Why has Pound/Euro risen to €1.38?

Pound/Euro surges on ECB comments 

In my last post on Tuesday, I said that today’s ECB press conference would be key to GBP/EUR rates, and that if there were hints they would extend their stimulus programme, the Euro could weaken and GBP/EUR rates would rise. This is exactly what we have seen happen today as they said that their Quantitative Easing programme would need to be re-examined. Look at the effect it has had on GBP/EUR and GBP/USD in the charts below: 

Pound/Euro rises by 2 cents: 

 Pound/Dollar drops by 1 cent:

ECB to re-examine its stimulus programme 

Inflation is low in the EU, but they can’t cut interest rates as they are already at 0.05%. As I’ve been saying recently, the only clear solution is to increase their QE programme. Today, the ECB president said that "The asset-purchase plans are proceeding smoothly and continue to have a favourable impact," adding that "The degree of monetary policy accommodation will need to be re-examined at our December meeting." 

What does this mean? In a nutshell this means more Euros will be pumped into the economy later this year, and as such the Euro has weakened significantly and is cheaper to buy. 

The news has also affected GBP/USD rates, as investors dumping the Euro have instead purchased the US Dollar, causing it to gain strength and become more expensive pushing GBP/USD rate lower by 1 cent. You can clearly see the 'inverse correlation' in the charts above, as at 13:30pm when the news broke, the graphs move in opposite directions. 

Do you have currency to convert? 

Those needing to buy Euro should consider taking advantage of this spike in rates we have seen today. It could go higher of course, but usually a large spike such as this is short lived, and recent gains haven't lasted very long, so while impossible to forecast, I expect rates to drop back away by the end of the week. 

Do you need the best exchange rates? 

If you would like to discuss the currency markets to help you decide when to fix an exchange rate, or would like to get a quote for your currency exchange to compare with your bank or existing broker, then click here to send me a free enquiry today. 

I will get in touch with you personally, and often better rates available at banks or other currency brokers by as much as 3%, so it's certainly worth getting in touch to see what I can do for you. 

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Pound/Euro €1.42, Pound/Dollar below $1.50

Wednesday 11th March 2015 
I read today that a pretend €100.00 euro note from a toy shop was accepted by a business in a County Down town in Ireland to purchase a sandwich. In the real world, it almost seems that an actual €100 Euro note isn’t worth much more, given the pounding the single currency has taken in the last few days! 

Since Monday alone, the weakness in the single currency has meant that the Sterling/Euro rate has risen from €1.39 hitting a high of €1.4255 before dropping back away:

Even today we’ve seen a rise from 1.4075 to 1.4250, before levelling back off to where we are now in the low €1.41’s. What an incredibly volatile few days. We are now seeing a new 7 year high on GBP/EUR, and in 2015 alone we’ve seen the exchange rate rise from €1.27 to the current highs above €1.40. To put this into real terms, a €300,000 property abroad is £25,000 cheaper than in January. 

Why has the Pound/Euro rate risen above €1.40? 

The fact the rate has smashed through the 1.40 mark and sustained itself above that level has surprised both me and the markets in general. Usually a technical level like that would act as a barrier. Most analysts agree that it’s due to renewed fears over the Greek position in the Eurozone, and this coupled with the launch of quantitative easing by the European Central Bank (ECB) continued to put downward pressure on the single currency. 

The weakening effect of the ECB’s bond buying programme seems to be more than offsetting the uncertainty surrounding the upcoming general election. Against the US Dollar, the Euro is now languishing at a 12 year low!

Which way will Pound/Euro rates move now? 

As I’ve said above it’s a surprise that rates broke through €1.40, however now they have it’s likely to stay above that level as it will be acting as a level of support. I now think that while the general election could still weaken the Pound, the risks of this are now offset by Euro zone uncertainty. 

