Pound/Euro exchange rate forecast November 2012

Monday 12th November 2012
Good morning everyone. As usual for a Monday, today I'm going to take stock of last weeks movement in exchange rates, look at why GBP/EUR rates have climbed. In addition I will analyse what may happen in the coming weeks to affect the rate, and of course as usual give you a detailed breakdown of economic data releases that I think will affect exchange rates this week.

In this week’s Report: 

•  Pound/Euro rates hit 5 week high
• Eurozone growth forecasts could affect UK 
• Round up of the week’s other data that may affect rates  

Sterling vs. Euro; 

Pound/Euro rates had a very good run indeed last week, with Sterling hitting a 5 week high against the Euro. In this report we will look at the reasons rates have increased, and look at what the coming weeks and months may hold for the Sterling/Euro cross.

First things first; Why have Pound/Euro rates gone up?

The main reason for the gains was the fact the Bank of England left interest rates on hold, and the size of its Quantitative Easing bond-buying programme unchanged. The decision had been broadly expected after recent strong UK third quarter growth figures, however some investors had positioned themselves for more QE, so when this didn’t happen the Pound gained strength as a result, pushing GBP/EUR rates up.

Only a few weeks ago, everybody convinced further QE was pretty much a given, and that it would happen the first week in November. In the last few weeks however, we have seen very robust UK data, including the fact the UK came out of recession recently, growing 1% between July and September.

However, a succession of poor economic indicators and corporate results has led many observers to believe that the economy is still weak, leading to speculation that more QE would be needed, just not right now. Indeed, the minutes from the last MPC meeting in October showed that some members thought more QE would be required at some point in the future.

All in all, for the moment the UK’s economic position looks relatively healthy, and this is the main reason for the strong Pound at present.

Pound/Euro rates also being driven by events in Europe 

The European Central Bank (ECB) also decided to keep rates on hold at 0.75%, with President Mario Draghi saying a euro zone recovery is likely to be slow and gradual but solid. Explaining the decision, he said that economic activity in the euro area was "expected to remain weak".

The weak data coming out of the Eurozone is another reason for the gains in the GBP/EUR rate. As the Euro weakens it becomes cheaper to purchase, pushing rates up. This was compounded on Thursday when data showed German exports fell in September at the fastest pace in nearly a year, raising concerns about the effects of the euro zone crisis on Europe's largest economy.

The European Commission has also cut its 2013 growth forecast from 1% to just 0.1% and said it expected unemployment to continue rising next year. This is stoking fears that the Eurozone crisis is far from over, and has caused further weakness in the Euro.

So if the Euro weakens GBP/EUR rates will continue to rise? 

Not necessarily. It’s extremely important to remember that around half of Britain's trade is with Europe. If the revised growth forecasts are accurate then this could have a significant effect for the UK in terms of our exports. While the UK is enjoying growth and a strong pound, weakness in the Eurozone could easily cause investors to also shun the Pound, and this is what is keeping GBP/EUR rates in check. Indeed on Friday rates stopped climbing and started to drop back away, indicating we had already hit the peak on Thursday afternoon.

Regardless of whether you need to buy or sell Euros, there is so much going on in the currency markets that rates could move either way in the coming weeks. In the last few weeks alone rates have fluctuated by over 2.5%, meaning a €250,000.00 purchase has differed in price by over £5000.00 in just a few weeks, clearly showing how quickly things can change and the impact it can have on your currency requirement.

If you need the best exchange rates, the first step is to contact us to have a free consultation. We can then let you know the options available to you, making sure you are not caught out by adverse exchange rate movements, and ensure you make the most of your currency.

Click here to send a free no obligation enquiry now. 

Weekly Economic Data that may affect exchange rates 

Monday – We’re fairly light on data releases today as it’s a market holiday in America and France. We do have some German Whole sale prices in addition to the Eurogrup meeting, which is attended by Finance Ministers of each Member State of the euro area. There are no UK releases of note. 

