Pound/Euro exchange rate forecast November 2012

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

In this week’s Report: 

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

Sterling vs. Euro; 

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

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

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

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

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

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

Pound/Euro rates also being driven by events in Europe 

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

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

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

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

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

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

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

Click here to send a free no obligation enquiry now. 

Weekly Economic Data that may affect exchange rates 

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

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

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

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

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

Getting the best exchange rates

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you.

It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.  

Click here to send me a free enquiry

Pound/Euro declines due to US QE - Full Market Report

Good morning everybody. Last week was a very volatile one that saw a big drop in the GBP/EUR rate, but in contrast the GBP/USD rate rose to a 5 month high. Today I'll take a detailed looks as to why this happened, and what it means going forwards.

In this week’s Report:

• Pound/Euro rates in dramatic decline
• US QE announcement main cause of volatility
• Pound/Dollar soars to 5 month high as dollar weakens
• Round up of the week’s other data that may affect rates

Sterling vs. Euro;

Last week the Pound continued its downward trend against the Euro, sliding away from the 4 year high of 1.2865 we saw at the end of July back down to the mid 1.23s. The main reason for the drop in the rates was actually due to news from the US after the Fed said it would pump $40 billion into the economy each month until it saw signs of improvement in its struggling jobs market (which will be discussed in further detail in the dollar report) and growing confidence in the euro zone rather than any data from the UK.













The confidence in the single currency mainly came from the news that the German Constitutional Court gave the go ahead for the regions new rescue fund and the European Central Bank laying down bold plans to lower the borrowing costs for struggling countries. This gives investors greater confidence that the euro zone will be able to withstand continued financial storms as they pulled money out of the dollar and back into the riskier single currency.

This week, the most important mover of the GBP/EUR cross is likely to come of the back of continued discussions with the ECB around Spanish, Italian bailouts as well as minutes from the Bank of England MPC meeting released mid-week. The minutes will give a full account of policy discussions including any conflicts of opinions. They will also show which way the individual committee members voted. This will give a good indication of whether the BoE has a dovish or hawkish stance on the outlook of the UK economy. Any indication of a positive outlook or talks of an increase in interest rates would be very beneficial to the pound and would push the sterling/Euro rates up.


What does this mean if I need to buy Euros?

With such a dramatic fall in Sterling/Euro exchange rates in recent times, anyone looking to buy Euros in the near future would be wise to consider locking in today’s rates with the use of a forward contract to protect themselves against any further falls in the market. On the other hand, anyone looking to sell Euros can take advantage of any spikes with stops and limits contracts allowing you to target rates not yet available in the market. To discuss these type of contracts, send me a free enquiry now.

With a property purchase of €200,000 costing you just over £6000 more than it would have done a couple of months ago, it outlines the importance of getting the right information to make an informed choice of what to do.

Sterling vs. US Dollar;

In this section I will have a look at what events have dominated the GBP/USD cross and how they have affected the markets. Last week the single focus of cable was the run up to the Federal Reserve interest rate and Quantitative Easing meeting on Thursday.













Even as early as Monday the market was pricing in some sort of stimulus intervention as Cable reached a 4 month high. The trend of sterling strength against the dollar was maintained on Tuesday as markets continued to price in movement coupled with a threat by ‘Moody’s Investors Service’ that the US was in danger of losing its triple A debt rating, if next year’s budget talks do not result in lower debt to GBP ratio.

When the results finally came in late Thursday UK time the conclusion certainly didn’t disappoint those expecting some action. Ben Benanke backed the purchase of $40 Billion of mortgage backed securities every single month until US growth as well as the US job market improves. In addition Fed Chairman Benanke added to his commitment to get the US economy moving through spending by confirming that interest rates in the US would remain low and wouldn’t be raised until 2015 at the earliest.

This is probably the most decisive action that the market has seen from the US to deal with the financial crisis since its inception. At the very least it sends a clear signal to the rest of the world that the US are prepared to do everything necessary, including trying new strategies to navigate their way out of recession and into competitive growth.

Dollar weakens significantly after announcement

Naturally following this announcement cable continued its upward trajectory as equities and perceived riskier currencies (including Sterling) made gains against the Greenback. With the Fed Chairman indicating that he would be prepared to pump $40 Billion into the economy every month until it has an effect, the market has the potential to continue the current trend of Dollar weakness. Essentially Mr Bernanke has embarked on an endless amount of quantitative easing and so it will be interesting to see how far the markets move off the back of this uncertainty.

Whilst this is undoubtedly a great time for dollar purchasers to be taking advantage of the recent gains, it would be wise to approach the market with some trepidation as the FX markets are notoriously volatile. Despite a clear shift in fundamentals there is no absolute guarantee that the technical levels will follow suit, and indeed there have been countless occasions throughout history where a sharp market movement has been followed by an equally sharp market retraction.

Ensure that you take advantage of a free consultation and explore the possibilities of both Stop Loss orders and Limit orders so that you are able to take advantage of any market gain, whilst at the same time protecting yourself should the market move against you.

Weekly Economic Data that may affect exchange rates

Monday – The main data today is Trade Balance data from the Eurozone, showing imports and exports. Elsewhere we have UK House Prices. There are no significant releases from the USA today.

Tuesday – Some important UK data today including Inflation data, House Prices and Retail Sales, all of which are a barometer of overall economic health. In the Eurozone we have Economic sentiment surveys from Germany and the EU. In the USA we have a speech from the Federal Reserve, and some Housing data.

Wednesday – The Bank of England release their minutes today, which often causes volatility for Sterling. In the Eurozone we see the latest construction data output. In the USA there are Homes Sales data and another speech from the FED. Over in New Zealand we see the latest GDP figures at 11:45pm.

Thursday – UK Retail Sales are released today, showing full monthly and annual comparisons. On the Eurozone we have inflation data from Germany, Manufacturing data from Italy, German and France. We also see measures of EU Consumer confidence. Over in the USA we see the latest Jobless Claims, Manufacturing data, and yet another speech from the FED.

Friday – We end the week on a quiet note, with the only UK data of note Public Sector borrowing. There is nothing of note from the EU today. Over in the United States we have, you guessed it, another speech from the FED.
Getting the best exchange rates

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you.

It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.

