Pound/Euro exchange rate forecast for 2014 changes after BoE comments

Wednesday 19th March 2014
It’s been a very busy day in the markets today, with UK Unemployment being released, along with the Bank of England minutes, a speech by governor Mark Carney, and of course the budget statement. This afternoon I will look at the effect each event had on exchange rates, and how this has affected my view on where rates are headed. 

First, let’s look at today’s GBP/EUR chart that reflects how exchange rates were affected: 

Mark Carney warns against strong Pound 

As you can see from the chart above, as soon as the market opened at 8am this morning, the Pound started to strengthen as I predicted it would yesterday. This was due to comments last night by BoE governor Mark Carney, in which he said the current low interest environment won’t be around forever. This gave the Pound strength on speculation of interest rates going up. 

It didn’t last long, and as you can see from the chart above, when the MPC minutes were released, it shows that many of the BoE members are concerned about a strong Pound. Sterling strengthened by 1.5 percent in the month running up to the March MPC meeting, hitting its highest in several years, but in the last week or so has weakened to the lowest it’s been all year. 

The MPC members noted the further strength in sterling, with Deputy governor Charlie Bean recently saying the BoE could keep interest rates lower for longer if sterling strengthens much more, adding that its current level was "fine". Another member recently said that that further strength in sterling would be a worry. 

What does this all mean? To me this means if you need to buy Euros at the best exchange rate, the current levels could be as good as it's going to get for some time.

UK Unemployment 

The latest Unemployment figures were released at the same time, and while the overall rate remains at 7.2% as I expected it would, the number of overall people in employment hit record highs. This did little to help the Pound, as all focus was on the BoE warning against the Pound getting stronger. 

UK Budget Statement 

As I predicted, it had absolutely no effect on exchange rates. Here I will only look at what could affect currency – basically Growth forecasts were up a little, and we’re getting a new Pound coin. Yay.

Look at the chart above, and you can see the markets were, as usual, underwhelmed by the Budget, with the Pound barely moving at all throughout the speech. The rest was mostly guff, and if interested you can read a full report on the budget here on the BBC site.

What does this mean for those looking at the best exchange rates? 

I have changed my view since my forecast yesterday. I now think it will take a few months before we get back through €1.20, in light of the BoE warning about the Pound getting stronger as I've outlined above. If I needed to buy Euros I would look to fix a rate now, or put protection in place against adverse movements.

They have hinted that they won’t let the rate get too much higher, so if you need to buy or sell Euros, consider doing something sooner rather than later. I don’t think it will drop much either due to the economy being fundamentally strong, so for the next few weeks I expect rates to remain range bound between 1.19 and 1.20 

Find out more about the rates and service I offer 

I don’t just trade the Euro; I provide commercial exchange rates for nearly all currencies, including EUR, USD, CHF, AUD, NZD, CAD, ZAR, AED, HKD, JPY, NOK, SEK, DKK, HUF, TRY, CZK, PLN, SGD, THB. 

I am a senior Currency Broker, and the firm I represent is fully authorised by the FCA to ensure security of client funds. With an annual turnover of £500m I have access to the best foreign currency rates. If you need to convert currency I could save you a significant sum on your exchange. 

If you are looking for the best foreign exchange rates, get in touch with me today for a free quote. 

Click here to send a free enquiry 
Call me directly: +44 (0) 1442 892 066 

You can reach me between 08:30am and 17:30pm UK time. 

Ask for Alastair Archbold, and quote ref ‘FERF’

Pound falls further in what is an important week for Sterling

Monday 17th March 2014 
Good afternoon everybody. The UK has been basking in unseasonable sunshine over the weekend, however Sterling has remained firmly in the shade. We have seen the Pound drop further today against the Euro and other currencies, ahead of what I think will be a key week for UK economic data releases, and therefore Sterling exchange rates.

Pound/Euro has fallen to 1.1940. Pound/Dollar remains in the mid $1.66’s. In today’s report I am going to run over the week’s economic data and how it might affect exchange rates. 