Tuesday – UK data today comprises of House prices, Retail Sales, and a raft of the latest inflation numbers. We also have inflation numbers from France, Germany and Europe. Also in the EU we will see the latest Economic Sentiment surveys. In the USA we have a monthly budget statement and a Business Optimism survey. 

Wednesday – Various UK releases today including Average Earnings, Unemployment, Jobless Claims, a BoE Inflation report and a Speech by Mervyn King. Expect volatility in the value of Sterling today. In Europe we have French Inflation, Spanish Unemployment & GDP, in addition to EU wide Industrial Production. Stateside we have Retail Sales, Inflation data, and the latest minutes from the FOMC. 

Thursday – Another important day for GBP/EUR. Starting in the Eurozone, we have GDP numbers from Spain, Germany, Italy and France. We also see EU wide inflation numbers. In the UK the only release today are the latest Retail Sales numbers, which are a good barometer of overall economic activity. Over in the USA we have inflation numbers, Jobless Claims, Manufacturing numbers, and speech’s by various members of the Federal Reserve. 

Friday – We end the week on a quieter note, with nothing released from the UK. There are global Trade Balance numbers from Europe however that could still affect Pound/Euro prices. Industrial Production numbers from the states round off the week.  

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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Weekly Sterling/Euro FX rate forecast

Monday 12th October
Good morning everybody. As always for Monday mornings, today I'm going to take a detailed look at Pound/Euro rates, where they have moved and what the forecast is for the coming weeks. In a nutshell, rates have been falling and are expected to continue to do so.

In this week’s Report:

• Sterling weakens on chance of more QE
• Pound/Euro falls to new lows in the €1.23’s
• Pound/Dollar remains in the $1.60’s
• Round up of the week’s other data that may affect rates

Sterling vs. Euro;

In an interesting week for the GBP/EUR cross the Pound broadly lost ground against the Euro as the frailties of the UK economy once again made headline news. Euro purchasers were on the back foot right from that start of the week as Sterling breached 3 week lows against the Euro following further expectation for more quantitative easing. This was triggered by the UK Chancellor George Osborne during his speech at the conservative party conference when he said that the bulk of savings in his budget would be through cutting government spending. This in turn would add pressure on the Bank of England to ease monetary policy perhaps as early as next month.












The week remained tough for the Pound following Christine Lagarde’s speech when she said that it was the IMF’s view that Britain's economy would contract 0.4% this year, before growing by just 1.1% in 2013. This is some way off previous predictions in July, when it suggested 0.2%t growth in 2012 and 1.4% growth the year after. This continued to put pressure on the Pound and also adds more fuel to the argument that the UK could lose its prized AAA credit rating.

Although the implications for the UK economy were ominous, the effect on the GBPEUR cross were somewhat limited as she discussed the on-going pressures on the rest of the Eurozone, and also looked at revised growth forecasts in the context of the rest of the world. In particular she warned that that austerity measure place on Greece need to be eased and they should be given an extra 2 years to repay their debts in the light of the fact that they very nearly defaulted recently.

World leaders warning over UK growth


There is an increasing call from financial leaders such as Legarde to restore growth to pull the world out of recession and not let Austerity curb this. This was touched on by the outgoing head of the FSA ‘Lord Turner’ in his speech on Thursday night at Mansion house when he commented that QE may not be working as well as perhaps it did when the program was first started and that there may need to be radical changes within the banking and finance system for these problems to be overcome.

Lord Turner’s speech was particularly scrutinised as he is widely expected to be named as the next Governor of the Bank of England when Mervin King steps down next year, and therefore anything he says now is analysed for clues on how he may approach the new role should he get the position. He called for "a willingness to employ more innovative and unconventional policies" and although he didn’t expand on this point it is understood that he believes the  Bank of England should considers telling the Treasury that it doesn’t have to repay the £375 Billion that it achieved through QE.