Click here to send me a free enquiry

Pound/Euro exchange rate forecast for September 2012

Monday 10th September 2012
Good morning everybody. I'm back from sunny Kos in Greece, so let's get cracking and see what's been happening with exchange rates. In a nutshell, the Euro has been gaining strength and as a result Sterling/Euro exchange rates have fallen further from their recent highs. Today I'll take a look at what's been happening in Europe, why the Pound/Euro rate has fallen, and what the coming weeks may hold. If you need to buy or sell Euros at the best exchange rate, read on....

In this week’s Report:

• Euro gains strength pulling GBP/EUR rates down
• Is a solution to the debt crisis imminent?
• Pound/Dollar rates climb steadily to $1.60
• Round up of the week’s other data that may affect rates

Sterling vs. Euro;

Speculators waited in anticipation last week as a relatively stable few days led up to Mario Draghi’s long awaited ECB press conference. Today I will consider the major announcements from both the UK and Euro-zone that drove the sterling-euro cross price since I've been away.


Last week began with a UK Manufacturing data report that was greater than predicted; lifting the pound as speculators concluded that the announcement would reduce the chance of more Bank of England stimulus. Sterling gains were offset, however, as on that day Angela Merkel stood before Bavarian beer drinkers to announce her support for a unified euro.

The inference of her speech appeared to be that the hard line taken with troubled Euro-nations, such as Greece, was ultimately to bring about an end to the crisis, rather than to simply protect German interests. The markets took the signal as an affirmation that a plan was on its way and this, coupled with a buoyed sterling, kept the markets relatively constant around the €1.26 level.













Just as the steam from Chancellor Merkel’s comments began to wane, and European stocks slipped again, Mario Draghi set the cat amongst the pigeons when he explained to lawmakers that if the ECB were to purchase two to three year sovereign debt from troubled nations, this was not tantamount to outright quantitative easing; a breach of their mandate.

All eyes fell on Draghi and Thursday’s announcement; the euro had tentatively held its ground, never quite weakening back to the four year high levels, but not quite strong enough to warrant the sterling-euro cross to fall below the 1.26 mark. Speculators were divided as to the fate of the euro; the broad strokes of the ECB plan were relatively well known by this point, what was not, were the details. Draghi could announce an insubstantial plan, such as capped bond purchases, that would disillusion markets in a similar vein to his prior press conference. A stronger message however, would settle investors, buoy the euro and reduce the dreaded bond yields of nations such as Spain.

Although the ECB President delivered with respect to content, Draghi’s speech was perhaps not the vitriolic call to arms many expected, or hoped, it would be. The markets did respond, albeit eventually, as an initial weakening of the Euro during the speech ultimately saw the single currency close in on two-month highs against the US dollar stealing momentum from the yen.

Friday delivered weaker than forecast Non-Farm payroll data from the US which will have driven speculators from the dollar to the euro as the ECB’s recent actions, and the risk of Fed stimulus, has seen more traders drop their risk-adverse positions on Europe. The news also caused GBP/USD rates to rise above the $1.60 level for the first time in quite a while.

With the euro increasingly gaining on its counterparts we have seen the Pound/Euro rate start to drop further away from the recent highs, on Friday falling over a point down towards €1.25. As such it has never been a better time to consider your currency options if you need to buy or sell Euros. We have a range of contracts to cater to many Forex requirements. Whether you are buying or selling Euros, we can provide you will all the information to help you make an informed decision and make the very most of your currency.

Make the first step now, click here to make a free enquiry.

Weekly Economic Data that may affect exchange rates

Monday – Today is all about the EU. We have various releases including Italian GDP data, Greek Inflation numbers, EU investor confidence, French Industrial Output and Portuguese Trade Balance. Elsewhere there are some House Price figures for the UK, and GDP figures for New Zealand.

Tuesday – Today we have some Trade Balance figures from the UK showing imports and exports. A little quieter in the Eurozone with German wholesale prices the only data of note. In the USA we have Trade Balance figures.

Wednesday – An important day for GBP/EUR. Starting at home we have a host of earnings and unemployment data at 09:30am. In the Eurozone we have Inflation data from Germany, Spain and France. There are also some industrial production figures for the EU. Over in the USA there are several Import and Export numbers being released at 13:30pm.

Thursday – The only UK data of note is the BoE Quarterly Bulletin. It’s relatively quiet in Europe also with only Greek unemployment and Italian inflation data. Most figures today are from the USA: Jobless Claims, Interest Rate decision, FOMC minutes & a monthly budget statement.

Friday – The G20 meeting starts today, which is a gathering of finance ministers and central bank governors and thus could add a new dimension to the currency markets. Scheduled releases today include EU inflation and unemployment numbers, US inflation and Retail Sales figures.

Getting the best exchange rates

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you.

It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.

Click here to send me a free enquiry

Pound/Euro forecast August/September 2012

Monday 20th August 2012
Good morning. So as usual for Monday mornings, here's my outline of what has been happening to the Pound/Euro rate in the last week, with a full analysis of what is causing the movements. In addition I will look at where rates may head in the coming weeks, and also list a run down of the weeks economic data that could affect rates.

In this week’s Report:

• Pound climbs to 2 week high against US Dollar
• Events in Eurozone continue to drive rates
• Thin trade in holiday season creating peaks and troughs
• Round up of the week’s other data that may affect rates

(For currencies other than GBP, EUR and USD, contact us for a consultation)

Sterling vs. Euro;

After the excitement of the previous week and the comments made by Mario Draghi’ s and Mervin King - last week failed to produce any real excitement. The Pound broadly maintained its strength against the single currency, trading in a very narrow range throughout the duration of the week despite a number of important data releases made on both sides of the channel.













On Tuesday Sterling gained marginally over the Euro as UK inflation surprisingly rose for the month of July, whilst at the same time figures released showed that the Eurozone economy shrank in the second quarter of 2012. Although positive news for the UK economy the market didn’t react too much as the general view was that the Bank of England’s stance on monetary policy is unlikely to change any time soon, and therefore the results to a certain extent remain irrelevant for now.

The week continued in a similar fashion as the market showed indifference when, as expected on Wednesday, the Bank of England produced the minutes from the Interest rate setting meeting from the beginning of the month. This reported a 9-0 vote to keep interest rates on hold and no further Quantitative easing.