Some forecasts I’ve read suggest €1.45+ later this year, but of course exchange rates depend on market sentiment, and this in turn will be driven by ongoing events in Europe. If you need to buy or sell Euros, don’t just watch the rate hoping things will go your way. I can help you achieve much better rates than the bank, and also have various tools to help you avoid unnecessary drops in the rate, such as Stop Loss orders, Limit Orders and Forward contracts. If you have Euros to buy or sell, then click here to send me a free no obligation enquiry today to get a quote, and find out how I can help. 

Pound/Dollar rates drop below $1.50 

In stark contrast to GBP/EUR rates, the Pound/Dollar rate has tumbled below $1.50 today. This is partly due to the Euro sell off. Investors dumping the Euro have been buying the US Dollar, which has given the greenback some strength. 

Will it keep dropping? I think so. The US economy is performing very well, and they are likely to raise interest rates this year. This will strengthen the currency, and while Europe suffers, the Dollar will continue to benefit. So I think we’ll see GBP/USD down in the low $1.40’s this year.  

Do you need to convert currency at the best exchange rates? 

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Sterling/Euro exchange rate forecast Feb 2015

Monday 2nd February 2015
Good morning and welcome to a new trading week. After a very volatile couple of weeks that has seen GBP/EUR hit 7 year highs of €1.35, things have stabilised somewhat, and this morning the rate has dropped back into the €1.32’s. With no significant data of note today, the only thing I can attribute the drop to, is a rumour that the Swiss National Bank will be unofficially targeting a EUR/CHF rate of 1.05. 

Why has the Pound/Euro rate fallen? 

This is significant as they recently ended their policy of keeping the rate at 1.20. They did this by selling CHF and buying Euros to keep the desired rate. These rumours mean the SNB could be buying huge volumes of Euros to keep the rate where they want it, and this demand for Euros has strengthened the single currency and made it more expensive, hence why this could be the reason GBP/EUR rates have fallen a cent this morning. 

Will the Pound/Euro rate go higher or lower in February? 

All in all, with rates to buy Euro still above 1.30 which is close to a 7 year peak, it’s a good time to take stock of any Euro requirements you may have in the coming months. With all the bad news from Europe now priced into the rate, I think we’ll struggle to see it get much higher. Furthermore if the QE measures recently announced by the ECB have the desired effect, we could see the Euro gain further strength and pull GBP/EUR rates lower. 

It’s also worth mentioning Greece – it looks like they won’t default on their debts, and for the time being will be firmly remaining in the Euro, so the initial uncertainty after their election has now subsided, and that’s also why GBP/EUR has stopped climbing. 

Do you want the best possible exchange rates? 

Get in touch with me today to discuss the rates I can offer and the contract types you have at your disposal to ensure you don’t lose out. The consultancy service I provide is free, and involves a chat over the phone regarding your requirements. I can then explain the various options and choices you have to ensure you make an informed decision when to fix a rate. When you decide to fix a rate I can provide you a quotation; the rates I provide are often up to 5% better than banks and other brokers can offer so the savings can be huge. 

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What could affect exchange rates this week? 

Below I have outlined what I think will move exchange rates this week. To discuss how this could affect your currency requirement in more detail, click here to send me a free enquiry. 

Tuesday 3rd February 2015 – The only UK data of note is PMI construction, which looks at the construction sector. It’s a relatively minor release but could affect Sterling. GBP/AUD could face a volatile day however with an Australian Interest Rate decision and following statement. GBP/EUR has recently seen very good gains with trading levels above $1.90. Staying with the antipodean currencies, the NZD could also be affected by Unemployment figures and a central bank speech today. 

Wednesday 4th February 2015 – Again only 1 release from the UK today; services PMI. As an indicator of the economic situation in the UK it can often affect Sterling. Sterling/Euro could also be affect today however by EU Retail Sales, and a policy meeting from the European Central Bank. Across the Pond we have a host of data from the States, including Employment, Manufacturing and Services figures. 

Thursday 5th February 2015 – today we have the Bank of England interest rate decision. I think this will be a non-event; rates won’t change from 0.5% in my view for another year. Elsewhere today we have an economic bulletin from the ECB, Retail Sales from Australia and Jobless claims along with Trade Balance figures from the USA. 