This type of policy is loosely termed as the creation of ‘helicopter’ money due to the imagery of just throwing money on everyone out of a helicopter. The idea being that the cash injection stimulates the economy without burdening it with painful austerity repayments.  As one of the leading candidates, his speech or ‘preliminary interview’ for the role caused a stir but also showed that he is open to perhaps more radical solutions for how to guide the British economy out of the lingering financial crisis.

All of this doesn’t bode well for the Pound, as more QE and further measures would likely weaken Sterling, while the Euro continues to pull the other way due to its well published problems.


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Weekly Economic Data that may affect exchange rates

Monday – The only UK data the markets will react to today is yesterday evenings RIghtmove House Prices. There are no EU releases either. In the USA we have Retail Sales, Manufacturing data and a speech by the FED. In New Zealand we have inflation numbers that could dictate interest rates. 

Tuesday – We get going with UK data today including Inflation data, Housing prices and Retail Sales. In the Eurozone we have inflation numbers and Trade balance figures at 10am. Also in Europe Germane releases an economic sentiment survey, of importance as Germany is the largest EU economy. Over in the USA we have more inflation numbers and industrial production figures.

Wednesday – An important day for the UK, as we have the latest Bank of England minutes, showing the vote and discussion of the recent MPC decision. In addition, UK Earnings and unemployment numbers are released. Some minor EU construction numbers are released, in addition to US Mortgage applications and building permits.

Thursday – An EU Extraordinary meeting starts today, which will see EU leaders meet and discuss the current problems in the Eurozone. This could throw up some surprises so expect Euro volatility today. In the UK the only data of note is retail sales, a good barometer of overall economic activity. Stateside we have jobless claims and the Philly Fed Survey.

Friday – The EU Extraordinary summit continues today. Staying in Europe we have inflation number and industrial production figures. In the UK we have the latest Public Sector borrowing numbers. We then end the week with Home Sales from the United States.

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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Why have Pound/Euro rates fallen?

Wednesday 22nd August 2012
Good morning. Today I’ll give a brief mid-week update on what is happening with exchange rates. We had seen the GBP/EUR rate recover back close to 4 year highs; however rates have been in decline this week. Today I’ll look at what has caused this, and which way rates may move in the coming weeks.

Why have Pound/Euro rates fallen?















Yesterday we saw GBP/EUR rates fall back into the mid €1.26’s. There were 2 reasons for this; firstly the UK deficit grew more than expected, which I’ll examine separately in a moment. The main reason for the fall was a strengthening of the Euro, caused by growing expectations the European Central Bank will take action to ease Spanish and Italian borrowing costs.

The anticipation of measures being taken in the coming weeks, to try and resolve the on-going debt crisis has been welcomed by investors. As a result, it’s spurred investment into the single currency, and this demand has caused strength, making it more expensive to purchase.

Talk of ECB intervention in debt markets resurfaced after a weekend report in Germany's Spiegel magazine that the central bank would target specific yield levels as part of any bond-buying programme. Reports At the beginning of the week said that the ECB played down that speculation; however there were reports that confirmed ECB experts were examining plans to cap Spanish and Italian yields.

"The focus is very much on the ECB's pledge of intervention, in combination with the EFSF," said Deutsche Bank economist Mark Wall, referring to the Eurozone rescue fund. The ECB is expected to detail its plans for addressing the Eurozone’s debt crisis in September.

If they do go ahead and we hear more concrete talk of this becoming a reality, expect the Euro to remain relatively strong. Don’t’ underestimate the Eurozone’s willingness to resolve the crisis. See below for my thoughts on what to do if you need to buy Euros.

UK Deficit Increases

As mentioned above, the Pound also weakened slightly when data showing Britain's public finances unexpectedly veered further off-track in July and a survey revealing a slump in factory orders this month as demand for consumer goods dropped.

Four months into the financial year the government has borrowed £44.9bn, £9.3bn higher than the same period in 2011. The OBR had predicted that borrowing on the same measure would be £120bn for the whole of the financial year, down from the £125bn borrowed last year.

