Sterling/Euro up after German Inflation figures

Tuesday 29th April 2014
For the last week exchange rates have been quite stable, without much volatility. Today however we have seen some choppy movements on the Sterling/Euro rate in particular, following data releases from the UK and Germany. Let’s have a look at how it has affected exchange rates:

     

Pound slips after growth figures lower than expected

This morning the UK’s latest GDP figures were released, showing that the UK economy grew by 0.8% in the first quarter of 2014. This is the 5th consecutive period of GDP growth - the longest positive run since the financial crisis. 

However the Pound fell on the news as the market had been expecting it to be even higher, at 0.9%. Just before the release rates rose slightly in anticipation of a good result as you can see in the chart above. You can also see the sharp drop the moment the actual number was released. 

In the currency markets, figures like this are forecast in advance and priced into exchange rates accordingly. 

Pound/Euro rates bounce back after German Inflation data 

After the UK’s figures, GBP/EUR sat around the €1.21 level. At 1pm Germany released its latest inflation numbers. Much like the UK’s release, Germany’s figures were slightly lower than expected, and this caused the Euro to weaken and become cheaper to buy. 

Germany is the EU’s largest economy so that’s why the results had quite a big impact on Pound/Euro rates, helping them to recover up to €1.2180. 

Looking for the best exchange rates? 

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I can also provide you a quote to compare with your bank or existing currency broker - even a small difference in the rate can often save you thousands of Pounds. 

I can help you get the best exchange rates if you: need to buy property overseas, sell property and convert funds back to Sterling, monthly transfers to a Euro account, business’s buying or selling goods in foreign currencies etc.  (I trade all the worlds major currencies, not just the Euro.)

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Alastair Archbold

Pound/Euro & Pound/Dollar exchange rate forecast

Wednesday 27th November 2013
There has been some volatility on the currency markets this week, with the Pound initially losing value causing exchange rates to drop. This trend however was reversed today after some strong UK data has given strength back to Sterling, pushing exchange rates up against other currencies. In today’s report, I’ll take a look at what’s been happening and the forecast for Pound/Euro and Pound/Dollar...

• Bank of England takes dovish tone on UK economy 
• UK GDP growth confirmed at 0.8% 
• Pound/Euro forecast 
• Pound/Dollar forecast
• Best Exchange Rates

Bank of England takes dovish tone on UK economy  

On Tuesday the Bank of England Governor Mark Carney delivered his latest Inflation report. It’s important because the BoE control interest rates, which have a big effect on the value of Sterling, and therefore exchange rates. 

The Bank has said it will not consider an interest rate rise until UK unemployment falls below 7%, a rate that many economists now believe could happen sooner rather than later. However Mr Carney poured a little cold water on this yesterday, when he said that the 7% is a "threshold, not a trigger". 

He said: "The exact timing of when that 7% threshold will be achieved is subject to uncertainty. We do our best to give our estimates of that uncertainty... One month's unemployment figures does not have a material change on those likelihoods." 

So while overall he was quite positive about the economy, these comments caused the Pound to fall to €1.19 vs. the Euro and $1.61 against the Dollar. We’ll look at each currency pair in more detail in a moment. 

UK GDP growth confirmed at 0.8% 

Before we look at the rate forecast, let’s review today’s data. This morning figures confirmed that UK growth is at 0.8%, according to figures released by the Office for National Statistics. The figure of 0.8% confirms the economy is growing at the fastest pace for three years. Read more about this on the BBC website here.

As the figure was as forecast, the immediate reaction was that the Pound fell. This was only momentary however, as clearly analysts quickly realised that while the number was as expected, it’s actually a very good number indeed! The UK is the fastest growing western economy at the moment, and so investors started to buy the Pound. 

This caused the Pound to rise, and recover its losses from earlier in the week. As I write this post, Pound/Euro is back at €1.20 and Pound/Dollar is at $1.63. So let’s take a detailed look at each currency pair. 

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Pound/Euro forecast

As you can see from the chart showing this year’s movements, the rate is looking good. 

 

It’s the best it’s been since January, and settled at around the €1.20 level. Over the last few weeks we’ve seen rates reach this level only to drop back away, for reasons I explained in a recent post. 

I expect this trend to continue for the rest of the year, and while it’s impossible to forecast, I don’t expect rates to breach this level this year. They will eventually, when the UK ecostats convince investors and the BoE that interest rates may have to rise. So if you need to buy Euros, consider taking advantage of the current level. Euro sellers may wish to consider a Stop Loss Order and hope the market retracts down. 