Friday 6th February 2015 – Today the UK releases its Trade Balance figures, which show the difference between imports and exports, and this release often creates some volatility for the Pound. There aren’t any releases from Europe today, but in the afternoon we have Jobs data from the USA. The Non-Farm payrolls in particular can really move the GBP/USD rate. The forecast is for 235,000 new US jobs to have been created, but the actual figure is often very different which could move the Pound/Dollar rate around 1.30pm. 

To discuss how the above could affect your currency requirement in more detail, or to obtain a quotation on the rates I can offer, click here to send me a free enquiry.

Pound/Euro hits €1.32 after QE announced by ECB

Thursday 22nd January 2015 
The European Central Bank (ECB) today announced its Quantitative Easing (QE) package, outlining over €1tn of stimulus for the economy. It’s been the main driver of exchange rates in recent weeks and today it became a reality. You can read a very good outline of the measures and how they work here on the BBC website. 

What has it meant for exchange rates? 

The Euro has weakened as markets expected it would. As you can see from the chart below, Pound/Euro rates have risen to a new 7 year high of €1.32, so fantastic rates for Euro buyers: 

Will it go higher or drop back down? 

I can’t see rates going that much higher, and given the GBP/EUR cross is now comfortably above the €1.30 benchmark, I think it will stay at this level. For this reason anyone that needs to buy Euro soon should consider fixing a rate while it’s so good. If you want to gamble on the hope of higher rates, then you should place a ‘Stop Loss’ order to protect against rates going back down. 

Euro sellers don’t have much on the horizon that could improve things. This weekend’s election could cause further uncertainty for the beleaguered Eurozone, and so if you need to sell Euros, consider cutting your losses and getting something done sooner rather than later. 

Getting the best exchange rates. 

If you have a currency requirement for any major international currency, and need to have funds wired between bank accounts, I can help you achieve excellent rates of exchange. Whether you are buying or selling property abroad, or are a business that sends and receives payments in foreign currencies, I can save you up to 5% on the exchange rate, which is considerable when moving a large sum. 

Even if you already use a currency broker, it costs nothing to compare the rates that I can offer. 

Click here to send me a free enquiry today and see how much you could save.

ECB key to GBP/EUR forecast for 2015

Tuesday 20th January 2015 
Pound/Euro rates have risen by a cent today, and at the time of writing GBP/EUR remains stable around the €1.31 level, which is the highest rate to buy Euros since March 2008: 

Will Pound/Euro rates climb or fall? 

We’ve seen a significant rise in rates in the last few weeks, pushing GBP/EUR in particular to the highest we’ve seen in 7 years. Being able to trade at levels above €1.30 is excellent news. The main question now is whether rates will drop back below this level, or perhaps even go higher still. 

The next few days will be key to this. Tomorrow we have a Bank of England decision on interest rates, and the latest Unemployment figures. I think both of these will be a non-event and won’t have much of an impact. 

Of much more significance will be Thursday’s announcement by the European Central Bank (ECB), when they’ll decide whether they will start a Quantitative Easing programme where funds will be created to spur an economic recovery. 

If they do, it will likely weaken the euro. As this has been progressively priced into the market, we’ve seen the euro lose value over recent weeks which is the main reason rates are currently so high. Because it is widely expected, for the most part it is already priced into the rate. If QE is announced however it may not actually cause further gains. 

However if there’s no announcement, expect GBP/EUR to fall away as the expectation has already been partially priced into rates. Furthermore, in a week’s time, the Greek election will cause uncertainty for the Eurozone, so there is much on the horizon that could significantly harm the euro. 

If you’re buying or selling Euros, what should you do? 

In the first instance you should discuss your currency requirement with me, to talk about your specific needs and discuss what is moving the market. I can also explain the various options you have at your disposal. 