There are lots of very important releases this week that will affect the Pound, including a Bank of England report, the latest Unemployment data, and George Osborne's budget just to name a few.

• Will the Pound fall further?
• Could it bounce back? 
• How to know when to fix a rate? 
• Do you want to get the best exchange rates? 

The below data will determine the answers to these questions, so read on to find out more about how this week could affect you getting the best foreign exchange currency rates. 

If you need to to buy or sell currency and want to get the best exchange rates, then you can get in touch with me for a free quote by clicking below.

Contact me to discuss your currency requirement in detail. 

This weeks economic data releases that could affect exchange rates 

Monday 17th March 2014 

Today has been relatively quiet data wise, with only some EU inflation data released earlier this morning. The numbers were not that different to the forecast, and so didn’t affect GBP/EUR rates too much. 

Tuesday 18th March 2014 

GBP/EUR could be affected by the EU ZEW survey at 10am. Basically this measures economic sentiment and how investors see the economy. A high reading could strengthen the Euro and pull GBP/EUR rates lower. 

GBP/USD could also be choppy today, as we have a raft of inflation data from the USA at lunchtime. 

At 17:45pm there is a speech by the Bank of England governor Mark Carney. This could be very important. It’s impossible to know whether he will be upbeat and positive about the economy, but if he is it could cause the Pound to rise. Many think they he wants the Pound lower however, in order to help UK exports. So he may use this opportunity to talk the Pound down which would cause exchange rates to fall also. 

Wednesday 19th March 2014 

The most important day of the week for the Pound in my opinion. Firstly we have all the latest unemployment figures. I expect the figure to be at 7.2%. Lower than this would cause the Pound to rise, and vice versa. 

Along with unemployment we also have the latest BoE minutes which will show what was discussed and how they voted in their recent decision to hold interest rates. The key will be whether this report hints at a rate cut early next year or not, and this report is likely to affect Sterling one way or the other. 

At 12:30pm chancellor George Osborne delivers the budget report, so just how could the budget affect exchange rates? The last few haven’t really affected the value of the Pound at all, but it all depends what he says. As we’re getting closer to an election, I expect some positive noises, but nothing that will really surprise the markets, so it’s the unemployment and BoE data today that you want to keep your eye on. 

Late in the afternoon the USA has an interest rate decision and a press conference, so GBP/USD may also be affected today. 

Thursday 20th March 2014 

After yesterday’s incredibly busy day, things settle down a little. There is nothing of note from the UK or EU, but the USA does have some manufacturing data and a bank stress test in the afternoon. 

Friday 21st March 2014 

The latest UK Public sector borrowing figures are released today and is expected to come in at around £7.8bn. As always, if the number differs from this then the Pound may rise or fall accordingly. 

Find out more about the rates and service I offer 

If you have a currency transaction to perform and would like to find out how I can help you, get in touch in the following ways: 

Click here to send a free enquiry 
Call me directly: +44 (0) 1442 892 066 

You can reach me between 08:30am and 17:30pm Mon-Fri. 

Ask for Alastair Archbold, and quote ref ‘FERF’

Effect of Budget & Cyprus on exchange rates

Wednesday 20th March 2012 

Good afternoon everybody. Much has happened since my last post, including worrying developments in Cyprus that have weakened the Euro, and also news from the Bank of England that has strengthened the Pound, so rates are the best they have been for about a month. The Budget delivered today has also affected exchange rates. So, what have I got in store for you all in today’s post? 

• Cyprus Bailout talks weaken Euro 
• Pound/Euro rises as Bank of England indicate Pound is weak enough 
• Effect of Budget on exchange rates 
• Uncertainty over further Quantitative Easing
• How to get the best exchange rates

So without further ado, let’s look at each of these points in turn, analyse their current and possible future effects on exchange rates, in addition to looking at ways I can help you get the best exchange rates possible. 