Want the best rates to buy or sell Euros? Click here. 

Pound/Dollar forecast

Again the chart clearly illustrates how good the Pound/Dollar rate is at the moment.

 

This is a 1 year chart, but rates haven’t been significantly above this for nearly 3 years! 

So again worth considering taking advantage of the current rates while they’re above $1.60. For Dollar sellers the direction is less clear, as we don’t know if or when the FED will start tapering their QE programme. 

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Best exchange rates

If you are looking for the best rates for Euros, Dollars, or indeed any major world currency, then send me a free enquiry today.

I am an expert foreign exchange, integrating market knowledge with a range of foreign currency contracts. I have great pride in the excellent rates of exchange I achieve for my clients, combined with exceptional customer service. 

Because I buy currency at wholesale prices, directly from the market, it enables me to pass on significant savings, often achieving up to a 5% better exchange rate than the banks. There are also no fees or commissions. 

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Alastair Archbold

Sterling gains after strong GDP. What's the currency forecast going forwards?

Friday 26th April 2013 

Good afternoon. As I’m sure you have all seen in the news already, the UK has avoided recession and the GDP numbers were a little higher than forecast. This has pushed the Pound higher against other currencies, which will be welcome for those looking to buy currency with Sterling. 

In today’s post I will take a look at the numbers and their effect on exchange rates. I will also look at what may cause rates to fall back away in the coming weeks, and also make the case for further gains. 

In today’s report: 

• UK avoids recession and Pound strengthens 
• Possible ECB Interest Rate cut could weaken Euro 
• US GDP disappoints, weakening the US Dollar 
• Bank of England could resume weakening Sterling
• Case for rates continuing to rise 
• Case for rates dropping back away 
• How to get the best exchange rates 

UK avoids recession, pushing the Pound higher against other currencies. 

The UK economy has avoided falling back into a recession after figures released yesterday surpassed expectations, showing growth in the first three months of the year. The Office for National Statistics said its first estimate for gross domestic product (GDP) showed the economy grew 0.3% during the first quarter of 2013, which Chancellor George Osborne said it was an "encouraging sign". 

Economists say the news should give a small psychological boost to consumers and businesses, but the broader picture of the economy remains the same. Poor growth has already led to two international credit rating agencies stripping the UK of its top-notch triple-A rating. 

As a result, Sterling has strengthened nicely against the Euro, US Dollar and other currencies, and exchange rates are now the best they’ve been since January. 

Want to buy Euros at the best rate? Click here to send me a free enquiry. 

Possible ECB Interest Rate cut could weaken Euro next week 

There is increasing pressure for the European Central Bank to cut interest rates, possibly as soon as next week. German confidence is down, banks are reducing lending, and after the council discussed the possibility of a rate cut last month, data next week will be watched very closely, and the chances of them reducing the rate from 0.75% to 0.5% is now quite high. 

If they do go ahead and cut rates, then I would expect the Euro to weaken, causing it to become cheaper to purchase so we may see an increase in rates should this happen. 

Selling Euros? Click here to find out how to avoid adverse rate movements. 

US GDP disappoints, weakening the US Dollar 

In contrast to the UK’s better than expected GDP, the US economy grew at a slower rate than expected, figures showed today. The US economy grew 2.5% in the first three months of the year, helped by the strongest consumer spending figures in two years. While the growth figure was lower than analysts' expectations, it was better than the 0.4% rate recorded in the final quarter of last year. 

What effect did this have on exchange rates? It weakened the US Dollar, making it cheaper to buy, and the rate rose as a result as you can see from the daily chart. 

Bank of England could resume talking the Pound down to lower rates 

So the question on everyone’s lips now is will rates continue to rise towards and above €1.20? There is no way to predict exchange rates, and of course should UK data continue to be positive, rates may climb further. One risk however is the Bank of England purposefully talking the Pound down. 

In recent months they have taken opportunities to be negative about the UK economy, in order to weaken Sterling. They do not want the exchange rate to be as high as it currently is, as it makes our exports more expensive. Therefore don’t be surprised if the governor Mervyn King talks the Pound down to try to bring exchange rates back towards 1.15. 

Summary – will rates now go up or down? 