For example, euro sellers should consider buying forwards to protect against the rate getting worse. Euro buyers should consider a stop loss order, to protect against the market dropping should QE not be announced. It would be a shame to miss out on a 7 year high by holding out for a small gain. 

Whatever your currency requirement, if you’re keen on achieve the best possible rates, contact me today by clicking here to make a free enquiry.

Pound continues to fall against Euro and US Dollar

Tuesday 6th January 2015 
Sterling initially had a good start to 2015 against the Euro, hitting highs of over €1.29 on Friday. As has been the case of late however, when it tested these highs it quickly dropped back away again. Against the US Dollar, the Pound has fallen to its lowest in well over a year. Let’s take a more detailed look at what’s been happening. 

Sterling/Euro 

The Euro is fundamentally weak at the moment, and this is reflected in its value. Over the New Year, comments from the European Central Bank president Mario Draghi indicate they are getting closer to a Quantitative Easing stimulus programme. This weakened the single currency and made it cheaper to buy. There are also the Greek elections later this month, with a strong chance the anti EU party could win. This also raises questions about a possible Greek exit from the Eurozone, and this is also keeping the Euro on the back foot, pushing GBP/EUR rates to above €1.29 last week: 

  
The gains were short lived as is often the case. With the New Year, came concerns over the Pound, and Sterling has weakened in the first few days trading. Much of this is probably due to the political uncertainty the upcoming election will generate, with the result quite open at the moment. This coupled with the fact that UK interest rates aren’t likely to rise for at least 6 months mean the Pound could be facing further pressure in the coming weeks. 


Longer term, I expect Pound/Euro to break the €1.30 barrier, probably in the latter part of this year. In the shorter to medium term however, those that need to buy or sell Euros should weigh up their options now, as a small movement in the wrong direction could cost you a significant sum. If you need to buy or sell Euros in the next 3 to 6 months, contact me today to find out what could happen, what your options are, and obtain a quote on the rates that I can offer you. 

Sterling/Dollar 

The downward trend for cable continues. The rate fell to $1.53 yesterday, and today has fallen below the $1.52 mark which is the lowest it’s been since August 2013. The main reason for this is Dollar strength, caused by uncertainty in the global oil markets, unrest in Ukraine and the Middle East, and a robust US economy that is going from strength to strength. The drop could continue, but I think the rate will struggle to drop below the $1.50 mark as this is a key technical level. 

If you need to buy or sell Dollars, would like a quote or would simply like to chat about which way the exchange rate is moving, click here for a free consultation. 

Click here if you are looking to achieve the most competitive exchange rates possible.

GBP/USD falls as FED announce end to QE

Thursday 30th October 2014 
Sterling/Dollar has plummeted overnight, following the FED’s expected decision to end its Quantitative Easing (QE) programme. This also had the effect of weakening the Euro, pushing GBP/EUR rates higher. The charts below show the currency movements: 

FED announce end to QE 

The US Federal Reserve has announced it is ending its quantitative easing (QE) stimulus programme, saying that it was confident the US economic recovery would continue, despite a global economic slowdown. The central bank, which also said it would not raise interest rates for a "considerable time", has gradually cut back QE since last year. 

While the decision was expected, it did have the effect of strengthening the US Dollar, bringing rates down below the $1.60 mark, however this morning GBP/USD recovered to around $1.60. The main reason the rate fell is their hawkish tone on interest rates.

Pound/Euro rises 

As investors bought the Dollar, they sold the Euro which caused the single currency to weaken, pushing rates up above €1.27. This has happened several times over the last few months, so I expect rates to dip back off again in the coming days and weeks as has been the trend of late. 

Getting the best exchange rates 

If you need to perform a currency transaction, get in touch with me today by clicking here. The rates I can provide are up to 5% better than banks or other brokers can offer. In addition to excellent rates, I can also provide an insight into what is moving the rate, to help you to decide when to fix your rate.

