How to get the best exchange rate buying or selling Euros

Wednesday 25th September 2013
Good afternoon. The currency markets have been fairly calm recently, and exchange rates seem to have stabilised. We haven't seen a huge amount of movement since my last post. GBP/EUR rates remain around the €1.19 level, and GBP/USD rates just above $1.60.

In today's post I will look at economic statistics that will be released in the next week, and how they may affect exchange rates. I will also explain how I can help you achieve exchange rates that can be much better than those offered by banks and other financial institutions.

So if you need to buy Euros at the best rate, have a foreign currency you need to convert back to Sterling, are looking for the best exchange rates, or are trying to find out if the Pound will go up or down against the Euro, read on...

Pound/Euro forecast 2013

In the last few months the Pound/Euro rate has climbed nicely, peaking a few weeks ago in the mid €1.19's. This is due to much better economic data that indicate the economy is recovering nicely. The only fly in the ointment was last week's poor retail sales that took the wind out of the Pound's sails a little.

Since then rates have stabilised around the €1.19 level. This is because the markets have now accepted the economy is recovering, and so good economic numbers are no longer a surprise.

So will rates go higher? Stay where they are? Drop back away?

I think that for the next few days it will be the UK GDP figures that will have an impact on rates. These are released at 09:30am tomorrow morning. I expect this to be revised up to 0.7%, and the markets have already priced this in to where the exchange rate stands. If the number is higher than this, the Pound/Euro rate may rise. If the number is worse, expect a drop in rates.

On Friday the European Central Bank (ECB) president Mario Draghi gives a speech. I think that his comments could well affect GBP/EUR rates. Put simply, if his words are positive for the Eurozone, Pound/Euro could drop, and vice versa.

For the medium to longer term, I personally don't think that rates will climb to €1.20 and above. Why? Well it wouldn't be in Britain's interest to have higher exchange rates, as it would affect imports to the Eurozone due to UK goods being more expensive. 50% of our exports go to Europe, so if the rate climbed too high I would expect the Bank of England to move to weaken Sterling.

If I needed to buy Euros in the next 6 months, I would look to fix a rate on a Forward contract. This allows you to fix today's rates which are around the best they've been all year. You only lodge 10% of the total to be converted, and the remainder when you instruct me to transfer your Euros. This protects you against the rate dropping away and allows you to budget.

If you need to buy Euros and want the best rates, send me a free enquiry now by clicking here.

Converting Euros back to Pounds

Rates have been moving against you due to the strong pound. If we look at the bigger picture though, last summer rates were nearly €1.30, so it's not too bad. You don't have to look back too far to remember when rates were €1.50+.

So if I had to convert Euros to Pounds, I would take the view that if the EU economy recovers, rates could improve. I wouldn't want to leave things to chance though, so I would place a 'Stop Loss' order to convert funds if rates breached a particular level; €1.20 for example. In this way I can hold out for an improvement in the rate, but have a 'worst case scenario' or safety net should the rate continue to get worse.

Converting Euros back to Pounds? Click here to find out more about the rates I can offer.

Other data releases in the next week that could affect exchange rates

Thursday 26th Sept - UK GDP figures, as I mentioned above, are released at 09:30. We also have US Unemployment and Home Sales numbers in the afternoon.

Friday 27th Sept - Nothing of note from the UK, however there are some important EU releases such as the ECB president's speech and some inflation numbers. In the United States we also have Central Bank members giving talks, so expect some volatility in GBP/USD rates. 

Monday 30th Sept - UK mortgage approvals, but I don't think it will have much of an impact. Of more importance will be EU Inflation numbers and Retail Sales.

Tuesday 1st Oct - The new month starts with a raft of Manufacturing numbers from the EU, Britain and the United States. Could be a volatile day as we also have EU unemployment numbers.

Keen to know how data releases like this could affect the exchange rate you're interested in? Send me a free no obligation enquiry now.

Getting the best exchange rates

 
That's the easy part - the rates I can source are commercial levels up to 5% better than the banks. Send me an enquiry now to find out more. The tricky part is timing your trade so you buy at a good level. There's no way to predict the way exchange rates may move, but what I can do is explain what is causing the movement, and my thoughts on how things may move in the future.

It is of course up to you to decide when to fix your rate, but by taking advantage of my expertise gained from over 10 years in the financial services industry, you can make an informed choice of what to do.

Why not take the advantage of a free consultation by clicking here and sending me an enquiry. I will personally contact you within 24 hours to discuss your requirements, run over your options, and give you an idea of the rates I can offer.

Click here to send me an enquiry or call me today. You may be very surprised how much you can save. I look forward to hearing from you.

Alastair Archbold

Pound could fall by up to 15% this year

Monday 10th June 2013 
Good afternoon. It’s been relatively stable in the world of exchange rates over the last week or two. Both the Bank of England and European Central bank have kept interest rates on hold again, as expected. We now look towards the new Governor taking over in a few weeks, and I’ll go in to detail below on how this could potentially weaken the Pound considerably. 

We also saw a surge in the GBP/USD exchange rate last week, rising more than 2 cents in just a few hours. So what do we have in store in today’s report? 