So what is going on in Cyprus? 

As I’m sure you have all read in the news, Cyprus is in trouble. The reason I haven’t posted on it until now is that it has been a developing story, and I wanted things to be a little clearer before discussing the effects on exchange rates. In a nutshell, in order for Cyprus to receive a bailout, they decided that up to 10% of peoples savings would be taken as a tax to prop up the banks. 

When markets opened on Monday, the effect was a weakening Euro and a rise in GBP/EUR rates. Why was this? Well it is because the latest EU bailout has dragged the debt crisis back in to the spot light, and the Euro has weakened as a result. Banks are currently closed until at least Thursday, over fears of a run on the banks. 

The ECB (European Central Bank) has made it clear however that without a reform programme for Cyprus there will be no bailout. The plans were voted down recently, but there's now a danger that they won't be able to open the banks again at all. The rescue deal for Cyprus, announced on Saturday, prompted widespread outrage on the island at the prospect of ordinary savers being forced to pay a levy of 6.75%. 

The Cypriot finance ministry announced a change in the plan on Tuesday, to exempt savers with less than 20,000 euros (£17,000), while those over 100,000 euros would still be charged at 9.9%. However, this was not enough to placate critics. The plan to tax bigger deposits at a higher rate has angered Russia, as Russian nationals hold many of those larger deposits. There are rumours that Cypriot Finance Minister Michalis Sarris is in talks with Russia for a possible bailout, in return for gas fields. 

So what does all this mean for exchange rates? The effect is will have is very hard to quantify. Should terms of a bailout be agreed, then it’s likely the Euro will regain some strength and pull exchange rates back down. While no agreement is in place, the uncertainty means the Euro is on the back foot.

Discuss your currency requirements with me today. 

Bank of England warns more QE may weaken Sterling 

This morning, the latest Bank of England minutes revealed that members of the Monetary Policy Committee remain divided over whether to inject more stimulus money into the UK economy. For the second month in a row, 3 of the 6 members voted for further QE, including Sir Mervyn King. 

One member of the MPC also raised concerns about the continuing weakness of the pound, which as we all know, has fallen significantly against the Dollar and Euro since the start of the year because of fears about the weakness of the UK economy. Ian McCafferty warned that a further fall in sterling could raise inflation, which might have "damaging" consequences. 

So what does all this mean? For exchange rates, it’s actually pretty unclear. There seems no consensus on whether more QE will come or not, so for the moment it hasn’t affected rates too much. Should further economic data support the case for more QE, then expect the Pound to fall. Should better numbers be released in the next 4 weeks, then the Pound will likely gather strength. 

Worried about which way the rate may go? Send me a free enquiry.

What effect has the Budget had on exchange rates? 

As is often the case, the budget didn’t have much of an effect on exchange rates. Initially the Pound dropped a little, before quickly recovering the losses. I won’t go in to too much detail on the budget here, other than to look at what affects exchange rate now and in the coming months. You can read a comprehensive breakdown of what was announced here on the BBC website. So what were the main points that may affect exchange rates? 

The official forecast for growth in the UK economy this year has been halved. Revised forecast is for the UK's national debt to rise to 85% of GDP Announced that the Bank of England Monetary Policy Committee had also been given an updated broader remit, but keeps its 2% inflation target. The markets have generally taken budget positively; indeed Sterling has risen against the Euro and the US Dollar. 

The main reasons for this are the fact that the deficit is being reduced, and despite the revised growth forecasts, it now looks like we may avoid a further contraction that would put us back in recession. Also of interest were changes to the Remit of the bank of England to focus on growth; however we don’t yet have the details of this. 

So in summary, not many surprises in the budget, but there is still the chance of further QE that could drag the Pound lower. While the EU debt crisis is still in the headlines however, expect Pound/Euro rates to be supported. If and when a bailout is agreed, then expect a reversal and decline in the rate. 

Contact me to discuss how exchange rates may change.