As I often say here on my blog, there is no way of second guessing and predicting which direction the market will take. If I knew what the market was going to do, I would be a millionaire! What I can do is explain the case for rates moving each direction, and in doing so help you make an informed decision on when to fix a rate....

Case for rates rising further

The UK is growing at a faster pace than predicted and economic numbers have impressed in recent weeks. Should this continue then we may see the Pound get even stronger. We also have a possible interest rate cut in Europe, which would further weaken the single currency and push rates higher.

Finally, if the debt crisis over in Europe spreads to other countries, the Euro may weaken even more. One or more of the above would likely lead to an increase in exchange rates. 

Case for exchange rates falling back away 

The GDP numbers released recently will be subject to two revisions in the coming months, and so it may transpire that the economy didn’t grow quite as much as 0.3%. We also have the Bank of England who openly want a lower exchange rate, as I outlined above.

Also, should the markets become more confident of progress in Cyprus and elsewhere, we may see the Euro become stronger again, and therefore more expensive to buy. Once again, one or all of the above would likely cause exchange rates to plummet. 

If you need the best exchange rates, click here to find out more. 

How to make the most of your currency and get the best exchange rates, at the best time. 

The first step is to take advantage of a free consultation. You can make a free enquiry by clicking here, and I can then get in touch to discuss your particular requirements, and explain the different options you can consider to protect yourself against adverse rate movements. 

In this way you can make an informed decision on when to fix your rate, and when you want to do this, I can source commercial rates of exchange that are up to 5% better than the banks, so you can save a considerable sum of money in using my services to get a better rate. 

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How could UK GDP numbers affect exchange rates?

Wednesday 24th April 2013

Good afternoon everyone. I'm only putting up a short post today ahead of tomorrow's key UK GDP figures. I thought I would outline what I think may happen depending on the actual numbers that are released tomorrow at 09:30am.

Let's start at the beginning. What is GDP?

Firstly, what is GDP? You can read a comprehensive outline here on the BBC website. In a nutshell, it's a measure of the economy in one simple number. If the GDP measure is up on the previous three months, the economy is growing. If it is negative it is contracting. And two consecutive three-month periods of contraction mean an economy is in recession.

How could the GDP result affect exchange rates?

Now, I'm sure regular readers are now getting a little bored of me talking about the GDP numbers, so you will be pleased to know the final result will be announced tomorrow morning at 09:30am! Markets have been waiting in anticipation for the result, and so we can finally put to bed the question of whether or not we're in recession. 

To summarise, in the last 3 months of last year, the UK's GDP shrank by 0.3%. If the first 3 months of this year also show a decline, then it means the UK is officially in recession for the 3rd time in as many years. 

A recent estimate showed that the economy may have actually shown growth of 0.1%. So not exactly a huge increase, but if confirmed it will mean the UK has avoided recession. So what would happen if the numbers are as forecast, or different than forecast?

Markets generally price in forecasted figures in advance, so the number of 0.1% growth will already be reflected in the current exchange rate. That's why we've seen the Pound make some gains in recent days. So if the number is as expected at 0.1%, then I wouldn't expect huge movements in the rate. We may see some modest strengthening of Sterling, but don't expect rates to shoot up to €1.20. 

If the figure shows a decline and confirms the UK is back in recession, then I would expect the Pound to fall, potentially by some margin. So there is the risk exchange rates could take quite a hit tomorrow if the numbers are poor.

Finally, the number could show growth of more than 0.1%, in which case I would expect exchange rates to rise.

Whatever happens tomorrow, I do expect rates to move in one direction or the other. 

Many clients are booking their currency today to avoid losing out if the market starts to move the wrong way. Send a free enquiry to me today to find out more about the rates that I can source for you - our rates are up to 5% better than banks, so you may be surprised in how much you could save.

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What next after the GPD numbers?

We can also start to look forward and talk about something else! It will finally confirm the direction the UK economy is taking, and so I would expect once this release is over and done with, focus will return to the EU debt crisis, and further economic released from the UK will be studied in detail to see how the economy is faring.

I personally expect the Pound to make gains against the Euro in the medium to longer term, but in the short term things may get worse before they get better. 

Getting the best exchange rates

If you need to buy or sell currency in the next 2 years and want to achieve the best exchange rate possible, then send me a free enquiry today. I can discuss your requirements, explain the different options you can consider, and help you make an informed choice on when to fix your rate.