• New Bank of England governor could weaken Sterling
• Pound/Dollar rates surge by 2 cents 
• Positive comments from ECB increase risk appetite 
• Economic data releases this week that might affect exchange rates 

New Bank of England governor could weaken Sterling 

The Bank of England has kept its stimulus programme of quantitative easing (QE) unchanged and also held interest rates at 0.5% at its recent meeting last week, as expected. However there could be a change in policy when the new Bank governor, Mark Carney, arrives in July. The BoE has been split in recent months over whether to increase QE from its current level of £375bn. 

Recent economic data has painted a mixed picture of the UK economy. Official figures showed retail sales fell in April, while unemployment rose in the three months to March. Last month the Bank upgraded its own forecast for growth, and recent data confirmed that the UK has avoided a triple-dip recession, growing by 0.3% in the first quarter of the year.

Due to the mixed data, 3 of the 9 MPC members have voted for more QE at recent meetings. There is now speculation the new Governor Mr Carney will pursue more QE which could weaken the Pound significantly.
 

Pound could fall by up to 15%

Mr. Carney, the current Bank of Canada governor who takes over from Sir Mervyn King in July, said central bankers should consider “changing the policy framework” to stimulate a desperately weak economy. 

His words were directed at the Bank of Canada but will be seen as a hint that he will push for radical QE action in the UK, where the economy has been stagnant for two years. Some reports have suggested Mr. Carney will try to devalue the pound by as much as 15% in a last ditch attempt to cement the UK recovery. This of course would mean the cost of buying overseas could increase. 

It seems likely that Mr Carney is going to try and use Quantitative Easing to weaken the Pound. This is because while a high exchange rate is attractive for overseas property buyers, it’s not helpful for returning the UK’s economy to growth. It makes our exports more expensive, and 50% of UK exports go to the Eurozone. A weaker Pound would make exports more attractive and aid economic growth. 

Looking for the best Pound/Euro exchange rate? Click here to send a free enquiry.

Pound/Dollar rates surge by 2 cents 

Last week we saw a surge in the GBP/USD rate, pushing up over 2 cents in just a few hours. This was a little unexpected, and has been put down to increased risk appetite. Generally when there is global economic uncertainty as we have seen recently, investors buy US Dollars as it is seen as a safe haven currency. Comments from Europe last week seem to have calmed the markets a little, and the more positive outlook for the EU has meant investors are more confident. As a result, all these investors that had bought US Dollars sold them off, and it was this that caused the weakening of the USD. 

Moving forwards, as outlined above the threat of more QE means there is a real chance we could see rates fall back to below $1.50. It all depends on how UK economic data fares in the coming weeks, which I’ll go over later in today’s post. 

Looking to buy or sell US Dollars at the best rate? Click here to find out more about our rates. 

Economic data releases this week that might affect exchange rates 

We have quite a few important releases this week that could cause exchange rate volatility. 

Today we had some minor EU inflation data and investor confidence measures. The numbers were little worse than forecast, and this caused the Euro to weaken off and push GBP/EUR rates close to €1.18. 

Tuesday - we have Industrial and Manufacturing production figures from the UK at 09:30am. These are a good indicator of UK economic activity, and so can affect Sterling. Also on Tuesday we have the NIESR UK GDP estimate. This is very important as the report is highly reliable, and could affect whether the new BoE governor will pursue more QE when he takes over. 

Wednesday - UK data is unemployment data. In the Eurozone we have Industrial production measures and inflation data, which could affect future interest rate movements in the EU. Also on Wednesday we have the latest decision on Interest Rates from New Zealand, so this might affect GBP/NZD rates. 

Thursday - Nothing of note from the UK on Thursday, but we do have a monthly report from the ECB so we could see movements in the GBP/EUR rate. Most data today though is from the United States – Jobless Claims, Retail Sales, Trade Balance figures. If these numbers are better than expected, then GBP/USD could drop away. 

Friday - sees a host of inflation and employment data from the EU, so expect a choppy day for the value of the Euro. We also have inflation data from the USA. 

Want to talk about how economic data could affect your currency requirement? Click here to send a free enquiry and have a free consultation. 

Getting the Best Exchange rates 

The rates I can help you achieve are up to 5% better than banks offer, so the savings you could make are significant. 

We are fully authorised and regulated by the Financial Conduct Authority, so you can be confident your funds are safe. 

Make a free no obligation enquiry today to see how much you could save. 

Exchange rates fall after BoE Inflation report

Wednesday 13th February 2013 

Good afternoon. In my last post I outlined the fact that Sterling had made a recovery against the Euro. However I’m afraid the recovery was short lived, and the Pound has continued to lose value and rates have fallen. In today’s post I’m going to explain why this has happened, and look at the Pound/Euro trend for the coming months. 

So let's get straight on to why rates have fallen again...

Bank of England weakens the Pound pushing exchange rates lower. 

This morning at 10:30am, the Bank of England (BoE) released it’s latest inflation report, delivered by outgoing governor Mervyn King. A link to the full report is here. This afternoon I will simply run over the effects on exchange rates rather than analyse the full report in detail. 

Recent figures have shown that the economy shrank by 0.3% in the last three months of 2012, fuelling fears that the UK could re-enter recession, defined as two consecutive quarters of contraction. In todays report, Sir Mervyn said: ‘The UK economy is set for a recovery. That is not to say that the road ahead will be smooth. This hasn't been a normal recession and it won't be a normal recovery.’ 

