

Sterling/Dollar rate has surged to the best in over a year, due to continuing uncertainty surround the U.S economy. If you are thinking of buying dollars in the coming months it may be a good idea to consider securing your rate of exchange before President Obama and White House representatives reach an agreement to avoid the looming Fiscal Cliff. 

As stated above, if an agreement can be reached before the 1st January 2013, we could start to see rates decline as investor confidence returns. 

You can either fix a ‘Spot rate’ which has to be settled within 2 working days, or if your requirement is some time away, you can still fix the current rates for up to 2 years into the future, and only lodge a small deposit to do so. 

Next week the back and forth between the democrat White House and the republicans in the house will dictate the course for the Dollar, but I suspect the biggest movement will be the following week when the timeline runs out on New Year’s Eve.

Economic Data that may affect exchange rates 

Monday – UK House prices is the only release of note. 

Tuesday – Bank Holiday 

Wednesday – UK/EU Bank Holiday. The only data release is US Mortgage data and Manufacturing numbers. 

Thursday – UK data is House prices and Mortgage approvals. In the EU we see French Consumer Confidence. US Data comprises of Home Sales & Jobless Claims. 

Friday – The only data today is French GDP, Spanish Retail Sales, and US Home Sales. 

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. 

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Pound/Euro & Pound/Dollar forecast outlook

Wednesday 29th September 2012
Good morning everybody. Today I’m posting a quick mid-week update on what’s been happening with exchange rates, and what may happen in the coming days and weeks. The Pound has recovered a little against the Euro, but is not likely to continue gaining much. Against the US Dollar the Pound remains at a 5 month high. Let’s have a more detailed look at each currency pair in turn.

Pound/Euro

Sterling has risen a little against the Euro into the mid €1.24’s following uncertainty about Spain. The concerns encouraged investors to take profit on some of the single currency's recent strong gains, and this helped the GBP/EUR rate recover slightly. Concerns are growing about whether and when Spain will seek a bailout, while a German investor survey highlighted concerns about Europe's largest economy.

The results of a financial stress test on Spain's banks are due to be published on 28 September, and will provide a basis for calculations as to which banks should receive European Union funds and how much they should get. This may weaken the Euro slightly, however I think events in the UK over the coming days will take precedent which I’ll look at in a moment. All in all I think the Pound/Euro rate may fall further due to the weak UK economy.

Pound/Dollar

The Sterling/Dollar rate has not moved much this week, but has risen slightly and remains near a 5 month high. It’s due to weakness in the US Dollar after the announcement of open ended Quantitative Easing in the USA.

If we don’t get any negative UK data in the coming days, I think GBP/USD could rise a little further. If you need US Dollars, while it may rise further this is no guarantee. Given rates are at their best for many months, if I needed USD I would place a Stop Loss order a rate a little below the current level. In this way I can continue to take advantage of any gains, but if things go the wrong way and move against me, I have a worst case scenario.

Find out more about Stop Loss Orders.

UK Data

Yesterday we saw that UK inflation dipped slightly in August despite a rise in oil and fuel costs. This kept alive prospects of the Bank of England injecting more cash into the economy later this year which might weaken the Pound.

Sterling has been quite well supported by better UK data in recent weeks, which has eased concerns about the growth outlook. The inflation data didn’t really have any effect on exchange rates, as it does not change the balance of expectations over whether the Bank of England will increase its asset-buying programme later this year.

Bank of England minutes – more QE on the cards?

I expect more QE in November, but of course today's BoE minutes may give us a cleared idea of what to expect. Today at 09:30am the minutes are published, and they will show what was discussed and differences of view during their last meeting on QE and interest rates.

Analysts suggested that the falling inflation rate eased concerns that the Bank's policy of pumping money into the economy to stimulate demand - known as quantitative easing (QE) - could lead to inflation picking up. The UK economy has contracted for the past three quarters and the Bank announced another £50bn of QE in July, taking the total amount of money it has injected into the economy under this programme to £375bn.

Some analysts suggested this total could rise again later this year, as the economy struggles to exit recession. If there is any hint of QE any time soon, the Pound may take a little dip against other currencies.

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Weekly Forecast GBP/EUR & GBP/USD and the weeks data

Monday 23rd April 2012
Good morning, I hope everyone had a lovely weekend. As usual for a Monday morning, today I will look back over last weeks events that pushed Sterling up to new highs against the Euro and Dollar. I will also analyse the exchange rate forecast for Euros and Dollars, in addition to what economic data is out this week that I think could affect exchange rates.

In this week’s Report:

• Pound Surges through €1.22 / $1.60
• Positive BoE report and unemployment strengthen Pound
• UK GDP figures this week key to future rate movements
• 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;

Euro purchasers celebrated last week after Sterling extended gains against a beleaguered Euro as investors scaled back expectations of further stimulus from the Bank of England, putting the Pound on course to allow it to rise against the euro to levels not reached since the middle of 2010.













Pound gains very well against Euro

The pound rose to its highest weekly average in over 3 years against the single currency and a five-month high against the U.S. dollar, which helped it to climb to a 20-month peak on a trade-weighted basket of currencies, data from the Bank of England showed.