How to achieve the best exchange rates possible. 

These are very volatile times we are living in. This year alone the Pound/Euro rate has been as high as 1.2350 and as low as 1.13. With so much happening all over the world that is impossible to predict and foresee, the result is violent swings in the exchange rate that happen quickly and often without warning, as we have seen recently. 

In my last post I did highlight the risk of the EU debt crisis resurfacing, and pointed out that if it did the Euro could weaken and this is exactly what has happened. Given the economic uncertainty in the UK and Eurozone, going forwards rates could move by as much as 8% in either direction in the next few months. So what to do if you need to buy or sell currency? Do it now? Wait in the hope it might improve? 

Ultimately nobody can predict the market and advise you on when to trade. What you can do however, is use my experience and knowledge and have a full discussion with me regarding what you need to do, and the timescales within which you need to do it. I can then explain the different options you can consider, in addition to giving you an outline of what could happen with rates in the coming weeks. 

Armed with the full knowledge of options available to you, and taking advantage of discussing with me may move exchange rates in the coming weeks, you can then make an informed decision on what to do.

Don’t simply sit back and hope the rate will move in your direction. Hope is not a reliable economic tool. 

Get in touch with me today to have your free consultation, and take the first step to making the most of your currency and getting the best exchange rates. I look forward to hearing from you.  

Click here to send me a free enquiry

Pound rises on Mervyn King comments

Friday 15th March 2013 

Good afternoon. Well, we have finally seen a turnaround for Sterling’s fortunes, with exchange rates rising steadily both yesterday and today (Friday). Pound/Euro is back at 1.16 and Pound/Dollar has recovered comfortably above the $1.50 mark. 

In my post today I will explain the reasons why the Pound has gone up against the Euro, and also have a look at next week’s data, as there are some important things happening that will affect exchange rates in the coming days and weeks. 

In today’s report: 

• Mervyn King talks up the Pound 
• Qatar may invest £10bn in the UK 
• Budget to be delivered on 20th March Risks remain to UK economy 
• Next week’s events that may affect exchange rates 

Mervyn King talks up the Pound 

The main reason for the rise in exchange rates is positive comments from the Bank of England governor Mervyn King. Yes you read that right – he actually made positive comments about Sterling! In some of his most upbeat comments since the financial crisis, he said that “there is momentum behind the recovery that’s coming” and that “good progress” has been made towards a new, sustainable economy in the last few years. 

He also retreated from his earlier attempt to talk down the pound, which he has done several times this year already. Having said recently that the 8pc appreciation in sterling “was not a welcome development”; he cheered its recent decline to a two-and-a-half year low and suggested the pound had fallen far enough. “We’re certainly not looking to push sterling down,” he said. “We are moving to a properly valued exchange rate. I think we’re probably there.” 

These comments caused the Pound to rally, pushing back up against most other currencies, which will be a welcome relief for anyone looking to buy currency with the Pound any time soon. The Governor also revealed that he has held discussions with the Chancellor and the Prime Minister about their economic strategy Last week, the Prime Minister hinted that the Bank would get new tools to boost growth in the Budget, saying he backed “monetary activism” and that “the Bank must support the recovery”. 

Sir Mervyn’s comments came despite his recently voting to increase quantitative easing by £25bn to £400bn, and amid weak economic data for the last two months that have rekindled fears of a triple dip recession. 

Do you need the best exchange rates? Contact me now.

So that’s that then, the Pound is now on the way up? 

The currency markets are notoriously volatile, and we often see wild swings in both directions. Putting Mervyn King’s comments to one side for a moment, let’s look at the actual state of the economy in the UK. 

The National Institute of Economic and Social Research (NIESR) said British economic output had contracted between December and February; indicating the economy would struggle to avoid recession. 

Strategists also said minutes from the central bank's Monetary Policy Committee on the likelihood of further quantitative easing (QE), the UK budget on March 20 and data releases were likely to see sterling suffer further losses. 