A more recent GDP estimate indicates that there may not be a contraction in the first 3 months of this year. Indeed, the BoE does not expect a triple-dip recession but said GDP was likely to continue at below pre-financial crisis levels for around another two years. 

"Growth is likely to be weak in the near term but further out a continued easing in domestic credit conditions, supported by the Bank's asset purchase programme and the Funding for Lending Scheme, together with the stronger global backdrop, underpin a slow but steady recovery in output," the governor said. 

So why did his comments weaken the Pound? 

The key to why the Pound fell is that the markets see his comments as Sterling negative. Sir Mervyn King said “there are limits to what can be achieved via general monetary stimulus” as he urged the Government to “find ways of boosting overseas demand for our products” and push through “supply reforms” – often associated with tax cuts and deregulation. 

Reading between the lines, what he means by this is we need a weaker Pound in order to make our exports more attractive. There is now the increased chance of further Quantitative Easing. The BoE actually want the Pound to weaken further and their policy moving forwards will likely reflect this. That is the reason the Pound fell so sharply when the report was delivered. 

Also of concern is the fact that the Bank’s update on the state of the economy came as the head of the Government’s Debt Management Office claimed that markets expect the UK to lose its prized AAA sovereign credit rating – this is also weighing on the Pound and knocking exchange rates lower. 

 Sir Mervyn was delivering his penultimate Inflation Report. His last Report will be in May, before he is replaced by Mark Carney as governor in the summer. It will be interesting to see if Mr Carney also pursues the policy of trying to weaken the Pound to encourage an export led recovery. We shall see. There are some interesting charts on the telegraph website which you may find of interest here. 

Click here to find out more about our exchange rates.

So will the Pound keep dropping or recover? 

Nobody can predict which way the markets will move. My personal view is that we could well see more weakness, especially if we do lose our AAA credit rating and/or see more Quantitative Easing from the BoE. So for those needing to buy Euros, you should consider your options now to protect against adverse exchange rate movements. 

Rates for those converting back to Sterling are close to an 18 month high, so if I needed to convert Euros back to Sterling I would be keen to take advantage of the rate while it is favourable. 

In the EU, there is talk of the European Central Bank also trying to weaken the Euro in the same way as our central bank is weakening the Pound. This could cause rates to climb back but there is no way of knowing if this will happen. We are entering the dangerous arena now of a currency war, where central banks race to try and devalue their currencies to make investment into their country more attractive. This makes predicting where exchange rates may move impossible and also makes swings in the rate extremely volatile, such as we have seen over the last few weeks. 

As you can read here, G7 nations have recently agreed not to engage in so called currency wars, however what is said and what actually happens are often very different things.

What to do if you need the best exchange rates. 

I am a senior FX Trader for one of the UK’s leading foreign exchange brokerages. Our rates are up to 5% better than achievable at banks and other financial institutions. It’s not just about better rates though; we offer a free consultation to anyone who needs the best rates. 

We can discuss your requirements, explain what is happening with the market and run over the different options you can consider. In this way you will be able to make an informed decision on when to fix your rate, and you may be surprised how much you can save by taking advantage of the best commercial exchange rates available.

Click here to send me a free enquiry

Pound/Euro at 1 year low after GDP figures

Monday 28th January 2013   

Good morning. Well last week was a very disappointing one for the Pound, with GBP/EUR rates falling to a one year low due to poor GDP figures. Today’s report will consider the dramatic fall in sterling/euro rates that has occurred recently. We will examine the effects of the UK’s forecast and announced GDP figures, EU data, Bank of England policy, as well as, David Cameron’s recent speech on Britain’s role in the EU. I'll also look at how you can protect against further falls.

In this week’s Report: 

• UK GDP disappoints at -0.3%
• Pound/Euro at 1 year low
• Pound/Dollar at 6 month low
• Round up of the week’s other data that may affect rates  

Sterling vs. Euro falls to 1 year low; How and When Did this Begin? 

Sterling euro rates have been subjected to a perfect storm with regard to news and data as of late. GBP/EUR had fallen away from the summer highs but appeared settled in the low to mid €1.20’s; this was before the European Central Bank's (ECB) interest rate decision and the initial predictions for Britain’s Gross Domestic Product. The spike in sterling/euro rates this summer was due to an interest rate cut by the ECB. Interest rate cuts can be used by Central Bankers as a means to stimulate the economy and the ECB used one of the major tools in their arsenal. 

 

The well-publicised issues in Greece, Spain, Portugal, Italy, and even France, left many euro-bears expecting a similar cut to rates at the beginning of this year which would prompt another round of euro weakness. Yet when Mario Draghi took the stage to announce the ECB’s decision earlier this month, not only did he leave rates unchanged, he offered a far more positive prediction for the Eurozone in 2013. This initial piece of euro-strength saw a drop in rates which was compounded by the news that the UK was forecast to have contracted in the final quarter of 2012. 

GDP figures cause Pound to fall even further

The announcement came at 9:30 last Friday; the official figure was -0.3%, and the contraction prompted a significant drop in rates; a 10.2% drop in mining and quarrying was one of the more significant contributing factors. There was a degree of trepidation when Britain exited recession in quarter three of last year; there were many claiming that the growth was mostly due to anomalous events, such as the Olympics, and once that artificial stimulus was over we would continue down a similar path. 

