What could move exchange rates this week?

Monday 24th March 2014 
Good afternoon. It’s been a pretty quiet day with not much change in exchange rates since my post last Thursday. Pound/Euro remains at €1.1950, and Pound/Dollar remains at $1.6500. 

With regards to whether Pound/Euro rates will recover any time soon, my view hasn't changed. I don't think it will go back through €1.20 unless we get some economic data that is significantly better than forecast. 

In the absence of anything new to move the markets, today I will list all the weeks’ data that I think might affect exchange rates this week. UK GDP data and a speech by ECB president Mario Draghi could both affect GBP/EUR exchange rates moving forwards. 

This week’s economic data releases that may affect exchange rates. 

Monday 24th March 2014 

Exchange rates have been relatively flat today, however we did see a raft of Inflation data from the Eurozone this morning. The figures were a little lower than expected, weakening the Euros and pushing GBP/EUR rates from 1.1940 to 1.1970, so a slight increase but not by much. 

Tuesday 25th March 2014 

I think the most important release today is a speech by ECB president Mario Draghi at 4pm. It was his recent comments that caused GBP/EUR to drop below the €1.20 mark. If he continues to be upbeat about the EU economy, rates could dip further. 

Other than that, we have UK Inflation, in the shape of the Consumer Price Index (CPI). I expect this to be around the 1.6% mark. Any higher will push Sterling up and vice versa. 

Over in the states we have consumer confidence figures and Home Sales data, both of which could affect the Pound/Dollar rate. 

Wednesday 26th March 2014 

There is nothing of note from the UK or EU today, so focus will be on US data. This includes Durable Goods orders, Bank Stress tests, Inflation numbers and mortgage approvals. 

Thursday 27th March 2014 

UK Retail Sales are released at 09:30am this morning. These are closely watched as they reflect overall economic health. The number will be around 4.3% I should think. If it’s lower than this then the Pound will fall, and if higher we could see Sterling get a boost. 

Elsewhere all data is from the States – Jobless Claims, GDP figures, Home Sales – expect a choppy day for GBP/USD rates. 

Friday 28th March 2014 

Today will be a key day for Sterling exchange rates, as we have the latest GDP figures from the UK showing how the economy is growing. Quarterly growth is forecast to be 0.7%, so any deviation from that figure will affect the Pound accordingly. 

Elsewhere it’s a busy day in the EU, with Economic sentiment indicators and German inflation data being release, but all focus will be on the UK GDP numbers. 

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Pound falls below €1.20, will it rise again?

Thursday 6th February 2014
Sterling has fallen below the €1.20 mark today for the first time this year. The reason for the fall was Euro strength following their decision not to raise interest rates. In today’s post I am going to look at the central bank decisions in both the UK and EU, and have a look at what this means for GBP/EUR exchange rates for 2014.

European Central Bank holds interest rates, GBP/EUR drops

The European Central Bank (ECB) has kept its benchmark interest rate at 0.25% today. The bank last cut rates to a record low in a surprise decision in November. Following low inflation numbers from the Eurozone in recent weeks, there was much speculation that the ECB would have to cut interest rates. 

As this was quite likely, the cut was already priced into the markets. A cut would weaken the Euro due to the lower return on offer for investors, and so because many thought a cut was on the cards, the Euro weakened accordingly and Pound/Euro rates rose to €1.22 last week. 

However after the announced no change to rates today, the Euro surged in strength, became more expensive to purchase, and this pushed rates just below the €1.20 mark as you can see from the chart below. Read more about today’s ECB decision here. 

Bank of England leaves rates on hold 

UK interest rates have also been kept unchanged at their record low of 0.5% by the Bank of England. This was widely expected and there was no effect on exchange rates. 

Analysts now hope that the Bank will use next week's inflation report to signal changes to its policy of forward guidance. There had been speculation that the Bank would issue a statement alongside the latest interest rate decision. However, in announcing the hold in rates and quantitative easing, the MPC said it, "reached its decisions in the context of the monetary policy guidance announced alongside the publication of the August 2013 Inflation Report". 

Where next for Pound/Euro exchange rates in 2014?

All year rates have remained above €1.20, but today’s Euro strength has pushed it lower for the moment. 

My view is that there is still a chance of the ECB cutting rates next month, so I think this dip in rates will be temporary. 