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Pound remains at €1.19 vs Euro, near 8 month high

Tuesday 17th September 2013 
Good afternoon. Sterling remains strong, however has failed to rise significantly above the €1.19 level against the Euro. GBP/EUR rates remain around the best since January. The Pound has however hit an 8 month high against the US Dollar after Lawrence Summers, perceived by the market as more likely to favour a quick scaling back of monetary stimulus, pulled out from the race to be the next Fed chief. So in today’s report: 

• UK inflation drops weakening Pound 
• Pound/Euro remains close to best it’s been since January 
• US Fed member drops out of race to be FED chief, weakening US Dollar 
• German Economic figures better than expected, weakening Euro. 
• UK Retail Sales and BoE Minutes this week expected to affect Pound 
• How to get the best exchange rates 

UK inflation drops weakening Pound 
 

Figures this morning showed a slight fall in inflation, which has pulled the Pound lower. Inflation measured by the consumer prices index (CPI) fell to 2.7% in the year to August, from 2.8% in July. 

CPI is important because it is the measure targeted by the Bank of England's interest rate-setters, while the RPI is used for annual adjustments in some benefits and rail fares. The Bank targets CPI inflation of 2%, but is currently holding off raising interest rates to control inflation because the unemployment rate is too high. 

A high figure usually strengthens the Pound, and because the number was slightly lower than expected the Pound weakened slightly, pulling down exchange rates. 

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German Economic figures better than expected, weakening Euro. 

 Also pulling GBP/EUR rates down was better than expected numbers from Germany. Economic sentiment is better than analysts had been predicting, and so this gave the Euro strength, making it more expensive. As a result we have seen GBP/EUR rates fall slightly. 

Pound/Euro remains at a good level 

As you can see from the chart, the Pound/Euro rate remains close to the best it’s been since January. It’s been at this level for a week or two now, and for a few days it rose above the €1.19 level, however the figures mentioned above have pulled it back to €1.19 again. 

 
This is a very good buying level, but seems to have levelled off and we haven’t seen any significant gains. The main thing that I think will move the rates next will be tomorrow’s minutes from the Bank of England, and UK Retail Sales on Thursday. 

Tomorrow the BoE will release its minutes, showing how the members voted at their recent decision to keep interest rates and QE on hold. They will be interesting because it will show what was discussed, and could indicate future decisions on QE and interest rates. If there are any indications any of the members wanted more QE, we may see the Pound fall. 

Retail Sales on Thursday are important as they are a good barometer of overall economic activity. I expect the figures to show a month on month gain of 0.5%. If the actual figure is higher than this, then expect exchange rates to rise. If the number is lower, then we will probably see the Pound fall in value. 

If you are looking for the best exchange rates, click here to get a free quote.

US Fed member drops out of race to be FED chief, weakening US Dollar 

The Pound rose to an 8 month high against the US Dollar earlier this week, after Lawrence Summers, perceived by the market as more likely to favour a quick scaling back of monetary stimulus, pulled out from the race to be the next Fed chief. The dollar fell broadly as it means it will probably be Janet Yellen that takes over the next chair of the Federal Reserve - she is expected to rapidly reduce U.S. bond-buying. This meant the US Dollar weakened, became cheaper to purchase, and GBP/USD rates rose. 

Due to the poor inflation numbers today however, we’ve seen the rate drop back away. 

Are you looking for the best exchange rates? 

I update this blog to keep my existing and potential clients abreast of what is happening with exchange rates. If you need to convert Pounds into another currency, or indeed move a foreign currency back into Sterling, I can help you achieve the best possible exchange rates. 

The rates I can achieve are up to 5% better than banks can offer, so if you are buying or selling property abroad, need to top up your Euro account, or need to pay for goods or services in a foreign currency, why not find out what rates I can offer. 

• You can send me a free enquiry now by clicking here. 
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I look forward to hearing from you.

Pound/Euro at 3 month high: (September forecast)

Monday 2nd September 2013 
Good afternoon. It’s been a good start to September for Sterling, with further strong economic numbers giving the Pound a boost to its highest against the Euro in 3 months. In today’s post I will take a look at the recent good run for the Pound, and also whether exchange rates will go up or down in the coming weeks and months. 