The contraction is the clearest sign yet that the UK could fall into a Triple-Dip Recession and there is a genuine fear that the Britain could lose its Triple-A credit rating. 

Unfortunately there is little continuity with our current coalition government; particularly when last week Nick Clegg, in typical dissenting fashion, publicly declared that capital spending cuts were a mistake. With continual U-turns and no discernible consensus on policy, other than anti-EU rhetoric and deficit reduction speeches, there is a genuine fear that the coalition may have led the UK down a very rocky road to recovery indeed. Markets are never fond of uncertainty and the poor data and lack of congruent direction have been a major factor in sterling’s recent decline. 

Contact me now to find out how to get the best exchange rates

How Has Data From the EU Affected the Rates? 

Despite the recent ECB positivity Europe remains an incredibly polarised continent. This was particularly evident last Thursday where two very different sets of data caused brief swings in the rates. French PMI came in much poorer than expected and Spanish unemployment continued to grow; now at a staggering level of 26.02%. 

The data was a brief reminder that there are still significant problems in the Eurozone and it was only last year that Citi were predicting a Greek exit from the Eurozone and Spain to apply to ECB’s bond purchasing program by November. Once again Germany rode in to the rescue; a less than expected contraction in manufacturing and growth in services PMI saw the single currency retrace the ground lost by its constituents’ weaker counterparts. 

What Could the Bank of England do to Intervene? 

The most recent Bank of England minutes revealed a unanimous vote to keep interest rates at the current level and Mervyn King has spoken at length about the pros and cons of quantitative easing. Governor King has outlined that that particular form of monetary policy is subject to the law of diminishing returns; in short this means that the more the BoE do it, the less effective it becomes. On this matter all but one of the deciding members opted to leave QE on hold. 

There is now the risk however that more QE will be needed given the recent figures, and this would weaken the Pound and potentially cause exchange rates to call even further. 

Find out how to protect against the rate dropping further. 

David Cameron’s Speech on Europe 

Last Wednesday David Cameron stood at the Bloomberg offices in London to announce he was to propose an in/out referendum for the UK on Europe. The crux of his argument was that he intended to renegotiate Britain’s seat at the European table; with many wondering how much of it was simply a ploy to keep Nigel Farage and the Tory Euro-Sceptic Motley at bay. 

John F. Burns, writing for The New York Times, described the announcement as a “giant political poker game” and it appears Mr Cameron has gone all in. Former Prime Minister Tony Blair called the move “holding a gun to his own head” and whilst a referendum could be beneficial to the UK the implications of Britain exiting the EU are unclear and could be very damaging. Blair’s comments will have referred to the fact that the referendum is not due until 2015 and the uncertainty will be detrimental to sterling and the UK economy; but also, there seems to be an obvious self-motivated element. 

Cameron’s popularity will likely increase with those in the UK harbouring anti-EU sentiments; as there are surveys that suggest UKIP have moved to third in the polls ahead of the Liberal Democrats. Also, the referendum is conditional on the Conservative Party, and Cameron, remaining in power after the next general election. 

What Can I do About It? 

Despite all the doom and gloom for the UK there are way you can maintain a level of control of your finances; if not your government or the markets. If you will need to purchase euros, and are worried the rate could continue to fall further, you could enter into a forward contract that lets you lock in today’s rate which would only require you to lodge a 10% margin against the total amount you want to convert. 

Alternatively you could use a stop loss that allows you to buy the euros 24/7 if the rates falls below a pre-agreed level. If you are selling euros the rate has certainly gone in your favour; it is important to keep in mind that market movements are fickle and if there is another well-publicised issue in the Eurozone we could see these gains retraced. 

Limit orders allow you to set an optimistic level in the market which, like the stop-loss, can be bought any time of any day if the level is triggered. Certainly with this much market uncertainty it is worth taking a free consultation 

If you need the best exchange rate, contact me now.  

Quote 'AJABLOG' when you get in touch.  

Weekly Economic Data that may affect exchange rates 

Monday – There is no UK data today. In the Eurozone we have German Trade Balance numbers in addition to Retail Sales. The USA releases its most recent home sales data and Durable Goods orders. Further afield New Zealand has trade balance numbers at 21:45pm.

Tuesday – Again nothing today from the UK. In Europe we have German & French Confidence measures, Spanish Retail Sales, and Greek inflation data. The US also has confidence measures. 

Wednesday – The UK today releases consumer credit numbers, Mortgage Approvals and Lending data. In the Eurozone we have a Spanish GDP estimate, Italian business confidence measures, and a German bond auction. We also see Portuguese Consumer and Business Confidence. In the states we have GDP numbers, Mortgage applications, and an interest rate decision. New Zealand also has an interest rate decision at 8pm. 

Thursday – Fairly quiet in the UK with only House Price data being released. In the Eurozone we have various inflation measures from most countries, in addition to German unemployment. The USA also releases unemployment numbers and inflation data. We also see the most recent GDP numbers from Canada. 

Friday – It’s been a very quiet week for the UK, and today is no different; manufacturing PMI is the only release of note. In the Eurozone we have inflation number; unemployment figures. In the United States we have unemployment, inflation data, construction spending, consumer sentiment, and Non-Farm Payrolls.