As surmised in previous reports, with UK rates firmly on hold and further QE off the table in the near term, Sterling is unlikely to play a dominant part in driving the cross for the time being. The focus is firmly set on the performance of the Eurozone. This was evident on Friday when the Pound began to lose some ground against the Euro following comments from the ECB and Angela Merkel of decisive action expected to reduce the borrowing costs for Spain and Italy.


So if the ECB take action could this lower GBP/EUR rates?

Any action by the ECB early next month to lower borrowing costs for Spain and Italy could well give the euro a lift against the Pound. But equally, now that they have outlaid an expectation, any lack of any bold action especially at a time when worries about Greece are resurfacing could send the euro lower across the board.

The status quo is likely to remain for the time being as markets remain quiet in part due to the holiday season. However there also seems to be somewhat of an undercurrent of disquiet as the problem in the Eurozone seems once again to be coming to the surface.

On the face of things the key members of the Eurozone are all singing from the same hymn sheet and claiming that they will do ‘whatever it takes for the euro to survive’ and thus far have managed to keep the markets subdued. However, cracks in the armour seem to be getting larger after Finland’s outspoken Foreign Minister last week claimed that the country was preparing for a ‘full blown currency crisis’ and the possibility of the Euro breaking up.

So it certainly looks like the EU debt crisis will continue to drive the Pound/Euro rate for the short to medium term. In uncertain times such as these, it's important to know your options and not just hope rates will go in your direction. Make sure you make the most of your currency, and use all the tools at your disposal to ensure that you maximise your position within the currency markets.

Contact me now for a free consultation.

Weekly Economic Data that may affect exchange rates

Below we list the main economic data releases of the week. It should be noted that as August is the holiday season in much of the world and Europe in particular, we are very quiet indeed on the data front. This does not necessarily mean there won’t be movements in rates however. Often when trade is thin in quiet periods we see larger swings in exchange rates than usual so if you have an imminent exchange to make, contact us today to have a free consultation.

Monday – There is little data of note today. The only scheduled releases are Construction data from Europe and a report from the FED in the states about Economic Activity.

Tuesday – On the whole another very quiet day for data. The UK releases its latest Public Sector Borrowing data at 09:30am. In New Zealand we see the latest inflation report from the Reserve Bank of New Zealand. Australia publishes its most recent Bank minutes. In the USA the FED gives a speech.

Wednesday –The only thing to watch out for is the FOMC minutes from the states that might affect GBP/USD rates.

Thursday – The markets have been saving all the data for today. UK: Mortgage Approvals & a CBI Trades Survey. EU: German GDP, German Imports & Exports, German, French & EU wide Inflation Data, EU wide investor confidence. US: Housing Prices, Homes Sales. New Zealand: Imports Exports & Trade Balance.

Friday – A little busier today with GDP figures from the UK in addition to a measure of business investment. In Europe the Greek and French leaders meet, which could mean an announcement about the Greek bailout. Over in the States we have durable goods orders.

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

Weekly Pound/Euro forecast report. Rates are looking good!

Monday 9th July 2012
Good morning everybody. Well, what a difference a week makes - I've been on holiday in Greece for a week, and much has happened in my absence. The Bank of England announced more Quantitative Easing as expected, but surprisingly it had no effect on the market. The interest rate cut in the EU however was a surprise, and has pushed GBP/EUR rates to new 3.5 year highs of €1.26+. I have much to catch up on, so in today's post I'll give a quick overview of what has happened while I've been away.

• UK announce an additional £50bn of Quantitative Easing
• Euro suffers its worst week in a year
• Dollar gains against the pound in light of jobless claims figures
• Round up of the week’s other data that may affect rates

Sterling vs. Euro;

Last week saw a very flat start to week for the GBP/EUR cross with no significant movement in the rates. The market awaited the Bank of England’s decision on whether more Quantitative Easing (QE) will be required and the European Central Banks interest rate decision on Thursday lunchtime.













The Bank of England made the expected decision to print more money and to add another £50bn to the £325bn already agreed previously. The last time Quantitative Easing was announced we saw a large drop in the value of the Pound; this was not the case with Thursday’s announcement.

The pound inched higher as the market awaited the Euro zone rate decision from European Central Bank President Mario Draghi. The policy move by the BoE and the interest rate cut from 1.0% to 0.75% had mostly been priced into the markets. The cut in the Banks deposit rate to 0.0% was unexpected and by the end of the London session the Euro had lost 1 cent against the Pound with the market closing at 1.2530 (mid-market). Decreasing the commercial bank deposit rate to zero is an attempt to try and boost growth within the Euro zone and get bank’s lending to customers or at least one another to bump start struggling economies.

UK manufacturing data surprised investors when it recovered by nearly three points to 48.6, beating even Switzerland's 48.1. Anything under 50 is seen as contraction although it is more the case off being the better of a bad bunch.

Friday saw the release of German Industrial Production figures which were much higher than expected at 1.6%; although the Euro did continue to weaken even further with the high of the day reaching 1.2606 (mid-market) as the deposit rate change seemed to over shadow all other news for the UK and Euro zone.

With the continuing problems across the Euro zone now is the time to get in contact with me to discuss your options and the types on contract you can use to your advantage when the markets are this volatile. The rate move on Thursday alone would have meant a difference of €2000 in a typical trade of £200,000.

The only other news from last week is that I have a nice suntan - 35c every day and not a cloud in the sky. I can highly recommend the Greek Islands for anybody who is not enjoying the British Summer, and the rates are very favourable too due to the issues in the country.

Weekly Economic Data that may affect exchange rates

Monday – A relatively quiet day for data releases but two important speeches, the first from ECB President Mario Draghi, and then MPC committee member Tucker discusses the resent decision to inject more stimulus into the UK economy.

Tuesday – German, French and UK industrial production figures released followed by trade balance figures and manufacturing data in the UK.

Wednesday – A quiet day for the Euro zone but important trade balance data from the US and Canada, followed by minutes from the FED.

Thursday – The monthly ECB bulletin and industrial production data make up the most important releases in the Euro zone, we see unemployment claims in the US which are a good indicator of where the market stands.

Friday – Friday 13th sees no releases from the Euro Zone but some important releases from the US in the form of PPI data, consumer sentiment, and also a speech by Federal Open Market Committee (FOMC) member Lockhart.