When you decide to do this, the rates I can source are significantly better than banks offer. So find out today how we can help 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 steady against Euro, but GDP estimate next week could shake things up

Friday 5th April 2013 

Firstly apologies for not posting any updates for the last week. I have been battling a particularly virulent strain of man flu and so have been out of action. The market has been fairly stable in my absence, and the Pound has had a relatively stable week against the Euro, only moving by between 1% and 2%. So after the roller coaster fluctuations we have seen in recent weeks, the last 7 days have been fairly calm. 

In today’s post I will take a look at what has happened in the last week, what effect the on-going crisis in Europe will have, in addition to looking at some important releases coming next week that could move exchange rates one way or the other. 

In todays’ post: 

• Pound stable against Euro 
• Effect of crisis in Europe on exchange rates 
• How GDP estimate next week could affect levels 
• The different options you can look at if you need to exchange 
• How to get the best Exchange Rates 

Pound Steady against Euro 

The week has been relatively stable for the Pound/Euro cross, with only movements of around 1.5% throughout the week. In comparison to recent weeks, this is quite calm indeed. One thing that could have caused Sterling to fall was the Bank of England announcement on Quantitative Easing. 

The Bank of England decided on Thursday not to expand its stimulus programme of quantitative easing and has also kept interest rates unchanged at 0.5%. The decision had been widely expected, despite concerns over the strength of the UK economy. 

Earlier in the year there was a much higher chance of further QE being announced, but better data of late means this has now been postponed. A closely watched survey released earlier on Thursday indicated that the key service sector grew at its fastest pace for seven months in March, raising hopes that the UK will avoid falling into recession again. This is keeping the Pound supported against other currencies, for now. 

There have been signs recently that the Bank could again expand this programme, which aims to boost borrowing and investment. In the past two meetings of the nine-member Monetary Policy Committee (MPC), three of its members - including Bank governor Sir Mervyn King - have favoured an extra £25bn boost. 

Although most economists had expected the Bank of England to hold back from taking any policy moves at this month's meeting, some are predicting that the Bank will take action later in the year. Mark Carney, the current governor of the Bank of Canada, is due to take over from Sir Mervyn as Bank of England governor in July, and there is speculation that this could lead to further stimulus measures. Further QE would likely weaken the Pound and push rates down again. 

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EU crisis and the effect on exchange rates 

As regular readers will know, it has been developments in Europe that have been driving GBP/EUR exchange rate movements recently. The fiasco there has weakened the Euro, helping rates recover from their lows earlier in the year. Cyprus is only the smallest of many countries to find itself stuck between the rock of bank deleveraging and the hard place of government austerity. Spain, Italy, Ireland, Greece and, increasingly, France are all experiencing the ugly consequences for their economies. So it could be that Germany soon finds itself in a minority over its demands for more spending cuts. 

Further issues in Europe could well weaken the Euro further, pushing GBP/EUR rates higher. I think most in the market however are waiting for the latest UK GDP figures to see if we are indeed in a triple dip recession. In my view that is what will drive the rate in the next week. 

UK GDP estimate and how this might affect things 

On Tuesday we have the first estimate of UK growth for the first 3 months of the year. If this shows a contraction, then potentially the UK is back in recession for the 3rd time since the financial crisis hit. If the figures are confirmed by an official release later this month, then expect Sterling to fall. 

It’s hard to know what will happen, as forecasts are is close to zero that it’s really on a knife edge. A recession is classed as 2 consecutive quarters of negative growth. Our economy shrank in the last 3 months of 2012, and so the numbers for the first quarter of 2013 are very important, and will likely drive Sterling exchange rates in the weeks to come. 

Different Options if you need to exchange currency 

Rates are being pulled in both directions at the moment. On the one hand, negativity in the Eurozone is weakening the Euro, pushing rates up. On the other hand, continued concern over the UK economy, and the ever present threat of the UK going back in to recession is keeping the Pound from making any significant gains. 

If you need to buy or sell Euros then, there are cases to be made for rates rising and also rates falling away. Of course they can’t do both, and so you could lose out unnecessarily if you simply hang on hoping that the rate will move your way. Your options are as follows. 

1) Fix the rate now. In this way you remove yourself from exposure to the foreign exchange markets and protect against potential loss. Those that are risk averse should choose this option. 

2) Wait and hope the rate might improve. This may pay off, it may not, and it’s nothing more than a gamble. Rates can move both ways, sometimes quickly and without warning, and so choosing this option could be risky as there is no way to forecast which way rates will go. It’s a risky option. 