  
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 exchange rate forecast 2013 outlook

Wednesday 23rd January 2013 

Good afternoon. Right then, this afternoon I’m putting up my thoughts on what has happened this week with exchange rates, what has been moving the Pound against the Euro and other currencies, in addition to what may happen in the next few days in the currency markets. 

The Pound continued to fall at the start of the week, dropping to a 10 month low against the Euro. We have since seen things stabilise, and Pound/Euro is steady just above 1.19, with Pound/Dollar around 1.5850. 

Now, it's quite a long post today so bear with me while we dig a little deeper and find out what has been going on. I’m going into quite a bit of detail covering: 

• UK borrowing worse than expected 
• Better UK Jobs data halt Sterling’s decline 
• The effect of Cameron’s EU speech on exchange rates 
• The Bank of England and Quantitative Easing 
• UK Growth Figures this Friday 
• How to get the best exchange rates and time your execution

 Excited? I am. Let’s get started! 

Public Sector Borrowing knocks the Pound further down 

Earlier this week figures showed that the government borrowed slightly more than expected in December, fuelling fears that the UK could lose its coveted AAA credit rating. The result was that Sterling continued its recent decline against the Euro. 

All three of the major credit ratings agencies now have the UK's AAA rating on negative outlook, meaning they could downgrade its rating if performance deteriorates. The risk of this happening is really weighing on Sterling at the moment, and the Pound fell further to a 10 month low against the Euro as a result. 

Better UK figures halt Sterling’s decline 

After a very poor start to the year in which Sterling lost 3.5% of its value compared to the Euro, some better figures this week finally halted the decline in rates. It is by no means a recovery, but rates have not fallen any further in the last 24 hours. 

This morning we saw the latest UK unemployment figures, showing that the total has fallen to 2.49 million. The UK unemployment total has fallen to its lowest level for 18 months while the number of people in work has reached another record high – in fact total UK employment is now at 71%, which is the highest it’s been since records began in 1971! You can read more about the employment figures here 

Despite these great numbers, the Pound hasn’t gained much ground. The number of people out of work in the UK has been falling steadily for almost a year, despite concerns over the economy's sluggish growth. This is strange however, and probably the reason Sterling hasn’t gained much strength. It seems unlikely to me that employment can continue rising while the economy is flat lining, and this can’t go on forever. There are worries that figures to be released on Friday, which I’ll go into more detail about shortly, which will show that the economy contracted during the final quarter of the year. 

Cameron on EU 

Also today, we heard David Cameron give his long awaited speech on the future of Britain’s position within the Eurozone, and he said the British people must "have their say" on Europe as he pledged an in/out referendum if the Conservatives win the election. 

The prime minister said he wanted to renegotiate the UK's relationship with the EU and then give people the "simple choice" between staying in under those new terms, or leaving the EU. 

You can read a detailed report on the speech here 

What Cameron’s EU speech actually mean for the Pound and exchange rates? 

In my opinion he has simply kicked the issue 5 years down the road. This also means that there will now be continued uncertainty over the UK’s membership of the European Union for 5 years. Markets do not like uncertainty, and so I think this could hinder investment in to the UK until our position is resolved once and for all. So all in all it’s probably bad news for Sterling, and another reason we haven’t seen rates recover significantly despite the better jobs data this morning. 

Bank of England's effect on currency rates

Today we saw the latest Bank of England minutes, which showed that all 9 members of the Monetary Policy Committee voted to keep interest rates on hold. All but 1 of the members also voted to hold off with any further Quantitative Easing, for the moment. 

So as expected really and not much movement on exchange rates. OF more importance was the governor Mervyn Kings speech yesterday evening. In it, he called for further action to boost the UK's ailing economy. 

To combat the downturn, the Bank has cut interest rates to record lows and pumped £375bn into the economy to try and stimulate demand under the programme known as quantitative easing (QE). QE was "crucial in avoiding a depression," he said. So while the MPC have decided to hold off more QE for the moment, we will probably see more of it this year, particularly if Friday’s GDP numbers disappoint. 

GDP figures this Friday – very important for the future of GBP/EUR rates 

On Friday the latest UK GDP numbers will be released. At the moment most forecasts suggest that this will show the economy shrank by 0.1% in the last 3 months of 2012. You can read more about what the GDP number means here

 In a nutshell, if the number is lower than this, expect Sterling to fall against other currencies. This is because it would increase the chance of the UK heading back into recession for a 3rd time, making it very likely we would lose our prized credit rating, and also mean more QE is on the cards. 

Find out about the exchange rates I can offer. 

What you need to know if you need to buy or sell currency 

Regardless whether you need to exchange Sterling for Euros, Euros for Sterling, or indeed change any other currency pair, the markets are extremely volatile at the moment. 

For those exchanging Sterling, I would say the real and present risks to the UK economy mean further drops in exchange rates are very likely. Many clients are choosing to fix their exchange rate for now for any requirement in the next 6 months. You can do this by only lodging 10% of what you want to convert now, thereby protecting against rates falling further. 

If you are converting another currency to Sterling, then things may get better should the GDP figures be poor, however this is not a given. You should consider placing a Stop Loss order to protect you in case the rate starts to get worse for you. 

To discuss how we can help you get the best exchange rates, or to find out all the options you have open to you, contact me for a free consultation. I can discuss what you need to do, give you my opinion on the currency market movements and where analysts think rates are headed, and run over all the available options open to you. I look forward to hearing from you. 