I will also look at UK growth forecasts, the effect the new Bank of England governor has had, and also how any strike on Syria might affect the currency markets. So in today’s report: 

• UK Manufacturing lifts Sterling. 
• Pound/Euro rates at a 3 month high 
• UK growth forecasts looking good 
• UK and EU Interest Rates
• How military action in Syria could affect exchange rates 

UK manufacturing lifts GBP/EUR to a 3 month high 

UK manufacturing has continued to grow, and is now ‘booming’ according to a survey by the British Chamber of Commerce. The sector has seen its strongest growth in activity for over 2 years, and has now seen 5 consecutive months of growth. 

This is very good news for the UK economy, and indeed analysts have welcomed the figures, adding that the data supported growing optimism over prospects for the economy as a whole. The economy appeared to be "running way ahead" of the forecasts, Mr Wood said, and this also strengthens the view somewhat that interest rates could go up within a year or so. 

The effect on the currency markets was a positive one for anyone that needs to convert Sterling to a foreign currency. As you can see from the chart below, this caused a spike in GBP/EUR exchange rates at 09:30am when the data was released. 



Exchange rates to buy Euros are now at their highest in 3 months, so if you need to buy Euros then now is a good time to consider your options and decide if you want to fix a rate while levels are very attractive. 

UK growth forecasts are up 

The British Chambers of Commerce (BCC) has sharply upped its 2013 growth forecast, saying the economy is gaining momentum. This is another reason for the good performance of Sterling at the moment. It’s important to note however that the BCC also warned of overseas risks to the more positive outlook, notably those posed by the Eurozone, the Middle East and China's slowdown. 

"Unfortunately the recovery is not yet secure," said BCC head John Longworth. "We have had false dawns in recent years and although this upturn appears to be on stronger ground, we must be aware that complacency could lead to setbacks,". So while rates are good at the moment, the recovery in the UK still depends on global factors, and it wouldn’t take much for rates to drop again – remember it was only a month or so ago rates were at a 2 year low, so if I needed to buy Euros in the next 3 months, I would consider fixing the rate sooner rather than later. 

Find out how competitive our exchange rates are. Click here. 

Bank of England’s MPC receives praise 

The Bank of England (BoE) Monetary Policy Committee has received praise for its recent adoption of "forward guidance" - providing explicit advance warning of when interest rates might rise - which the BCC said helped provide businesses with more confidence to plan and invest. You can read a very good detailed article on Forward Guidance by the BBC’s Stephanie Flanders here.  ECB and 

BoE & ECB Interest rates 

This Thursday both the Bank of England and European Central Bank announce their decision on whether interest rates will change, and for the BoE, whether they will pursue any more Quantitative Easing.

Now I don’t expect any change from either bank, and no further QE. What will be interesting however is any comments that come along with the decision – these could well affect Pound/Euro rates depending if comments are perceived as positive or negative by the markets, so this is something to keep an eye on should you have an imminent requirement to buy or sell currency. 

Syria & the effect on exchange rates

The on-going civil war in Syria has been dominating the headlines over the last week. At one point it seemed there would be imminent strikes against the Syrian government, however following the vote in the UK parliament that effectively rules us out of any action, it seems the US has followed suit and are seeking approval from congress before launching any action. 

So how would any strikes affect exchange rates? Should the US go ahead with France and launch missile strikes, then the first effect this would have on the markets would be an increase in commodity prices, oil in particular. For the currency markets, the uncertainty any strikes would create would probably strengthen safe haven currencies like the US Dollar and Swiss Franc. Conversely riskier currencies such as the Pound could weaken. 

So should we see an escalation in the middle east, I would expect Pound/USD rates to drop as investors seek safe haven currencies. 

Do you want to achieve the best possible exchange rates? 

If you are looking to buy or sell a foreign currency, and want to get the best possible rate you can, then send me a free enquiry today. I can discuss your particular requirements, explain which way the rate may move, and explain the different options you can consider. 