Markets will remain wary of sterling ahead of the UK budget next week, and of course the latest BoE minutes, both of which we will see on Wednesday. Despite the positive comments, unless Mervyn has some king of crystal ball, I can’t see that much has changed to be honest. Growth is still slow, we may still head back in to recession, and most still thing further QE may happen in the next few months. This then may be a temporary upwards spike, however I expect markets will now await next week’s releases before the GBP/EUR cross makes significant changes in either direction. 

Worried about adverse exchange rate movements? Discuss your requirements with me for free. 

Qatari investment rumours also spur the Pound on 

Add caption

Qatar has begun talks with the UK government to invest up to 10 billion pounds into key infrastructure projects in Britain, the Financial Times reported earlier this week, citing people involved in the negotiations. They reported that officials and ministers from both countries held talks over what schemes the Qataris could invest in and whether a specific fund could be set up for the same. 

This would be a welcome development for the struggling UK economy, and so went some way to helping bolster risk appetite for Sterling. 

Data Next Week that I think could affect exchange rates 

On Tuesday we will see UK inflation data and Retail Sales, which are a good barometer of overall economic activity, and so will be closely watched. 

Wednesday is probably the most important day for Sterling in my opinion. We have the minutes to the recent BoE decision not to pursue any more Quantitative Easing. If this shows 3 or 4 members voted for it, then we may see the Pound weaken as it will increase the chance of QE in April or May. 

Also on Wednesday The Chancellor George Osborne will deliver his 2013 Budget. Speculation is mounting that Chancellor George Osborne may announce a review of the Bank of England's remit and give it more leeway on inflation targeting, so this will be watched closely. I’ll do a full report on 

Thursday regards what effect Wednesday’s data has on exchange rates Thursday will see some EU inflation data, but to be honest I expect markets will still be reacting to Wednesdays BoE minutes and budget. 

• Want to talk about exchange rates? 
• Need the best deal? 
• Worried about how the rate might move? 
• Need to make a large transfer? 
• Looking for the best exchange rates?

If you have answered yes to any of the above, then:

You should take advantage of a free consultation on your requirements by clicking here.

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

Budget, Sterling/Euro forecast & Regular Payments

Thursday 22nd March 2012
Good morning. Pound/Euro had a mixed day yesterday. Higher than expected borrowing figures pushed rates lower in the morning, however rates were to recover later in the afternoon. The Budget had little to no effect on exchange rates at all, and was perceived as neutral for the currency. Today we will look at the Budget, the Bank of England minutes, and how to get the best deal for Regular Payments in Euros. Below shows rate movements throughout the day yesterday:

~Currency Movements on Wednesday 22nd March 2012~











UK Budget

The budget delivered yesterday was pretty much as expected, contained no real surprises and had no effect on Sterling exchange rates. The chancellor George Osborne was seen to be sticking with the coalition government's austerity drive which aims to bring the country's finances back into line in five years, though sluggish growth hampered by fiscal cuts remains a concern to investors.

As it had little effect on rates, I won't go into any real detail on the budget here, but for those that are interested, the key points are outlined here on the BBC website.

Of interest to me were 2 key facts; Independent Office for Budget Responsibility (OBR) revises up UK growth forecast for 2012 to 0.8% - from 0.7% - better growth should be good for the Pound in the long term.

Also, borrowing this year to be £126bn - £1bn less than forecast in the autumn. Predicted to be £120bn in 2012-13 and £98bn in 2013-14. Forecast to fall to £21bn by 2016-17. Again, lower borrowing would cut the deficit and could give the Pound a boost should it prove to be the case.

Higher borrowing figures published just before the budget

The Office for Budget Responsibility's forecasts for growth and borrowing detailed by Osborne were marginally more optimistic than the previous estimates, but the earlier release of much higher-than-expected public sector borrowing for February pulled the Pound down, as illustrated in the charts above. Any future deterioration in the borrowing figures may well mean that ratings agencies Fitch and Moody's downgrade the UK's prized AAA sovereign debt status, a potential source of weakness for the UK currency.