Click here to send me a free enquiry now. 

Will the Pound/Euro rate keep dropping?

Friday 18th January 2013

Good morning. The UK is in a cold snap, and snow is falling across the country. The UK economy and Sterling has also been getting a pretty frosty reception from investors recently. This week was another torrid one for the Pound/Euro cross I'm afraid, with exchange rates continuing to fall and dropping below the €1.20 level. In today’s report we will take a look at why Sterling has fallen & what the forecast and predictions are for the coming months. We will also look at what tools we can provide to help protect you against adverse exchange rate movements to help you make the most of your currency. 

In this week’s Report: 

• Pound/Euro tumbles below €1.20
• GDP figures this week could confirm negative growth
• Pound/USD drops below the $1.60 level. 
• Round up of the week’s other data that may affect rates

Sterling vs. Euro; Why have the rates fallen so much? 

The pound has now fallen 3% so far this year. Last week continued poor data pulled rates below the €1.20 level. It looks increasingly likely that 2013 could be a very disappointing year for sterling.

There are three main areas of concern for the pound: firstly, a raft of poor data shows the UK economy is struggling and that we could be headed back in to recession. Secondly we have the potential loss of the UK's AAA credit rating which is becoming increasingly likely. On Tuesday, the Fitch ratings agency warned that the UK's top-notch sovereign credit rating could be cut if the Chancellor of the Exchequer's March budget shows debt levels continuing to rise. 

Thirdly, Britain's unclear position in the EU is also weakening the Pound. We only have to look back a few months to see that currencies react badly to uncertainty. The longer this debate drags on, the harder sterling will fall. 

What could happen to rates this week?

So part of the reason for the drop is uncertainty over the UK economy. Next week will give some important clues on which way things are headed. On Wednesday we have the Bank of England (BoE) minutes, which will show how they voted on the recent decision to hold off changing interest rates or pursuing more Quantitative Easing. This may indicate further QE is on the cards and so could pull the Pound down further. 

Of even more importance will be Friday’s GDP figures. A recent estimate indicated the economy shrank by 0.3% in the last 3 months of 2012. If these figures are confirmed, it would mean the economy didn’t grow at all last year, and increases the chances of the UK heading back into recession for a 3rd time. 

The decline in the rate is not all down to the UK however, it’s also partly due to a strengthening Euro. In recent weeks we have had the ECB giving a very robust outlook for the Eurozone, and the markets now see the EU debt crisis being tackled. This has given confidence back to the single currency, and it has gained strength as a result.

So what are the forecasts for the rest of the year? 

The UK economy is still very soft and that adds up to testing times for sterling," said Daragh Maher, foreign exchange strategist at HSBC. He has forecast the Sterling/Euro rate to drop to 1.1250 by the end of the year. "There's going to be an erosion of the view that sterling was the best of a bad bunch," he said. In stark contrast, Barclays Capital still have their 12 month forecast at 1.28! This shows how uncertain things are for Sterling/Euro rates and that nobody knows which way it is going. 

In truth, nobody can accurately predict which way exchange rates will move. There are however ways you can protect yourself against adverse exchange rate movements, and make sure your currency doesn’t cost more than necessary.

How to protect against the rate getting even worse. 

Regardless whether you are buying or selling Euros, one option is fixing your rate now for up to 2 years with a Forward contract. You only have to lodge 10% of the total you want to convert, and you are then protected against the rate moving against you, and this allows you to budget effectively. 

If you think the rate will get better for you, then another option you can look at is a Stop Loss order. This allows you to set a rate below the current level, and if it drops below this your currency is automatically purchased. Using this tool allows you to take advantage of any gains in the rate, but should the market drop then you have a worst case scenario allowing you to budget. 

Make an enquiry today for free

Given there is so much uncertainty surrounding the exchange rate at the moment, with very different forecasts from major banks, now is the time to take stock of your requirements for the year. The first step should be a free consultation. In this way I can discuss your requirements and look at all the options available to you, allowing you to make an informed choice on when to fix your rate. 

Don’t simply leave things to chance and hope the rate will get better. Hope is not a reliable economy tool. Contact us today and take the first step to making the most of your currency.

Weekly Economic Data that may affect exchange rates 

Monday – Fairly quiet today as it’s a market holiday for Martin Luther King day. We do have some House Price data for the UK, and some inflation numbers from Germany, the EU’s largest economy. 

Tuesday – In the UK today we will see the latest Public Sector borrowing numbers, in addition to an industrial trends survey. In the Eurozone we have the EcoFin meeting and an economic sentiment survey. In the United States we will see the latest Home Sales and manufacturing numbers. 

Wednesday – An important day for the Pound: First we have the Bank of England minutes, showing how the vote went for the most recent QE and interest rate decision. This is followed by a raft of unemployment numbers. The only EU data of note are Trade Balance numbers from Italy. In Canada we see the latest interest rate decision. 

Thursday – UK Mortgage applications is the only data of note for Britain today. In the EU however we have Inflation data from France, Spain Germany, and the EU as a whole, which may dictate interest rate movements this year. Over in the states we have unemployment and jobless claims numbers. 

Friday – We end the week with the all-important UK GDP numbers. We could see confirmation the economy is in retraction again. Elsewhere there are some business climate assessment figures from Germany, and Home Sales data 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.  