Minutes from the BOE's policy meeting released on Wednesday showed the committee voted 8-1 against further stimulus, with one policymaker Adam Posen who had consistently voted for more stimulus moving away from a dovish to a more hawkish stance.


How is the debt crisis in Europe affecting things

Analysts and Traders commented that while sterling was potentially poised for more gains, a lot would depend on how the euro zone debt crisis panned out. The Spanish 10 Year bond auction went through smoothly but with limited success and borrowing costs have been rising as investors remain sceptical about whether other countries in the Eurozone can solve their fiscal problems without seeking more aid from agencies like the IMF. While a steady erosion of confidence in the euro zone supports sterling against the euro, the pounds gains can be limited to a certain extent, given the UK's large exposure to the crisis-hit euro zone.

What about further UK data? How could that affect exchange rates?

Furthermore the UK's labour market is at best sluggish at the moment, domestic demand patchy and the economic recovery uneven. So while the signs of a slight recovery lessen the need for further stimulus, a rapid deterioration in the euro zone crisis could actually worsen the UK's outlook and drive the BOE towards quantitative easing again.

On Thursday, BoE's Posen said he is worried that underlying inflation pressures have not eased in recent months and added if last month's pick-up in inflation persists, the central bank would need to rethink policy.

Whilst the Pound’s performance against the Euro can be welcomed by those people in the UK buying a property abroad, a degree of care should be taken. It is certainly true that Sterling has benefited from negative Euro sentiment recently, however the Pound shifted this week on reasonably indifferent news. The news that further QE is unlikely for the time being, acted merely as a trigger to push the cross in Sterling’s favour, although it certainly wasn’t a green light to indicate that all is well within the UK economy.

Next week sees a host of data releases including preliminary GDP figures that could potentially push Sterling back and undo that gains that we have seen this week.

In order to ensure that you remain in control of your currency purchases in order to capitalise on positive market movement and protect yourself in the event of the market moving against you, you should speak to us about our exchange rates.

Click here to send me a free rate enquiry now.

Sterling vs. US Dollar;

Last week saw the Pound continue its bullish start to 2012 against the Dollar, with the enticing level of $1.60 tangibly close as a trading level to buy. A string of positive data releases in the UK allowed the pound to flex its muscles throughout the week, with several choppy trading sessions representing fantastic buying opportunities as well as a few selling opportunities for those who got their timing right.













Many people had wondered whether the surge in rates would continue in the back drop of an improving US economy, thinking, and not illogically, that the Dollar would strengthen with economic growth. Perhaps however, US growth is exactly what is supporting the Pound in its rise against the Dollar?

Regular readers of this report will be keenly aware of the phrase ‘safe haven currency’. The US Dollar has benefited from this throughout the global recession, with investors seeking low risk investments where their money would at least be safe, even if it wouldn’t grow.

Risk sentiment drives investment away from the US Dollar

With the US economy still the largest in the world people ploughed funds into the Dollar through cash and low yield bonds to see out the storm and subsequently the Dollar strengthened massively; remember the 1.36 ‘s back in 2009? Indeed even through the mildly positive 2011 we entered this New Year with the pound struggling in the low 1.50’s with the real changes seen amid the positivity in the US economy in 2012. Droves of previously risk averse investors have sold their bonds and got out of cash and back in the hunt for yield, unsurprising then that the Dollar is now testing levels in the early 1.60’s.

So, great news then if you are looking to buy Dollars. As always though, in the most volatile markets in the world a cautionary note should be heeded. Next week sees the official GDP figures released for the UK in Q1 2012.

Have we all got ahead of ourselves? Will the OECD’s prediction of a second UK recession come true or has the UK Chamber of Commerce correctly predicted growth, however small, in the UK last quarter? Wednesday could be a key day to see whether the pound surge kicks on and continues these great buying opportunities but may still prove a sting in the tail for those looking to squeeze that little bit more out of the market.

If you are looking to buy Dollars, now is obviously a great time to talk to us given that it went to a 5 month high on Friday.

Click here to send me a free rate enquiry now

Weekly Economic Data that may affect exchange rates

Monday – UK Nationwide House Prices are released today, which reflect the health of this sector and is a barometer of overall economic activity. In the Eurozone, inflation data from Germany will be closely watched as it could affect EU interest rates in the future. Elsewhere the only data of note is Producer Price Index info from Australia, which is an inflationary measure.

Tuesday – Today the only UK data is Public Sector net borrowing, released at 09:30am. EU Industrial New Orders are released at 10am, along with some further EU inflation data. Across the pond we have US Home Sales, Consumer Confidence numbers, and Canadian Retail Sales.

Wednesday – A very important day for Sterling, as we have the latest UK GDP figures. This could move the Pound either way depending on the results showing growth or contraction. This is the most important release of the week. In the USA we have Mortgage Approvals, an Interest Rate decision and a press conference from the FED.

Thursday – Quite a lot from the EU today, including Economic Confidence, Consumer Confidence, Industrial Confidence and Retail Sales for Germany. There is nothing of note from the UK. The USA has some jobless numbers and Home Sales, and in New Zealand we will be privy to their latest interest rate decision.

Friday – We end the week with German Consumer Confidence and a US GDP data. Also in the US is consumption expenditure data and measures of Consumer confidence.

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.

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