Also if UK data continues to improve then we could see the Pound recover and get back to €1.21 / €1.22 in the coming weeks. This will be even more likely should further EU data mean analysts think that a rate cut may still happen. 

If you need to sell Euros and convert Sterling, then you should give serious consideration to taking advantage of the 2 point move in your favour. Rates won’t drop much below €1.20, and I think that we will see it climb back up in the coming weeks. 

Click here to get a quote for EUR/GBP

If you need to buy Euros, then yes the rate may well increase. However much of the Pound’s strength recently is on speculation our interest rates may go up. Next week we have an inflation Report from the Bank of England, and I expect they may move the goal posts slightly with regards to a trigger for a rate hike. 

So while rates may indeed go back up, this is by no means a certainty. So Euro buyers may wish to consider placing a Stop Loss order. This means you can fix a rate should rates drop further below a pre-agreed level, €1.19 for example. In this way you can still take advantage of any gains in the rate, but should we see a shock drop, you’re not leaving yourself exposed and risk losing out on the great buying levels we are currently seeing. 

Have a free consultation and find out more about the rates and service I can offer you. 

I work as a Senior Currency Broker for one of the UK’s leading independent currency brokerages. 

I can source you exchange rates that are up to 5% better than banks and other brokers may offer you, safe in the knowledge that we are fully Authorised by the Financial Conduct Authority. In addition, I offer a wide range of contract types, such as Forward Contracts, Stop Loss Orders and Limit Orders.

With over 8 years’ experience in the industry, I have a very good knowledge of what can move the exchange rate, so I can also talk over your requirements, and let you know the different options you can consider in order to help you time your trade and get the best possible exchange rate. 

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I can call you to have a brief chat about what you need to do. It doesn’t cost anything, there is no obligation to trade with me, and I can let you know the rates that we offer so you can compare it with your bank. 

Many of my existing clients have saved thousands of Pounds by using me to get a better rate of exchange. So find out today if I can be of use to you, by getting in touch. 

I look forward to hearing from you. 

Alastair Archbold

Pound falls significantly after Mark Carney comments

Friday 24th January 2014 
Good afternoon. We have seen Sterling weaken significantly today, after the Bank of England governor poured cold water on the chances of interest rates going up any time soon. 

Speaking at the World Economic Forum in Davos, he admitted that its new "forward guidance" on increasing interest rates will need to change because unemployment has fallen far faster than expected. He added it was time to "evolve" the guidance, raising the possibility the Bank may abandon the 7% unemployment trigger to consider an increase in rates. You can read more about what he said here on the telegraph site. This is what happened to Sterling/Euro rates after he spoke:

What does this mean for exchange rates? 

Earlier in the week the excellent unemployment figures pushed Sterling to a 12 month high against the Euro, and this was because the level was falling to the 7% target that analysts thought would trigger an interest rate rise. 

The comments from Mark Carney today counteract that, and as a result the gains are gone, and as is often the case the spike was short lived, the Pound has fallen back away. I think it’s now unlikely Sterling will make any further significant gains now the market has corrected, although we are still above €1.20 against the Euro which is a good buying level. Those that need Euros may wish to fix a rate to protect against rates falling further. 

I have been saying for some time that if exchange rates rose much higher, don't be surprised to see the Bank of England move to weaken the Pound back off so that UK exports don't become too expensive, and that's exactly what we have seen happen today.

If you are converting Euros or another currency back to Sterling, then today's move represents a decent move in your favour. Medium to Long term, the Pound will likely strengthen again, so it’s worth discussing your options with me regardless of which currency you need to move. 

Getting the best exchange rates 

This is all about timing. If you look at my post on Monday, you will see I highlighted the fact that Wednesday’s unemployment figures would be key for Sterling, and indeed they were as we saw rates surge. I also warned that any comments from the BoE that hinted no rate rise was on the cards would cause the Pound to drop in value, which again proved to be the case. 

This demonstrates that having a good currency broker on your side to help explain what could move the market is key to getting the best possible exchange rates. If you have an upcoming currency transfer to make, and would like to discuss your requirements, then you can click below to send me a free no obligation enquiry. I can discuss what you need to do, run over the options available to you, and explain what could happen to move rates either for or against you. 

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In this way you can take control of your requirement and make an informed choice about what to do. Getting your timing right and achieving a good exchange rate can save you thousands of Pounds. 