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

Weekly GBP/EUR forecast, and the weeks data

14th May 2012
Good morning. Well, last week was one of the busiest I have seen on the trading floor for some time. With Euro weakness pushing rates to €1.25, many of my clients were keen to fix rates for both buying and selling Euros with a forward contract, due to the uncertainty over the future movements of the GBP/EUR rate.

In today's report as always for a Monday morning, I'll review last weeks movements, and take a look at what might happen to the rate this week. If you are looking for the best exchange rates for a transfer of £5k+, get in touch today to find out more about our service.

In this week’s Report:

• Pound/Euro rates hit 3.5 year high
• EU political uncertainty still driving exchange rates
• Round up of the week’s other data that may affect rates

Sterling vs. Euro;

Last week again saw the Euro weakening significantly after further uncertainty within the Euro zone, along with some positive data being released from the UK surrounding decisions made by the Bank of England, which combined have led to the mid-market levels for GBP/EUR reaching a high of €1.2501 before dropping slightly on Friday. This is the highest we have seen over the last three and a half years! With some more important data coming out of the euro zone this week it will be hard to predict which way the market will shift.













Euro weakness causes GBP/EUR rate to rise

The main reason for such uncertainty within the Eurozone has come as of a result of the recent elections in France and Greece. Greece are yet to form a coalition government and there is a lot of uncertainty as the leader of Greece's left-wing Syriza bloc has stated to the two major parties that if they want to form a coalition they have to end their support for the austerity terms. This has increased speculation that Greece may leave the Eurozone which is a big worry for Germany as Spain, Portugal and Ireland may look to follow suit.

Indeed there was an interesting article on the BBC website outlining how Greece may leave the Euro.

Francois Hollande (the new socialist French leader) is also looking to reduce austerity and to focus on increasing growth which has led to a lot of uncertainty regarding the economic recovery within France and the Eurozone.

EU economy forecast to return to recession

The eurozone economy is forecast to shrink this year as its debt crisis continues to bite. The European Commission's spring forecast confirmed its prediction of a 0.3% contraction in 2012 in the economies of the 17 countries that use the euro. Growth figures for the first quarter of 2012 will be released by the European statistics agency Eurostat tomorrow, Tuesday 15 May.

"Economic activity in the EU contracted in the last quarter of 2011 and is estimated to have also done so in the first quarter of 2012," the Commission said in its statement.

This is probably priced into exchange rates already for the most part, but could of course cause some further weakness in the Euro.

Pound supported by Bank of England decisions

Back in the UK, the Bank of England released data for interest rates and quantitative easing (QE). The decision was made to hold interest rates at 0.5% which has now been kept at this level for over four years. There was also the decision for there to be no further QE this month.

This has come as a surprise to many experts as the UK recently dropped into a double-dip recession and it was expected that there may be a further injection of QE into the economy. As a result of these announcements the pound strengthened slightly pushing the GBP/EUR rate into the high 1.24’s.

What data this week may affect exchange rates?

This week we have some important data that may affect the GBP/EUR rate quite significantly. On Tuesday Germany will release their GDP figures followed then by GDP figures released from the European Monetary Union (EMU) which may have a big effect on the exchange rate.

Then on Wednesday we have data from the UK in regards to average earnings and unemployment figures followed up by core consumer price index data released by the EMU which may lead to some large fluctuation in the exchange rate.

We round off the week with German producer price index release which again could lead to a large swing in the GBP/EUR rate. Full details of the week’s data releases can be seen in the Market Data section below.

Do you need to buy or sell Euros?

Taking into account the volatility of the Eurozone at the moment and the data that will be released over the next week, it is important that if you are looking to sell Euros this week and you are wary about the data releases, you make an enquiry to discuss your options.

Even if you don’t need to convert your funds for some time, you can hold the current rate through a forward contract for as much as up to two years, thus protecting against further adverse exchange rate movements.

Likewise if you are looking to purchase euros you should get in contact to discuss the current market movements. Of course many will hope rates will continue to rise, but of course this is not a given. The currency markets can move very quickly indeed, and having a well thought through strategy to help time your purchase can save you thousands of pounds.

As I have often said on this blog, the other options is simply hoping the market will move in your direction, and hope is not a reliable economic tool.

Weekly Economic Data that may affect exchange rates

Monday – It’s a quiet start to the week in terms of fundamental data, with the only release of note Industrial Production data from the EU.

Tuesday – In contrast to Monday, today sees lots of important data. Potentially affecting GBP/EUR rates is the Germany GDP release, Europe’s largest economy. This is followed by EU GDP figures later in the morning, and economic sentiment surveys for the EU. In the UK we have Trade Balance figures which may also have an impact on exchange rates. Stateside we see Inflation data, Retail Sale & Housing Index data.

Wednesday – We’ll start in the UK today with a host of unemployment data including the Claimant count, average earnings and the ILO unemployment rate. We will also see an inflation report from the BoE, so lots that could affect the Pounds value. In the EU we have inflation data and trade balance figures. Across the pond we have Housing data, industrial production, the FOMC minutes and a FED speech.

Thursday – The Ascension Day bank holiday sees many EU markets closed today, so data today is weighted towards the states, with Jobless Claims, the Philly Fed survey and a FED speech the main data to watch for as it may affect Sterling/Dollar rates.

Friday – The G8 Meeting starts today which could throw up some economic surprises. Scheduled data releases include German and Canadian Inflation data. There are no UK releases today.

Getting the best exchange rates

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you.It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.

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Weekly Sterling/Euro forecast & predictions

Monday 16th April 2012
Good morning. Today as is usual for a Monday, I'll take a retrospective look at what happened in the currency markets last week, with a focus on the Pound/Euro exchange rate in addition to the weeks economic data I think will have an effect this week. Will the Pound/Euro rate remain above €1.20?

In this week’s Report:

• Pound remains stable against Euro
• EU Debt problems refuse to go away
• Round up of the week’s data that may affect rates

(For currencies other than GBP, EUR and USD, contact us for a consultation)

Sterling vs. Euro;

Last week saw the GBP/EUR rate move to a 19 month high of 1.2160, a mid-market price we haven’t seen since September 2010 and was driven by continued negative data coming out of France, Greece and Spain.













Data and events last week in the Eurozone showed that French manufacturing production declined further, only narrowly avoiding a slip into negative territory whilst social unrest continued in Greece as more strikes at the start of the holiday season seemed destined to halt efforts to get the economy moving again.