BoE Minutes

The BoE's latest policy minutes were largely overshadowed by the budget, but they showed two policymakers voted for more monetary stimulus to support the economy. Most in the market had expected a unanimous vote for asset purchases to be left on hold following the February decision to increase the scheme by 50 billion pounds to 325 billion. This also put Sterling under pressure before getting better later in the day.

Making Regular Payments

When owning property overseas, many people will need to make Regular monthly transfers between Pounds and Euros. The natural inclination is to arrange this sort of thing through your bank; however it’s usually a fairly expensive way of doing it. When making Regular Payments on a monthly basis, we can save you money compared to your bank through lower costs and much better exchange rates. Our Regular Payment Plan means you simply set up a Standing Order for the amount you want to convert, and your transfers happen automatically.

We purchase all the Euros in bulk, meaning that you can achieve commercial exchange rates even on smaller amounts. Due to the better rates and lower costs, sending €1000 per month over 10 years could save you nearly £10,000.00 compared to using your bank, as the figures below illustrate.











(Figures based on Foremost rates and typical bank rates on 21st March)

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

How will the 2012 Budget affect exchange rates

Wednesday 21st March 2012
Good morning. It's budget day - so today we will look at how will the UK 2012 budget affect exchange rates, and the implication for the Pound Sterling Forecast and Euro Rate Forecast. It's been the usual story for Sterling so far this week. On Monday we hit a high of €1.2071, however as has often been the cast in the last few months, the highs were not to last, and yesterday the Pound fell back against most currencies, as the chart below shows.

~Currency Movements on Tuesday 20th March 2012~











Sterling falls against Euro ahead of Budget

The Pound fell against the Euro yesterday after UK inflation fell to the lowest in over a year. This means interest rates are likely to stay on hold for the foreseeable future, slightly weakening Sterling.

The UK Currency has had a good run in the last few days, after being underpinned by a recent run of better data. According to Reuters Sterling rose to a 13-month peak against a trade-weighted basket of currencies on Monday. Analysts expect it to extend gains if there are more signs of economic improvement, while some expect it could benefit from the UK's annual budget on Wednesday.

Budget Today

Today the chancellor will announce the latest budget. As ever, the BBC has an excellent outline of what to expect on their 2012 Budget page. Much of it will not affect the currency markets, but undoubtedly there will be financial aspects of it that will. The key points of the budget that might affect Sterling are likely to be as follows:

• The government's basic economic strategy will not change
• The basic economic numbers will not change
• This will be a fiscally neutral budget
• A note of caution on income tax
• The European debt crisis

In a nutshell, it's all to do with investor confidence. If the budget outlines plans that look good and make the UK an attractive place to invest, the Pound may make some gains. If there are no surprises in the budget, and there is nothing there that changes anything, we could see the Pound fall slightly.

Some analysts say sterling could gain a boost if UK finance minister George Osborne announces some measures to support growth in a fiscally neutral budget, still leaving the country on course to reduce a hefty deficit.

"The expectations are for the Chancellor of Exchequer (finance minister) to announce lower tax rates, more generous tax allowances which together with the credit easing scheme announced yesterday should stimulate domestic demand and thus boost growth," Citi analysts said in a note to clients.

But they warned that key to whether sterling can sustain a bounce will be the response of ratings agencies, which may express concern if the budget focuses too much on growth-boosting measures at the expense of deficit reduction efforts.

To discuss how rate movements might affect your currency requirement, send me a free enquiry now.

BoE minutes at 09:30am

Today we will also see the latest Bank of England minutes, showing the discussions and vote split to their recent decision to hold interest rates and QE. These minutes often have a big impact on Sterling, although today they may be overshadowed by the budget.


Do you need the best exchange rates?

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exchange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now by sending us a free no obligation enquiry..