Click here to send me a free enquiry

Will Pound/Euro drop further? 2013 Exchange Rate Forecast

Wednesday 16th January 2012 
Good afternoon. I thought I’d post up a mid-week update on what’s been happening with exchange rates, and Sterling in particular. In a nutshell the Pound is still struggling to make any headway, remaining between 1.20 and 1.21 against the Euro, and just below $1.60 against the US Dollar. In today’s post I’m going to have a look at recent UK economic data, and what effect this may have on exchange rates in the coming weeks, including the forecast and outlook for the best exchange rates in 2013. 

Euro strength means GBP/EUR is quite low 

The Euro has gained much strength in the last week, pushing GBP/EUR rates to their lowest in 9 months. A European Central Bank policymaker soothed investor concerns today however, that officials might take steps to undermine the currency's recent strength. 

ECB member Ewald Nowotny said the exchange rate was "not a matter of major concern", contrasting with comments from Eurogroup head Jean-Claude Juncker who on Tuesday prompted investors to sell the euro by saying it was "dangerously high". This is what caused the slight uplift in rates in the last 24 hours, but after the recent comments, the general downward trend has now continued. 

UK Inflation: Could there be more Quantitative Easing on the cards? 

UK consumer prices inflation held steady at 2.7% in December, official figures have shown this week. John Longworth, the director general of the British Chambers of Commerce, said however that he expected inflation to rise in the near term, as further rises in utility and food prices kicked in. Higher inflation is clearly a concern for the UK economy as it increases the squeeze on both businesses and consumers, further exacerbating an already weak economic environment. 

Now usually, the Bank of England would combat this with higher exchange rates, and this in turn would strengthen the Pound. At the moment though, rates are at a record low of 0.5%, and there is little prospect of them being raised to head off rising inflation. Instead, they would likely do more Quantitative Easing, which many are rumouring will happen again this year. If so, there is a risk to the downside for the Pound as QE would weaken Sterling. 

UK Credit Rating at Risk 

 

There is more risk to Sterling than just QE however. Part of the reason rates have plummeted in the last week is the fact that the UK continues to risk losing its top AAA credit rating if it does not reduce its debt, as a senior figure at Fitch Ratings agency recently said. Fitch has had the UK's AAA rating on "negative" outlook since March 2012, meaning that it is warning it may cut it. 

If they do, it would mean the UK is a less attractive place to invest, and so this is weighing on the Pound and stopping any recovery in rates. 

Summary 

Pound/Euro Rates have been dropping for a while now, due to poor UK data and a stronger Euro. What will happen in the coming weeks depends on further UK data to come this month, and market reaction to the EU debt crisis. I do believe that longer term we will see rates recover as the UK economy picks up, however I think things may get worse before they get better. 

If you are buying Euros, then you can place a ‘Stop Loss’ order, which is where we can secure your currency if it drops below a pre-agreed level. This means if rates improve you can still take advantage, but have a worst case scenario should the market continue to fall. 

For those converting Euros back in to pounds, then if it were me I would probably take advantage of the 9 month high. It hasn’t got any better in the last day or two, and if we continue to get conflicting messages from the ECB, investors could sell off the Euro. 

Regardless which currency you need to buy or sell, send me a free enquiry today to see how we can help you achieve the best exchange rates possible. I look forward to hearing from you.  

Click here to send me a free enquiry

Pound/Euro & Dollar forecast for 2013

Friday 4th January 2013

Good afternoon, and a very happy new year to all my regular readers, and of course those finding my site for the first time!

It's the first post of the year, so this afternoon I'm going to go in to quite a bit of detail on GBP/EUR rates, GBP/USD rates, look what's happened recently and where rates may be headed in the coming months. 

If you need the best exchange rates, don't forget to send me a free enquiry to find out about the exchange rates I can provide - they are significantly better than you can get at banks and other financial institutions!

In this week’s Report: 

• Pound/Euro recovery short lived as rates start to drop again 
• Pound/Dollar also drops slightly from 16 month high 
• Fiscal Cliff deal agreed in United States 
• Round up of the week’s other data that may affect rates

Sterling vs. Euro; 

In recent months the GBP/EUR rate has been falling; however at the start of 2013 we saw rates pick up slightly. This wasn’t to last however, as by the end of this week the rate had started to drop again. In today's report we’ll look at the reasons why, and where rates may be headed. 

How has Fiscal Cliff affected Euro

The New Year ushered in a late fiscal cliff deal, and with it a resurgent euro, at least initially. Much of the focus last week was on the United States; not only due to the fiscal cliff, but also on the US debt ceiling and the country’s most recent data releases. These results have largely been the driving force behind Sterling/Euro rates and this week’s Euro report will look at how this and other events have affected the GBP/EUR cross. 

The compromise between the White House and Congress’s dissident Republican faction meant that the US economy would not be automatically plunged into recession. As the world’s largest economy, the state of America’s finances will always have a peripheral effect on economies like those within the Eurozone; and as such, stalemate in the fiscal negotiations would have been disastrous for the single currency. 