Spanish 10-year bond yields remained high, prompting investors to move to the safer heaven currencies of the GBP and USD. Also, Spain’s 10-year yield jumped to 5.99% nearing the levels that prompted Greece, Ireland and Portugal to seek bailouts.

Despite the bad news coming from the Eurozone, there seemed to be little effect on the currency markets. The negative news seems to be priced into the market already; as everyone knows it will not be a quick turnaround for the single currency. This has helped the GBP/EUR exchange rate to keep trading above the 1.21 level on interbank.

Furthermore the Pound was supported and has hit a 13 month high against a trade weighted basket of currencies. Sterling has been helped of late by data showing British retail sales rose in March at the fastest pace this year so far. Retail Sales are a good overall barometer of the UK economic as a whole, and so often have quite a big impact on the value of the Pound. The British Retail Consortium said like-for-like retail sales rose by an annual 1.3%, easily beating expectations of a stagnant performance, hopefully holding off fears of any potential recession for the UK economy.

As with the Euro data, the positive data out of the UK didn’t have much effect on rates as the markets wait to see what effects Q1 GDP figures on Wednesday (25/04) next week will have on the markets. The GDP figures will be very important indeed as they will show whether the UK is back in recession or not. Most analysts say that this is the next key indicator of the UK economy.

So will exchange rates remain above €1.20?

So in summary, the market seems to be fairly stable of late, and has been range-bound around the 1.20 and 1.21 levels for a few weeks now. Moving forwards, with forecasts for the exchange rate varying wildly between €1.14 and €1.25 for the next 3-6 months it’s very hard indeed to know what will happen.

It’s very important to note that despite the stability of late, it’s no guarantee rates will stay at this level. Indeed over the course of the last few years we have breached €1.20 several times, only for a sharp downwards correction to follow. Even if you don’t need your currency for some time, there are tools in place to protect you against adverse movement.

With much uncertainty over the issues in Europe, and of course the possible know on effects of this on the UK, the best course of action is a free consultation with us to discuss your options.

Make a free enquiry now - click here

Weekly Economic Data that may affect exchange rates

Monday – We start the week with EU Trade Balance figures, which can quite often affect the value of the Euro. UK wise, there is no data released today. Over in the United States we have Retail Sales at lunchtime, followed by Housing market prices in the afternoon.

Tuesday –This morning we have and RBA policy statement which will be interesting as there is talk of an interest rate cut down under, which could push GBP/AUD higher. In the UK we have a host of data including the Consumer Price Index (Inflation), Retail Sales and House Price Data. In Europe the German ZEW survey (confidence measures) will be released at 10am. In the US there is House Price info released at 13:30, along with industrial production figures at the same time.

Wednesday – Unemployment data is the main UK release today, including the claimant count and average earnings measures. In the EU there are Current Account measures which measure the net flow of funds in and out of the Eurozone, so expect some EUR volatility. Later in the day some inflation measures are released from New Zealand.

Thursday – Unusually for a Thursday there are no UK releases today. In the EU there are consumer confidence measures which in the absence of any other EU or UK data could have a bigger impact than normal. In the USA we have Home Sales data and the Philadelphia Manufacturing Survey.

Friday – We end the week with Retail Sales data being released from the UK, which is a good barometer of the economy as a whole. In the Eurozone there are various confidence measures from Germany, which can have a big impact as its Europe’s largest economy. Other than that the rest of the data is from Canada in the form of various measures of inflation.

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

Weekly GBP/EUR & GBP/USD and the weeks data

Monday 30th January 2012
Good morning. Another Monday, so let's start the week with a full breakdown of the last weeks movements in the currency markets.

In this week’s Report:

• Pound/Euro hits 4 week low
• Sterling/Dollar rises to 5 week high
• UK headed back to recession, more QE on the way
• Round up of the week’s data that may affect rates

(For currencies other than GBP, EUR and USD, contact us for a consultation)

Sterling vs. Euro;

Last week saw the volatility continue in the currency markets as Sterling dropped to a 4 week low against the Euro. With the UK economy shrinking by 0.2% in the last quarter of 2011 and poor UK retail data being released, Sterling fell away from the €1.20 highs we have seen over the last few weeks. One of the only positives for the UK was the news from the BoE (Bank of England) that all 9 members had voted against more QE which lent some valuable to support to the pound. There were also some positive sounds coming from Greece as leaders met Private Creditors to look at reducing Greece’s rising debt levels.













Official Figures released last week showed that the UK economic activity shrank by 0.2% in the last three months of 2011 compared to the 0.6% increase we saw at the end of the third quarter. Chancellor, George Osborne, said the figures were disappointing but not a surprise. "They are not entirely unexpected because of what's happening in the world and what's happening in the Eurozone crisis," he said. "The truth is that dealing with those problems is made more difficult by the situation in the Eurozone."

Retail sales fell in January as shoppers reined in their spending at the start of the year, the CBI says. Its monthly survey found 44% of retailers said sales volumes were down on a year ago. Ian McCafferty, the CBI's chief economic adviser, said: "Shoppers have reined in spending across the board at the start of the New Year after taking advantage of early discounting last month, which boosted pre-Christmas sales.” He added that poor sales were likely to lead to further falls in the rate of inflation.

Key talks between Athens and its private creditors took place last week as they try to agree a debt write-off that would dramatically reduce Greece's debt levels. If an agreement can be reached, Greece is in line to receive 130bn euros in additional bailout funds. Without the latest bailout package Greece would struggle to repay 14.5bn euros of loan repayments that are due in March. The agreement would see Greece's debts dramatically reduced by half to its private creditors.

With the GBP/EUR rate falling this week we have seen a rise in the number of stop losses placed with our brokers and banks. This is where clients look to protect themselves against any adverse exchange rate movements. E.g. you can place a Stop Loss order to buy your Euros should they drop below a pre agreed level - for example €1.15. In this way you can continue to take advantage of gains in the rate, but have a ‘worst case scenario’ should the market move against you. To put this into prospective if you did not have a stop lose in place and the rate dropped to where it was just a few months ago, purchasing €200,000 would cost you nearly £10,000 more.

Send me a free enquiry now to find out how much we can save you.