This has reinforced the fact that the Pound is very weak – we’re in recession (still!), there is no growth, and unemployment while better than it has been, is still high. This is keeping Sterling weak relative to other currencies.

Pound/Dollar at 3 month high















Despite the Pound weakening and falling against the Euro, Sterling rose to a 3 month high against the US Dollar. Really this is again due to the news from the EU – as the Euro gained strength, the Dollar weakened as investors that had been holding them due to their safe haven status, moved back to riskier currencies.

This weakened off the Dollar, pushing rates up despite the Pound getting weaker.

So what is the forecast for GBP/EUR rates for the rest of the year?

Many people still seem to think that rates will get to €1.30, but when questioned they can give no logical reason why. They have just seen it get close, and think that therefore it must get there. The highest the rate has been in the last 4 years was 1.2860 over a month ago, and since then we have seen rates in decline.

The Pound is at record lows against most currencies. The only reason rates are still quite good against the Euro is due to the debt crisis. Now that investors are more confident of a solution, the Euro has been slowly regaining some of its value, and that’s why rates have been falling.

If you need to buy Euros, then consider the fact the rate is still within a few points of a 4 year high, which is not too bad at all considering rates were 10% lower at the end of last year. Don’t end up holding out for an inch only to lose a yard.

If you need to buy or sell Euros, then contact me now to discuss the options you have available to get the best possible rates and make the most of your 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 below to send your free enquiry now, and get a response the same day.

Click here to send me a free enquiry

Pound/Euro continues to drop from 4 year high

Monday 6th August 2012
Good morning. While Gold was been the main focus last week in the UK in the form of Olympic medals, the value of sterling has fallen against the Euro with the pound falling away from recent highs and taking a firm second place while the Euro gains. In today's report I'll take a look at what has caused the GBP/EUR rate to drop away, and where rates may head in the coming weeks.

In this week’s Report:

• Pound/Dollar drops on better jobs data
• Sterling/Euro falls again from its 4 year high
• Possible buying of Spanish bonds strengthening Euro
• Round up of the week’s other data that may affect rates

Sterling vs. Euro;

GBP/EUR rates slipped away from the recent near-four year high of last week mainly due to comments from the Euro zone with Mario Draghi announcing that he will do "whatever it takes" to save the Euro.













The ECB said on Thursday it may resume its programme of buying the government bonds of indebted euro zone countries. The terms and conditions are being drawn up for the bond buying programme and a key factor to bear in mind is that Draghi explicitly left open whether the new bond purchases would be sterilised - i.e. whether the ECB would sell other assets, to leave the total money supply unchanged. This means that if the bond purchases are not sterilised, then they would come under the heading of genuine quantitative easing, like the Bank of England.

On Thursday the Bank of England left interest rates and its quantitative easing target unchanged but expectations are growing that the central bank will opt for further monetary easing in the coming months to aid a flagging economy, in addition to the possibility of an interest cut.

Nevertheless, concerns about the UK have been growing since recent data showed the UK economy slumped in the second quarter, marking its third consecutive quarterly contraction. "The expectations are that the economy will rebound modestly in the third quarter but that doesn't change the picture of growth stagnating," said Lee Hardman, currency economist at BTMU.

Analysts expect the Euro will edge lower against the pound, taking it back towards a near four-year low if worries deepen about debt problems in Spain and Italy. However if it is agreed that the ECB will buy Spanish bonds to reduce their borrowing costs, this could be taken as a positive by the markets, and cause the GBP/EUR rate to drop further. The chart below shows the declines we saw on Friday as the Pound lost ground against the Euro, pushing rates towards €1.26.















So what next?

Both the Euro and Sterling are not without problems, it remains to be seen what the short term future holds for the currency pairing. What we do know is that timing is key when looking to buy or sell your currency. At the Foremost Currency Group we will arm you with market knowledge and look to make the most of the markets with a variety of different contracts available to you.

To find out how good our exchange rates are, and the types of contract we can offer to protect you against adverse exchange rate movements, send us a free enquiry now.