Late on January the 2nd the act was signed into law, close enough to the deadline to avoid any drastic price movements. The equity markets, which largely mirror the euro, responded favourably with the FTSE 100 breaking through the 6000 mark. The euphoria was short-lived however, as the following day euro strength receded as fear began to re-enter the public imagination. An undesirable side-effect of avoiding the cliff is the effect on US spending. The debt ceiling has been an issue for some time and the new taxes imposed on the wealthy are viewed as not enough to justify current public spending. 

This meant that the risk-on approach adopted early in the week was side-lined in favour of repurchasing safe-haven assets, like the dollar, which had previously been subjected to aggressive selling. The shift from investors buying the euro to buying the dollar was further exaggerated by the publication of the Fed’s minutes, which hinted at an end to the QE infinity program, and by positive data stateside which would act as catalyst to a winding down of Central Bank intervention. 

How has UK data affected Pound/Euro

Friday saw a fight back from the single currency against the pound. Month on Month Italian CPI and Year on Year European CPI both exceeded expectation yet the UK’s PMI Services Index was down from 50.2 to 48.9; a score of 50 is the minimum level required to indicate growth. The move indicated that the UK economy could have contracted as much 0.2% in the final quarter of 2012 reawakening fears that our exit from recession may have been largely due to events like the Summer Games. If the UK were to fall into a triple-dip recession, sterling-euro rates could continue to fall, making the purchase of euros a more expensive process. 

Time will tell whether the Conservative Party can grow an economy through cuts; what is clear however, is that Friday’s data brought negative direction to a cross that was largely range bound, but erratic, in its path. 

Do you need to buy or sell Euros?

If you are purchasing euros, I can guide you through methods of protecting yourself against adverse movements in the rates. 

For those needing to sell, we’re close to the best rates in 8 months; Forward contracts can lock in today’s price giving you certainty in a volatile economic climate. 

Alternatively, if you have a minimum rate you need to achieve, a limit order can be placed in the market, which can be bought twenty-four hours a day, seven days a week, if the rate drops below the pre-agreed level. 

Send me an enquiry now to discuss further.

Sterling vs. US Dollar; 

As mentioned in the Euro report, the main driving force behind fluctuations in the GBP/USD rate this week has been the apparent resolution to the US ‘fiscal cliff’ problem. The fiscal cliff was the forecasted sharp decline in the US budget deficit that could have occurred at the start of the New Year, due to increased taxes and reduced spending. 

 

The deficit—the difference between what the government receives in revenues and what it spends—was projected to be reduced by roughly half in 2013. Although reducing a country’s deficit is seen as a positive move, the associated tax increases and spending cuts were forecast to plunge the US economy back into recession and increase unemployment levels as a result. 

The American Taxpayer Relief act of 2012 was signed into law by President Obama on January 2 and eliminated much of the tax side of the fiscal cliff. As a result, the safe-haven dollar fell sharply on Wednesday as investors moved away from the US currency into riskier assets. 

As a result, GBP/USD hit a seventeen-month high of 1.6337. However, optimism over the US budget deal quickly waned; giving way to concerns that more budget wrangling may lie ahead. Consequently, the dollar began gaining strength with safe-haven flows driving GBP/USD rates lower. The dollar is often favoured at times of market uncertainty and as initial optimism over the budget deal was replaced with scepticism, the trend in rate movements reversed and the dollar regained the ground it had lost over the previous two days. 

The greenback continued its march as the week drew to a close as minutes from the Federal Reserve’s latest meeting indicated the central bank looks set to continue its bond-buying scheme over the coming months, helping to stimulate economic growth. However, rate movements were not entirely one-directional as US employment figures caused a brief rise in Cable. However, this was only temporary with the rate sliding further as market players unwound their positions ahead of the weekend. 

Overall, it was a fairly eventful week for the currency pair, with a 2% difference between the high and the low. This is considerable, considering the short trading week and the usual post-Christmas lull in activity. To put this movement into perspective, the cost of purchasing $250,000 early in the week was around £3000 less than if the dollars had been purchased on Friday. 

Considering current market volatility, if the Dollar is the currency you need to trade, send me a free enquiry now.

Weekly Economic Data that may affect exchange rates 

Monday – Today’s UK data comprises of UK House Prices, and the CB Economic Index, which looks at overall economic activity and is considered as a measure for economic stability. In the Eurozone we have some inflation numbers and a measure of Investor confidence. 

Tuesday – The only UK data of note are the latest Retail Sales numbers. It’s quite busy in the Eurozone however with Trade Balance data from Germany and France, EU wide Retail sales, Unemployment and Industrial orders. In the USA we have an economic optimism survey along with some consumer credit numbers. 

Wednesday – Today is the UK’s turn for Trade balance figures which show overall imports and exports. In Europe we have some important GDP figures along with industrial production numbers from Germany and Greece. Further afield we have Trade Balance figures from New Zealand at 21:45pm. 

Thursday – Today we have the all-important interest rate decisions from both the Bank of England and European Central Bank. We will also see the latest decision on whether the UK will increase its Quantitative Easing programme. Also in the EU today we have Inflation figures from France and Greece. We also see Greek unemployment figures. In the USA we will see Jobless Claim numbers, and speeches by some key members of the Federal Reserve. 

Friday – We will see the latest GDP numbers from the UK today, along with Industrial and Manufacturing production figures. The only EU data of note is the French budget and Portuguese inflation figures. We round off the week in the states with a Budget statement and the latest Trade balance figures.  

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