3) Hedge your bets. If you really think rates will move your way, then why not fix a rate on 50% of your requirement. This gives you some level of protection as if the market does not do what you want it to, then at least you secured some of your currency before it fell. Conversely if rates do indeed improve, you can take advantage with the remaining portion of your funds. 

Contact me now to discuss your options

How to get the best exchange rates 

Whatever your requirement, regardless of the timescales you are working to, getting better exchange rates can make a huge difference to a large currency transfer. Even a fractional improvement in the rate can mean a very big difference to the cost of any currency. 

I work as a Senior FX Trader for one of the UK’s leading foreign exchange brokers, and the exchange rates we can source are significantly better than available at the banks and other financial institutions. 

Take the first step to making the most of your currency now by sending me a free enquiry. There is no cost or obligation involved, and I will simply get in touch to discuss your requirements and explain the rates we can offer you. You have nothing to lose, and potentially a significant amount to gain. Send your enquiry now by clicking here. 

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Sterling to Euro predictions Feb March 2013

Monday 25th February 2013

Good morning. I hope you all had a nice weekend. As usual for a Monday morning, today I will have a look back at last weeks movements, look at what might be in store for exchange rates this week, and also look at what I think are the most important economic data releases that might affect currency. 

In this week’s Report: 

• Bank of England weakens Sterling, again. 
• More Quantitative Easing on the horizon 
• UK loses AAA Credit Rating 
• Round up of the week’s other data that may affect rates 

Sterling vs. Euro; 

Well, what a week for the Pound, especially against the Euro, with the pair starting and finishing the week trading at mid-market levels over 1.16, but a low on Wednesday of 1.14. Sterling fell also during the weekend during trading in Asia as financial markets reacted to the loss of Britain's top AAA credit rating. The pound fell to a 31-month low against the dollar and a 16-month low against the euro.

So, let's have a little look back at what happened last week

The week started off slowly due to Presidents Day in the USA so the markets were quiet and Sterling vs. Euro remained close to 1.16 all day. This however turned out to be the only calm day for the currency pair as Tuesday kicked off with surprisingly good economic sentiment figures from Germany and the Eurozone as a whole which forced the rate down 1 cent, and this slide was exacerbated by the impending Bank of England meeting minutes which were due the following morning. 

Bank of England minutes push Sterling lower 

The 9:30 am release then fuelled a further sell-off in Sterling over the course of the day, helping the Pound to retain its title of the worst performing major currency of 2013 so far. The minutes showed that since the last time the MPC sat down to discuss the UK interest rate (currently at an all-time low of 0.5%) and asset purchase programme (currently standing at £375billion) 2 more members have started to vote for more Quantitative Easing.

The current 6-3 vote to hold QE where it is means we only need to see another 2 members join the other “Doves” to give a majority, and the fact that one of the new voters is the BoE Governor, Mervyn King, means that kind of majority could even be reached at the next meeting. 

Thursday’s data helped to show just how finely balanced both the GBP/EUR cross is, and also both economies as it started to climb off the back of weaker than expected Eurozone manufacturing data and figures which showed that UK public sector borrowing fell by more than forecast. The Pound recovered most of Wednesday’s loss against the Euro and the rate ended the week pretty much back where it had started. 

What might affect the rate this week?

This week’s data releases are looked at in more detail in the market data section but the key release will be the 2nd estimate for UK GDP for the fourth quarter 2012. The last reading showed a -0.3% fall and any revision either way could be huge for Sterling. We have bodies such as the CBI & NIESR suggesting that we may narrowly avoid recession, but we will not actually see the initial reading for the current quarter until the end of April, so we expect the Pound to remain on a knife-edge as this reading will be a huge influence on how the Pound will perform over the rest of the year. 

Any further news from the Eurozone will also be closely watched, and we are sure to hear more on a potential currency war (discussed in detail in one of last weeks posts) where the ECB & BOE will try to devalue their currency to help keep exports attractive and therefore encourage economic growth. 

If you are looking for the best rates, send me a free enquiry today.

Weekly Economic Data that may affect exchange rates 

Monday – Today’s UK data comprises of House Prices and Mortgage approvals, reflecting the health of this sector. Elsewhere we have Trade Balance data from Germany and Italy. Over in the USA we have a speech by a FED member, manufacturing numbers. Also of note is a speech by the Bank of Canada Governor Mark Carney, the soon to be governor of the Bank of England. 