In this way you can make sure you’re making an informed decision, and when you decide to go ahead and fix your rate, the levels I can source are up to 5% better than banks can offer. 

So how much could you save? Click here to send me a free enquiry and find out today.

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 

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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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Pound at 4 month high vs US Dollar, flat vs Euro

Wednesday 28th March 2012
Good morning. The Pound/Euro rate has been pretty flat so far this week, remaining around the €1.19 to €1.20 range. Against the US Dollar rates briefly hit a 4 month high above $1.60, before retreating slightly. Today we will take a look at what is causing recent movements, and the forecast for GBP/EUR and GBP/USD for the coming weeks.

Sterling remains range-bound vs Euro

Let's start with the Pound/Euro exchange rate, which remains around the €1.20 level. It did briefly drop by half a point yesterday morning when the first round of economic figures were released, however the drop was not to last.

At 12:00pm yesterday the CBI Distributive Trades Survey was released by the Confederation of British Industry. This is an indicator of short-term trends in the UK retail and wholesale distribution sector, and tends to have an impact on the formulation of economic policy at the Bank of England and within Government, and so can often impact Sterling.

The figures were much better than analysts had forecasts, and the Pound steadily recovered throughout the day, pushing back towards the €1.20 level.

What is the Pound Euro Forecast for where rates may head?

We're getting mixed messages from analysts at the moment. On the one hand the EU debt crisis is not resolved and this is keeping the Euro weak. It's important to remember however that there is no fundamental strength in the Pound, it's simply the fact that we have our own central bank to print money, and a well established austerity plan that the markets like. This is keeping the Pound supported against other currencies... for the moment.

Supporting this view was Bank of England policymaker David Miles, who said earlier this week that economy had effectively stalled, with growth rates near zero over the last six months, keeping alive slim chances of another round of quantitative easing. A bulletin released by the BoE yesterday suggested that asset purchases by central banks have helped economies weather their crises, and so the sluggish UK growth is keeping alive the prospects of more QE.

My view is that while the threat of more QE is on the horizon, the Pound will not make any significant gains against the Euro. It will likely remain range-bound between €1.18 and €1.20, but any resolution to the EU debt crisis could pull rates back down. In fact for several years now, we have seen rates above €1.20 only to sharply drop back away within a month or two. If you need Euros at the best possible rates, then send me an enquiry now to find out how you can protect yourself against the rate dropping.

EU Debt crisis: OECD urges eurozone rescue fund boost

The OECD has said that the eurozone needs to double its bailout fund to €1 trillion, however German Chancellor Angela Merkel said she would favour only a temporary increase. The reason for the proposed increase is that some fear that the fund will not be able to cope with another bailout.

At the moment we've seen bailouts already for Greece, Ireland and Portugal. While this has given some stability to the markets and kept exchange rates stable, the chance is still there that other countries, namely Spain and Italy, could require some funding. This shows that the EU debt crisis is far from over, and is keeping rates supported around the €1.20 level.

Adding to the problems in the EU, Spain confirmed yesterday that they had fallen back into recession. It contracted again in Q1 this year, and in the last quarter of last year. 2 consecutive quarters of negative growth is a 'technical' recession.

Sterling hits 4 month high against US Dollar

Despite the stability in GBP/EUR rates, the Pound/Dollar rate actually gained quite well yesterday, and rose to its highest in more than 4 months. The dollar was hit by increasing chances of more U.S. monetary easing, which weakened it and made it cheaper to purchase.

Given rates are now quite favourable, those that need the best exchange rates for Dollars can look at a Forward contract - lock in the rate now for up to 2 years, and only lodge 10% of the funds now, the remainder due when you want the currency. If this is of interest to you contact us to discuss it further.

Today's Data to watch out for

We start in Germany again today, with inflation numbers at 7am. A few hours later the EU releases money supply data. US figures this afternoon include Durable Goods orders. There are no releases of note today from the UK.

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