I will be back on Monday as usual, with a full breakdown of what is happening throughout next week that could affect exchange rates. 

Have a great weekend. 

Alastair Archbold

Unemployment falls, Pound rises...

Wednesday 18th December 2013 
In my last post I outlined the data this week that I thought would have an impact on exchange rates. I pointed out that today (Wednesday) would likely cause changes in currency rates due to some key data including Unemployment and the latest Bank of England (BoE) minutes. Unemployment was lower than expected pushing the Pound higher, but comments from the Bank of England threaten to put the brakes on the Pounds rise. In today’s post I’m going to take a detailed look at what has happened, and what it means for the exchange rate forecast.  

UK unemployment falls, Sterling rises. 

The UK unemployment rate has fallen to its lowest level since 2009, official figures from the Office for National Statistics (ONS) showed this morning. The market expected a figure of 7.6%, however the actual number came in at 7.4%; the lowest rate since February 2009. As a result, the Pound has risen against the Euro by 1 cent to €1.1915, and also by a cent against the US Dollar to $1.64. 

As the chart above shows, the news gave Sterling a boost and caused exchange rates to rise, as I predicted would be the case on Monday. So why exactly did the Pound gain? 

This 7.4% rate compares with a figure of 7.6% for the three months to September, and is below the rate analysts had expected. The Bank of England has said it will not consider raising interest rates from their record low of 0.5% until the unemployment rate falls to 7%, so the fact that we are getting closer to the 7% target means interest rates in the UK could rise sooner than expected. 

Higher rates of interest attract investment due to the higher return, and this means demand for Sterling causing it to rise in value, and in turn push exchange rates up. However, the BoE governor Mark Carney has said an interest rate increase is not guaranteed even when unemployment falls to this level. Indeed as we will see in a moment, the BoE could even move to weaken the Pound in the coming months.

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BoE say that Sterling strength not good for the UK 

So the Pound is strong, exchange rates are rising, the economy is growing, so all is well right? Not necessarily. Sterling's recent strength risks derailing Britain's recovery and could jeopardise attempts to rebalance the economy, the Bank of England said this morning. 

The nine members of the Monetary Policy Committee (MPC) said while sterling's gains over the last 4 weeks reflected a stronger economic outlook, further rises could harm export growth. You can read the full minutes yourself by clicking here. 

Half our exports go to the Eurozone and so if the Pound gets much stronger, our goods become more expensive and so our recovery could start to falter. 

"Any further substantial appreciation of sterling would pose additional risks to the balance of demand growth and to the recovery," minutes from the Bank's December meeting showed.  

Sterling is at a five year high on a trade-weighted basis, where it is measured against a basket of other currencies, and the Bank said that for Britain's "burgeoning" economic recovery to be sustainable, it needs to rely more on business investment and exports and less on consumer demand. 

So you have been warned; this is the clearest signal I have seen yet that the BoE may move to devalue Sterling as they did in the summer of 2012 when rates fell from €1.30 to €1.14.

Will the Pound go up or down against the Euro?

Summary - when should you fix your rate?

On the one hand the UK economy is good, the Pound is gaining value, and this could continue should economic numbers continue to impress. This would be good news for those that need to buy Euros, but not so good for those looking to convert back into Sterling. 

On the other hand, if the Pound gets much stronger, might we see the Bank of England move to devalue the Pound due to the reasons I have outlined above? This would lower exchange rates, meaning it could be wise to fix a rate soon while it’s on a high. 

There is no way to predict what will happen, but if you need to make the most of your exchange, having a good currency broker on your side can make a huge difference. In addition to helping you achieve rates up to 5% better than banks can offer, I can explain various options and contract types that I have available, that can protect you against rates moving against you, while still allowing you to take advantage if the market moves in your favour. 

The first step is to send me a free enquiry by clicking below. I can then have a brief discussion regarding your requirements, explain the options you have, and enable you to make an informed decision on when to fix your rate of exchange. 

Click here to send me a free enquiry now. 

I look forward to hearing from you. 

Alastair Archbold

How to get the best exchange rate buying or selling Euros

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

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

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

Pound/Euro forecast 2013

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

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

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

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

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

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

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

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

Converting Euros back to Pounds

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

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

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

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

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

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

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

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

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

Getting the best exchange rates

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

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

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

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

Alastair Archbold