Sterling vs. US Dollar;

Last week saw a complete reversal in Cable’s fortunes after GBPUSD rates went from an 18 month low to a 5 week high. The Pound began gaining against the Dollar as talks of a Greek bailout package put pressure on the Greenback as risk appetite increased, although any gains made were moderated by concerns over another round of Quantitative Easing in the UK. It’s expected that the Bank of England will announce that it will buy billions of Pounds worth of gilts as early as next month.













"Sterling/dollar has been weak in the last month, primarily because of the weakness of the euro but also because of evidence of renewed UK economic weakness," analysts at Lloyds said, adding that the run-up to any announcement of further QE was typically negative for the pound.

Sterling briefly suffered losses against the Dollar midweek as data released showed Britain’s economy contracted in the fourth quarter, shrinking by 0.2%, below the consensus forecast of a 0.1% contraction. Growth for the whole year was just 0.9 percent, less than half the expansion recorded in 2010. The Pound’s losses midweek were only temporary however, as the U.S. currency came under broad selling pressure after the U.S. Federal Reserve announced that it would keep interest rates near zero until late 2014 and may opt for more stimulus.

In light of this, sterling rose to $1.5719 (Interbank), its strongest since Dec. 22.

Although Sterling made gains of around 2% against the Dollar last week, market participants said these gains could be only temporary in nature. "Our view is still that this period of dollar weakness we've seen this year will prove temporary so we're not looking for cable to break back into the $1.60s," said Lee Hardman, currency strategist at BTM-UFJ. "Maybe the market is getting ahead of itself in terms of anticipating QE3, that does create some scope for disappointment which could help the dollar regain some lost ground in the coming month," he added.

To put last week’s gains into perspective, a typical purchase of $400,000 would have cost around £3010 less on Friday than if it had been bought on Monday. To take advantage of the recent gains, contact your dedicated account manager at Foremost Currency and take the first step to making the most of your currency.

If you need to buy or sell US Dollar, send me a free enquiry now.


Weekly Economic Data that may affect exchange rates

Monday – There are no UK releases of note today. In the EU however we have German Inflation Data (which can impact interest rates) and Retail Sales (which reflect consumer confidence). In the USA we see Personal Consumption & Personal Income data.

Tuesday – Starting in the UK we have Consumer Credit, Mortgage Approvals and Net Lending. Of more importance will be the EU unemployment figures released at 10am. In the afternoon we see Canadian GDP and Industrial Prices, and in the USA we see inflation data and a measure of consumer confidence.

Wednesday – Today Nationwide releases its house price data for the UK, which reflect the national economy as a whole. In the EU there are various releases of inflation for both Germany and the EU as a whole. In the states there are Mortgage Approvals, Manufacturing data, Employment Numbers and Car Sales data.

Thursday – We’ll start down under today – Australia has Building permits, Commodity prices and Trade Balance figures – if good this could push GBP/AUD even lower than it already is. The UK releases its PPI data this morning also. In the Eurozone there are also inflation figures. In the USA there are some important releases – Jobless Claims, Labour costs and Nonfarm productivity.

Friday – We end the week with more UK House price info, this time from the Halifax. There are also further inflation numbers to add to those released earlier in the week. The Eurozone also has further inflation numbers and Retail Sales. Across the pond, we have Non-Farm Payrolls and Unemployment data – both of which often affect GBP/USD rates.



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

Weekly GBP/EUR & GBP/USD round-up, and weekly data

Monday 19th September 2011

Good morning. It's Monday morning, so let's take stock of movements in GBP/EUR and GBP/USD over the last weeks trading, in our Monday weekly round-up. In this week’s Report:

• Central Banks in Co-Coordinated move
• GBP/EUR falls from 6 month high
• GBP/USD remains near 8 month low
• Round up of the week’s data that may affect rates

(For currencies other then GBP, EUR and USD, contact us for a consultation)

Sterling vs. Euro;

Monday morning saw the GBP/EUR reach a six month high of 1.1720 (interbank). As the week progressed, trading rates returned to a more familiar level of around 1.14+ as we have seen over the last couple of weeks.

Speculation of the possible downgrade of French banks at the beginning of the week saw the rates increase. This was shown when the Credit Rating agency Moody’s downgraded two French banks after reviewing their exposure to Greek debt. Credit Agricole was cut from Aa1 to Aa2 and Societe Generale from Aa2 to Aa3. A third bank, BNP Paribas, is being kept on review for a possible downgrade.

You would assume that this news would weaken the Euro, but as we are so closely tied to the single currency, it has seen the GBP get caught up in the problems.

Confidence in the Eurozone was further shaken by the resignation of Jurgen Stark the chief economist of the European Central Bank. Stark resigned over his opposition to the ECB's bond-buying program, representing turmoil in the ECB with one of their key members walking out.

As the week progressed five of the World’s central banks announced a move to help resolve the Eurozone financial situation. The Federal Reserve, Bank of England, European Central Bank, Bank of Japan and Swiss National Bank will provide additional lending, and follows the fears about the exposure of banks in the EU and the potential collapse of the Eurozone during the debt crisis.

The leaders of France and Germany met late in the week and in put some confidence back into the Euro stating that Greece is an "integral" part of the Eurozone. Mrs Merkel and Mr Sarkozy said in a joint statement: "Putting into place commitments of the (bailout) programme is essential for the Greek economy to return to a path of lasting and balanced growth."
This strengthened the Euro and pushed rates back down from the highs we saw at the beginning of the week.

As we have seen over the last few weeks, the continued volatility in the foreign exchange markets have provided huge swings in the exchange rate. With all the economic uncertainties across the world, exchange rates are likely to remain extremely choppy over the next few weeks, therefore if you are buying or selling Euro’s in the next 6 months, contact us today for a free consultation.

Do you need to buy or sell Euros? Send us an enquiry now.

Sterling vs. US Dollar;

As the chart belows clearly shows, rates to buy US Dollars have been in steep decline over the last month. This reversed slightly last week, when we saw the world’s main central banks announce joint action to provide Dollar liquidity, aimed at securing the funding needs of banks struggling to meet them in the market.

Sterling slipped against the Dollar on Friday to trade within sight of 8 month lows, hit by signs that Bank of England officials were edging closer to more UK monetary stimulus, as investors watched events in the Eurozone closely. "The QE discussion is gaining momentum in the UK and is likely to keep GBP under pressure," said Morgan Stanley analysts in a note.