Weekly Economic Data that may affect exchange rates

Monday – Some economic zones have a Bank Holiday today such as Ireland and Australia. There are figures from elsewhere however, with Retail Sales data from the UK. IN the Eurozone we see Greek Inflation data and EU wide investor confidence.

Tuesday – We’ll start in the US today where we have a Speech by the Federal Reserve following last weeks good jobs data. In the UK we see the latest Industrial & Manufacturing production figures, in addition to the latest GDP estimate from the NIESR. In the Eurozone the main releases are Irish GDP & German Factory Orders.

Wednesday – Europe releases lots of Trade Balance data today, including Import and Export measures from Germany and France. There are also Industrial Output measures from Spain and Germany. In the UK we have an inflation report from the Bank of England and some house price data from the RICS. Stateside releases include Non-Farm Productivity and Mortgage Applications.

Thursday – After EU Trade Balance figures yesterday, today is the turn of the UK and we’ll see Imports and Exports released at 9.30am. Wholesale prices from Germany is the only EU release of note. In the USA we have further Trade Balance figures.

Friday – Today is all about inflation numbers. We start in Germany where the latest CPI figures are released. IN the UK the Producer Price Index is the inflation measure released at 9.30. To end the week we have some more Trade balance numbers from the USA and a monthly budget statement from the FED.

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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Sterling/Euro exchange rate forecast July 2012

Friday 29th June 2012
Good morning. Sterling/Euro exchange rates have had a very strong week indeed, remaining supported around the €1.25 level. This is despite further poor data about the UK economy. The reason rates are good is because of the weakness in the Euro. Against other currencies Sterling has fallen this week. I think there is a very high chance that we will see more Quantitative Easing next week, and so I personally think these levels will not last for long. In today’s post I will look at what is weakening the Euro, and why Pound/Euro rates may fall back in July.

UK economic figures disappoint, but Sterling remains strong

We have had some further disappointing figures from the UK this week. Firstly the latest mortgage approval numbers were much worse than expected, pushing Sterling lower against currencies other than the Euro.

Yesterday the latest GDP figures were released, showing that the UK economy shrank by 0.4% in the final three months of 2011, compared with previous estimates of a fall of 0.3%. This confirms that the UK is still in recession, and a deeper one than previously thought.

The estimate for the first quarter of this year was unchanged, showing the economy shrank by 0.3% in that period. A recession is commonly defined as two consecutive quarters of economic contraction. The news pushed the Pound lower, however as stated above, it didn't affect the GBP/EUR rate as the Euro is so weak at the moment.

More Quantitative Easing possible next week

Regular readers will know all about Quantitative Easing, and to be honest are probably as bored reading about it as I am writing about it, however it's the next 'big thing' that will affect rates and so is very important.

For those that don’t know what QE is, this BBC article explains it nicely. In response to the latest figures, some economists said they expected the Bank of England to restart next week its programme of quantitative easing, designed to boost the economy by buying government debt which in turn injects money into the economy.

Quantitative easing is usually seen as negative for the currency as it increases the supply of pounds in the system. But some analysts said signs policymakers would take active steps to protect the UK economy from the euro zone crisis may be seen as sterling positive. The last time QE was announced the Pound/Euro rate dropped by 3 points. I feel we will see this announced on the 5th of July, and expect the Pound to drop as a result

Euro remains weak ahead of summit

Sterling rose again against the yesterday after a German official quashed any thoughts of rapid decisions at a European Union summit. These comments which weighed on overall risk appetite and weakened the Euro making it cheaper to buy.

European Union leaders are preparing to meet for a closely-watched Brussels summit on the fate of the euro. European authorities have unveiled proposals such as the creation of a European treasury, which would have powers over national budgets. The 10-year plan is designed to strengthen the Eurozone and prevent future crises, but critics say it will not address current debt problems.

The fear that nothing will be resolved is what has driven exchange rates this week, pushing the Pound/Euro rate close to the best in nearly 4 years.