Tuesday – Today we see a speech by BoE member Mr Bean; watch out for any negative comments that could de-value Sterling. Not much from Europe today other than German retail sales. We have a raft of data from the United States: House Prices, Consumer Confidence, Manufacturing figures, Homes Sales and a speech by the FED. Further afield, New Zealand has Trade Balance figures. 

Wednesday – An important day for Sterling, as we have the latest GDP figures, in addition to business investment numbers. In the Eurozone we have various measures of confidence: Industrial Confidence, Economic sentiment and consumer confidence. Over in the states we see further Home Sales numbers, another Speech from the FED, and durable goods orders. 

Thursday – Nothing of note from Britain today other than a measure of consumer confidence. Eurozone data includes Spanish GDP, German unemployment, French inflation numbers, and EU wide inflation figures. In the USA we have GDP numbers & Jobless Claims. 

Friday – UK data today includes inflation numbers, Credit/Money Supply & Mortgage approvals. In the EU we have another host of inflation figures from a number of countries, in addition to EU wide unemployment figures. We end the week with US Inflation, Manufacturing, construction spending and a measure of consumer sentiment.  

Getting the best exchange rates 

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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.  

Click here to send me a free enquiry - Quote 'AJABLOG' when you get in touch.  

Pound/Euro rates climb after good GDP data

Monday 29th October 2012
Good morning. The Pound/Euro rates climbed nicely last week when UK GDP figures confirmed we are out of recession. Today I'll have a look back at the events of last week, look at what might happen with exchange rates going forwards, and as usual round up the weekly economic data that could affect exchange rates in the short term.

In this week’s Report: 

•  Pound/Euro rates hit 3-week high 
• UK finally out of recession – GDP grows 1% 
• A volatile week for the Pound/Dollar cross 
• Round up of the week’s other data that may affect rates 

Sterling vs. Euro; 

The pound surged last week on the back of a hugely better than expected GDP swing of 1.6% quarter on quarter, showing an initial estimate of a full 1% growth in the UK for Q3 2012. Though this figure is sure to change as the final figures are more accurately calculated, the realisation that the UK had exited recession was more than enough to send its currency on a rally.

This caused Pound/Euro rates to surge nicely at the end of last week. Forecasters still expect a Euro rally in the wake of any request by the Spanish Government for financial assistance from the EU, but as yet this still hasn’t happened. In the absence of serious support for the Euro as the Spanish continue to tap-dance around the bailout, the pound was free to strengthen nearly 2.5 cents unabated in a day and a half after the GDP report.

This quick movement shows how easily gains can be made and lost on the currency market; those who were holding off selling their Euros whilst waiting for the Spanish Bailout lost nearly £3000 on an average second home sale price of €180,000. Of course one man’s loss is another’s gain with those looking to buy in the Euro zone have benefited from this sharp spike. Experience teaches us that spikes are often just that, with correcting movements seeing rates move the opposite way very quickly.

One way of trying to make sure you catch a spike in your favour is by using our services. Unless you have the time and inclination to sit and watch a prices screen day in day out, the free services we provide mean you always have eyes and ears on the market that can inform you as soon as the rates move.

With the wide array of currency contracts available and state of the art trading facilities we can cover your bases for your currency needs when buying, selling or servicing overseas properties as well as any foreign invoices your company may need to pay. Consultations with us are free, as are trading facilities which carry no obligation.

Click here to send me a free enquiry now.

Weekly Economic Data that may affect exchange rates 

Monday – A relatively quiet day for data releases to start the week. We have Net Lending figures from the UK along with inflation figures from both Germany and the US. 

Tuesday – A quiet day for data releases in the UK today. In Europe, the president of the ECB Mario Draghi gives a speech. We also have a ten-year Italian bond auction. It may be an interesting day for the GBP/EUR cross. From the States we have consumer confidence measures. 

Wednesday –We have consumer confidence figures from the UK today and a raft of inconsequential data from the Eurozone, including the general unemployment rate and inflation measures, both of which should have little impact on exchange rates. 

Thursday –As was the case last week, Thursday will be an interesting day for data releases. We have manufacturing PMI from China, the States and the UK along with unemployment figures from the US and house price data from the UK. 

Friday – We end the week with Canadian and American unemployment figures along with Spanish and Italian PMI data.  

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