Sterling was down on Thursday in reaction to the co-ordinated central bank announcement. Markets expect interest rates to remain around historic lows at least until the end of 2012, with some further easing of policy also being factored in.

Manufacturing data from the US yet again disappointed to the downside with Empire state manufacturing and the Philly fed both posting negative readings in August. The data was virtually ignored by equity markets but with unemployment remaining persistently high in the US, traders cannot be too confident of a global recovery getting back on track. Not a single job was created in August and this is the first time that has happened since 1945.

A story of note from last week revealed that more than £4 billion was wiped off UBS shares as losses of $2 billion were uncovered stemming from trades put on by a trader in their London office. After Nick Leeson and Jerôme Kerviel, it seems that another ‘rogue’ trader is about to enter the banking history books. This time it’s the turn of the Nottingham University educated, Kweku Adoboli.

The bank has not announced where the losses were made, but there is speculation that it could have stemmed from trades in the Swiss Franc which moved over 10 cents in a matter of minutes after the SNB announced it was pegging the currency to the Euro. UBS profits will be all but wiped out in Q3 but as the revelation was more company specific, other financial stocks still performed well.

Do you need to buy or sell US Dollars? Send us an enquiry now.

Weekly Economic Data that may affect exchange rates

Monday – A very quiet start to the week, with only Nationwide House Prices for the UK. There is also some housing data from the US later in the afternoon.

Tuesday – Again quiet for the UK, with no data of note. In the EU, we see lots of figures from Germany including inflation data, and German and EU economic sentiment surveys. In the US we have an interest rate decision & the FOMC minutes. We also see RBA minutes which could affect GBP/AUD rates.

Wednesday – Public sector borrowing is released today for the UK. This shows the deficit and can affect the value of the Pound. More importantly, we see the BoE minutes to the recent interest rate decision. Watch carefully for any mention of Quantitative Easing being discussed. If so, it could knock the pound significantly. Nothing from the EU today, but from the US later in the day we see various housing figures.

Thursday – Canadian Retail Sales are released at lunchtime, followed by Jobless numbers from the USA. There are no releases from the EU or UK today.

Friday – There is no data of note today.

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

Weekly GBP/EUR & GBP/USD report, and weekly data

Tuesday 30th August 2011

Good morning. As is customary for Monday mornings, today we'll take a detailed look at the movements in Sterling/Euro Sterling/US Dollar and a round up of the weeks data that may affect exchange rates



In this week’s Report:



• Sterling starts to fall on poor UK data

• UK Interest Rates going to remain on hold for some time

• GBP/USD falls from 2 year high

• Round up of the week’s data that may affect rates



(For currencies other then GBP, EUR and USD, contact us for a consultation)



Sterling vs. Euro;



After the previous week saw more than a 2% gain in the Sterling/Euro exchange rate, we hoped that last week would at least provide some degree of calm for the volatile pairing, but unfortunately this wasn’t to be.



























Tuesday saw better than expected CBI industrial order data from the UK which was closely followed by a large fall in Eurozone economic sentiment from the ZEW. This is a key indicator for the health of the EU economy over the coming months and such a large fall does not look good.



These concerns were compounded when on Wednesday both German IFO business climate figures and Eurozone industrial new orders were worse than expected and the industrial order figures actually showed a negative reading.



Later in the week UK consumer confidence rose and GDP figures remained at 0.2% after fears they could be downwardly revised, so surely with all the poor EUR data and some reasonable figures for the UK the rate went up? Unfortunately not...



MPC member Martin Weale gave a speech in Dublin on Thursday in which he explained the reasons for him to abandon his call for a 25 basis point hike in the UK interest rate at the latest policy meeting. The main reason is the sharp deterioration in economic data since the start of the year and there are now suggestions that we could see a coalition in favour of renewed asset purchases (Quantitative Easing) between members of the Bank of England should the UK economic outlook deteriorate significantly.



It has forced the Pound to retreat by 1.5% against the Euro since Wednesday of last week and just goes to show that even if the data suggests one thing, the rate can do quite the opposite. We had already expected the interest rate in the UK to remain at the current all time low until at least May 2012 but now the MPC has a unanimous 9-0 vote in favour of keeping the rate at 0.5% it could stay there until late 2012 or even 2013.



There doesn’t seem to be much out on the data front this week so we expect the rate to mainly be driven by continuing debt problems in the EU and any more news about a stagnating UK economy. The mid-market rate should remain range-bound between 1.12 & 1.15 and even though this doesn’t seem like a huge movement, it can make a £4,600 difference on a €200,000 trade.



Do you need to buy or sell Euros? Send us a free enquiry now.



Sterling vs. US Dollar;



Sterling maintained its march against the dollar early last week bolstered by profit taking and support from a slight recovery in risk appetite after less gloomy than forecast China manufacturing data and German factory activity numbers marginally eased global growth worries. Further gains were expected to be limited due to concerns about the UK's faltering economic recovery.

By mid-week Sterling fell 0.5 per cent to $1.6411 on better-than-expected U.S. durable goods orders data which reduced some dollar bearishness temporarily. Analysts said sterling would struggle to find clear direction ahead of a speech by Federal Reserve President Ben Bernanke on Friday.

Some investors were speculating he may use the speech to signal further monetary stimulus to prop up the faltering U.S. economy whilst others had been betting on sterling in recent sessions on the perception the UK is a safer investment destination given U.S. fiscal problems and the euro zone debt crisis that shows few signs of resolution.



Market analysts said sterling may come under renewed pressure, given the UK economy is struggling and rate hike expectations have been pushed back into late 2012. Traders said the pound remains at risk of selling if data continues to show the economic recovery is stuttering, which would increase speculation that the Bank of England may opt for more "quantitative easing" stimulus.



Friday saw US Q2 GDP figures return slightly lower than expected at 1% growth for the quarter. Though growth remains weak, Fed officials do not appear particularly concerned about recession risks, and some have voiced doubts about the wisdom of more QE. The dollar pared losses against Sterling as Federal Reserve Chairman Ben Bernanke said the central bank was prepared to employ tools as needed to promote a stronger U.S. recovery but offered no definitive action and stopped short of signalling QE3.



To put last week’s market movements into perspective, a typical transfer of $200K would have cost £4500 more at the end of the week.



Do you need to buy or Sell US Dollars? Click here to send us a free enquiry.