So will rates stay at €1.25 or higher, or will they fall again?

It is these problems in the Eurozone that have kept the Euro weak and the reason why buying levels are so attractive at the moment. As discussed above the fact that more QE is on the way, coupled with the unknown factor of how the escalating debt crisis may affect the UK, then there is no reason to think levels will remain at this level. Indeed several times in the last few months we have got to €1.25 only for rates to dip back away fairly quickly.

For those that need to buy Euros, a Forward contract should be given serious consideration. This week we have conducted 3 times as many Forward Contracts than usual, as clients want to fix the rate while it’s close to the best in nearly 4 years.

Even if you don’t need your Euros for some time, we can lock in the current rate for you, and you only have to lodge 10% of the total you want to convert. In this way you can protect yourself against adverse exchange rate movements, while retaining the majority of your capital, safe in the knowledge you have fixed close to the best rates in many years. Please note Forward contracts are only available for conversions of £10k+. Click here to find out more about them.

Pound/US Dollar

Sterling has not actually fared very well against other currencies. Against the US Dollar for example, the Pound has dropped down to the $1.55’s. This is partly due to the poor economic data pulling the Pound down, and partly due to the US Safe haven status. When there is economic uncertainty, the USD generally strengthens and becomes more expensive to buy. This is what we have seen this week.

Blog Off

The blog will be a little quiet for the next week, while I take a short holiday. Blog posts will resume on Monday the 9th of July. My twitter feed will continue to run, posting several updates throughout the day of where GBP exchange rates are, and any interesting stories that affect the exchange rates.

You can still make a free enquiry about our services, and one of my colleagues will respond to you in my absence to explain how we work and how we can help you. when you speak to one of the traders, make sure you quote 'AJABLOG'

I look forward to continue to keep everybody updated with the markets, and continue helping clients achieve the best possible rates of exchange when I return!

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

When you make an enquiry, quote 'AJABLOG'

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

Bank of England decide not to pursue QE, for now..

Friday 7th June 2012
Good morning. The markets remain very volatile with the Pound/Euro rate continuing to be pulled in two directions. Only yesterday we saw lows in the €1.22's and highs touching €1.24's, illustrating just how unpredictable things are at the moment. So today I'll take a look at what is pulling the rate; Fears of Spain having debt trouble, and when the Bank of England are likely to pursue Quantitative Easing.

The Bank of England and Quantitative Easing

Yesterday the Bank of England left it's interest rates at 0.5%, and left quantitative easing unchanged at £325bn despite mounting speculation that it would take steps to stimulate growth this month. Before the decision, it looked like around 25% of analysts thought they would pursue more stimulus, and so this was partly priced into the value of the Pound.

When they announced no change for the moment, the Pound then corrected to the upside. If you look at the chart, you can see the instant reaction at 12:00pm yesterday when the announcement was made.

I actually thought there was an outside chance of them announcing further stimulus. Indeed the decision contrasts with the recommendation from the International Monetary Fund (IMF), which last month urged the Bank to restart QE to help restore Britain’s faltering recovery.

I now expect a much higher chance of further Quantitative Easing in July. It's likely that they have simply held off, as should the situation in Europe deteriorate further, they will have this in their back pocket to try and stimulate growth. So, expect a rocky road for Sterling in the coming months.

Spain issues spook the market

There have been reports in the past few days that Spain was seeking an immediate bailout from eurozone funds. I recent weeks I have been warning that behind the headlines about Greece, Spain and other EU countries are facing serious problems. There is every likelihood that the EU will see a domino effect with debt issues spreading.

Spain's economy minister has since dampened speculation that the country is about to seek a bailout of its bank sector, saying that no decision would be made until audits of the banks were completed, possibly by the end of June.

Giving some support for the Euro was strong demand for Spanish bonds at an auction on yesterday, which was seen as a key test of the country's ability to raise funds, but it had to pay a higher interest rate. The rate on the 10-year bonds was 6.044%, up from the 5.743% paid when bonds were last sold in April.

What next for Pound/Euro exchange rates?

I wish I could foresee what will happen, but unfortunately nobody can! On the one hand, the Euro is being pulled down by the well publicised problems with Greece and Spain. I think the Euro will continue to get weaker.

Will the Pound/Euro rate go up though? I don't think it has much further it can go. It peaked several weeks ago in the €1.25's, but speculation on QE in the UK will likely limit any further gains. Being in recession with more QE widely predicted, I can't see where any Sterling strength is going to come from .

If you need to buy or indeed sell Euros, then contact me today for a free consultation on your options. There are various ways we can help you take control of the market to help you get the best exchange rates.

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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2012 forecast: Pound/Euro recovers to 22 month high

Thursday 3rd May 2012
Good morning. A fairly volatile week so far! The Pound fell earlier in the week when economic data was quite poor, signalling all is not rosy with the UK economy. However during trading yesterday, Sterling recovered well to hit a 22 month high against the Euro, and a 32 month high against a basket of major currencies.

In today’s post I’ll have a look at the latest data in detail, how it has affected exchange rates, and how the coming days data could have an effect on the cost of your currency conversion.


Pound falls earlier in the week

As stated above, the Pound fell back from the record highs we had seen recently, after some quite poor data was released. We had a manufacturing survey that highlighted the fragility of the UK economy, and also the risk that the strong Pound may dent exports also had an effect on the Pounds value.

The pound's losses were quite short lived and limited though, as the currency is still seen as the best of a bad bunch. The Euro is having its own well publicised problems, the US has high unemployment and the chance of further monetary stimulus, and of course the recent numbers showing the UK is in recession may be revised up after last week's unexpected contraction – all of this has helped the Pound recover.


EU data disappoints, pushing GBP/EUR back up

This week we have seen unemployment in the Eurozone reach a record high. For all 17 nations in the Eurozone the jobless rate rose again to 10.9%, the highest since the euro was formed in 1999.

In some rare good news from the EU, Greece has had its government debt rating raised out of default by credit rating agency Standard & Poor's. The country goes to the polls for national elections on Sunday, and has been racked by continual street protests over its austerity cuts.

We also have the Dutch and French political uncertainty, which could mean we see new governments not as sympathetic to the austerity measures needed for EU bailout funds. This has caused concern among investors which has weakened the Euro pushing rates back up to a 22 month high.

Better UK data helps push up the Pound

We’ve had a run of decent data for the UK in the last few days. UK construction data exceeded expectations while the euro zone manufacturing sector contracted further and unemployment rose, highlighting the divergence between their economies. The markets seemed very pleased with the solid figures as a slump in construction output was one reason behind the economy's contraction in the first quarter.

The construction data soothed some concerns about the fragility of the UK economy after manufacturing data disappointed on Tuesday, and raised expectations of a decent PMI reading from the dominant services sector on Thursday.

Furthermore, UK mortgage approvals and consumer credit data also came in above forecasts.
So in summary, the data has helped fuel safe-haven demand for the pound, which has rallied strongly against the Euro in recent months as investors diverted portfolio flows from the indebted euro zone to triple-A rated UK government bonds.

Indeed, Sterling has performed well since April's Bank of England policy minutes dampened speculation of an increase in the bank's 325 billion pound asset purchase programme. With its high levels of debt and strong trade links to a troubled euro zone, however, the UK economy remains shaky and more monetary easing remains a possibility. Analysts, however, said a sister PMI survey on the more dominant services sector, due on Thursday, could have a bigger impact on sterling if it came in on the weak side.

Summary for Pound/Euro forecast 2012

So lots to digest with regards to the UK and EU economies and this is what has been driving exchange rates this week. In short, if we keep getting strong UK data then the Pound will likely remain supported against the Euro at the current highs. If poor data comes in though we could see it dip.

I think the main thing that will affect GBP/EUR rates in the coming days however is the political situation in the EU – continued uncertainty could weaken the Euro and the potential is there for it to weaken further.


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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