Weekly Economic Data that may affect exchange rates



Monday – No UK Data yesterday as it was Bank Holiday. There were some GDP figures from Germany and Home Sales data from the USA



Tuesday – Today we have UK House Prices and Mortgage Approvals. Eurozone & USA confidence figures are also released today. Staying in the US, we have the FOMC minutes, which show what was discussed at their recent interest rate decision.



Wednesday – Unemployment data from Germany and the EU and USA are the main releases to watch out for today. We also see GDP figures from Canada and Factory Orders from the USA.



Thursday – The busiest day of the week. We start with Retail Sales from Australia and Switzerland, and then GDP figures are released for Germany & Switzerland. Later in the day we have inflation figures from Germany and the UK. From the USA we see Jobless Claims and Manufacturing figures.



Friday – We end the week with Retail Sales from Germany, and Construction figures from the UK. In the US, we have further unemployment measures in addition to the non-farm payrolls numbers. As these are notoriously difficult to forecast, the actual figures often differ significantly, causing GBP/USD volatility.



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

Weekly Pound vs Euro & Pound vs US Dollar forecast

Monday 22nd August 2011

Good morning. As regular readers will know, on a Monday we take stock of the last weeks movements in Pound vs Euro and Pound vs US Dollar. In this week’s Report:



• Sterling hovers near 12-week high vs. struggling euro

• Scope for Sterling gains seen as limited due to weak UK economy

• GBP/USD rates close to 2 year high

• Round up of the week’s data that may affect rates



(For currencies other then GBP, EUR and USD, contact us for a consultation)



Sterling vs. Euro;



Sterling hovered near a 12-week high against the euro towards the end of last week, as concerns about a worsening euro zone debt crisis dented the single currency. Mounting fears of a global recession and concerns about stresses facing some European banks caused European stocks to fall 2.6 %, extending a steep decline that continued throughout the week.





















Analysts said sterling has benefited to an extent from the troubles besetting the euro, though its scope for gains was expected to be limited due to recent evidence of a sluggish UK economy. The euro was down 0.1 % by Thursday last week, which placed it not too far from the August 5 low, below which would mark its weakest position since late May.



"Given the renewed demand for safe-haven currencies, sterling has fared quite well," said Michael Derks, strategist at FXPro. "Sterling is the least bad of the big currencies, but economically the country is still completely stuck in neutral". These comments highlight the fact the gains may be limited.



Data on Thursday showed British retail sales barely grew in July as cash-strapped consumers cut back on spending, underscoring the risks for the UK's already fragile economic recovery. However, public finance figures on Friday showed that the UK government's harsh austerity measures are helping to bring down UK debt as intended, which is a welcome sign of progress for the UK economy, albeit only a small glimmer of hope in an ocean of neutrality.



Higher unemployment and rising inflation are expected to continue to restrain consumer spending and, together with signs key British export markets are slowing, increase the risk the UK economy may still fail to pick up. In spite of stubborn inflation, markets expect the Bank of England to keep interest rates on hold until the end of 2012, with possible calls for further quantitative easing to stimulate growth. This will mean that although the economy may be quietly strengthening, it may not be reflected on the currency markets for quite some time, with further QE likely to be interpreted by investors as a sign of weakness for Sterling.



So, with exchange rates close to a 3 month high, and fears Sterling could slip back away due to poor economic conditions in the UK, those that need to purchase Euros within the next 6 months should contact us now to discuss how we can help protect against the market dropping.



Do you need best exchange rates to buy or sell Euros? Send us a free enquiry now.



Sterling vs. US Dollar;



Last week the GBP/USD got very close to a two year high which was mainly due to a batch of poor US data showing a plunge in factory activity in the U.S. mid-Atlantic region. Concerns about the UK recovery and the chance of monetary easing are expected to keep the pound in check. The poor data from the US made the dollar cheaper to buy, and this is why rates climbed against the USD despite dropping against the Euro.























Traders said markets were thin and declining risk appetite was pushing investors back to the dollar in the near-term, but the pound was gaining some support from the perception it was the best of a bad bunch of currencies.



Last week markets across the World dropped, with the biggest fall on the FTSE since the financial crisis began. We saw a flight from risk, where investors were jittery and moved their funds to perceived safe havens. Usually this means the US Dollar and Swiss Franc, however with problems in the US and the Swiss keeping their currency weak, Sterling benefited.



"Despite negative data coming out of the UK suggesting there's quite a significant cyclical downturn taking place, global investors see the UK as relatively stable from a political and ratings perspective against Europe and the U.S.," said Ian Stannard, head of European FX strategy at Morgan Stanley.



So Sterling is gaining support from the perception it is the best of a bad bunch of currencies. We have stable credit ratings, political calm and a deficit reduction plan in place. The government's fiscal austerity programme is also expected to hamper demand in the economy, leaving sterling vulnerable to weakness in the medium term.



Many are questioning the Pounds buoyancy at the moment, as the UK economy is far from healthy. Just last week we had poor Retail Sales figures, higher than expected unemployment, and dovish minutes from the Bank of England. Due to this, many analysts think that these gains will be short lived.



So in summery Sterling vs USD rates got very close to the best they have been in two years, however many analysts do not expect these levels to last for long.



Do you need to buy or sell US Dollars? Send us a free enquiry now.



Weekly Economic Data that may affect exchange rates



Monday – There are no scheduled economic releases today.



Tuesday – UK Mortgage Approvals are released today, showing the health of the UK housing market. Rom the Eurozone we have Inflation Data from Germany, and also Economic Sentiment Surveys from Germany and the EU. Also from the EU, we have measures of consumer confidence that may affect the value of the Euro. In the USA, Home Sales figures are released. Trade Balance figures and Inflation data are released from New Zealand.



Wednesday – Today’s UK data is Nationwide Housing Prices. In the EU we have Industrial New Orders, and Business Climate assessment figures from Germany. In the USA, we have Mortgage Approvals. New Zealand releases Retail Sales.



Thursday – The most important release today are German GDP figures. If poor these could weaken the Euro. In the USA we see Jobless Claims and Unemployment Data.



Friday – After yesterday’s German GDP figures, today is the turn of the UK. This will show at what pace the economy is growing, and is likely to have an impact on the value of Sterling. GDP is also released in the USA in the afternoon, followed by a speech from FED chairman Ben Bernanke.



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