Sterling/Euro rises from €1.3350 to €1.3550

Thursday 15th October 2015 
Sterling/Euro rates have recovered very well in the last few days, rising from the €1.33’s to €1.3550 today. In today’s post I’ll explain the reasons for the gains, and what action those with Euros to buy or sell can take to help achieve the best exchange rates. First, a quick look at this week’s GBP/EUR graph: 

Why have Sterling/Euro rates risen? 

As you can see from the chart above, early in the week Sterling/Euro fell to €1.3350, the lowest it’s been since February. As I explained in my recent post, the drop was due to very low inflation numbers that weakened the Pound. 

Since, then we’ve seen the rate gain nearly 2 cents to €1.3550, so what’s been going on? Yesterday morning it looked like the Pound would continue to drop, as UK jobs data was released at 09:30am. The Claimant count was pretty dire, and showed that there were nearly 7000 more people claiming benefits than forecast. The Pound fell to €1.3350 on the news, but quickly recovered. 

This is because when you actually look at the figures in more detail, you see that the number in work actually rose by 140,000, bringing the employment rate to 73.6% - the highest rate since records began in 1971. This caused the Pound to gain, and in addition, wage growth has gathered pace much faster than the Bank predicted earlier this year, and this may allow the Bank of England to deliver the first hike in May next year, according to the chief economist at BNP Paribas. 

This morning, European Central Bank policymaker Ewald Nowotny said that it was now "obvious" the bank must do more to stimulate the euro zone economy. This signals further Quantitative Easing may be required in Euro, and the single currency has weakened further this morning pushing rates up to the mid €1.35’s. 

Do you have Euros to buy or sell? 

Many clients that had Euros to sell that read my post on Tuesday decided to fix a rate then, and that was a prudent move given the rebound we’ve seen. If you look back at the movements in GBP/EUR this year, you can see the rate has dropped to €1.35 several times, and every time it’s bounced back. This is what we’ve seen happen again this week. 

In contrast, it’s a difficult time for Euro buyers unsure whether to wait to see if rates will recover, or just get the rate locked in now to protect against a further decline. Nobody can foresee whether rates will recover as they did earlier this year, or if the recent trend of Sterling weakness will continue causing rates to drop back away again. It’s important to remember that past performance is not indicative of future trends, however it’s the most salient data that many with a currency transaction to perform will rely on. 

But simply looking at the trend and hoping things will get better could end up costing you dearly. A more proactive approach would be to ensure you are fully informed of both what is moving the market, and the contract types at your disposal to help you take advantage of any spikes we may see in the exchange rate. 

I would welcome the opportunity to speak to any clients about the currency markets, discuss your requirements, assess your needs, and help you to make an informed decision on when to fix a rate. Click below to get in touch, and I will get in touch personally to explain the mechanics of how our service works. 

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Pound/Euro has fallen 8 cents since last month

Monday 28th September 
The last week has been an interesting one for currencies, with the GBP/EUR exchange rate fluctuating between €1.39 and €1.35. Since last month, it's now fallen 8 cents. This means purchasing €350,000.00 today is costing you around £15,000.00 more than last month, which really illustrates how important it is to get your timing right, and have tools in place like 'Stop Loss' orders to protect against sharp drops in the market like we have seen recently.

Here's how the GBP/EUR rate has moved in the last 2 months:

What has been causing the volatility in currency prices? 

As I explained in my last post, the main reason for the fall in GBP/EUR rates last week was due to a strengthening of the Euro, which has now become more expensive to buy. The European Central Bank opted not to extend their stimulus programme, and have also said interest rates will not be cut. This has supported the Euro and is the main reason for rates dropping away. 

Also the global economic uncertainty has meant that the UK are no longer likely to tighten monetary policy, and this has halted the rise in the value of Sterling. I’d expect the USA to raise interest rates later this year, and the UK may follow them, but not until the latter part of 2016 in my opinion. (The rumour of an interest rate hike generally strengthens a currency due to the higher return on offer for investors).

What could happen to exchange rates this week? 

Below I’ve listed the main data releases I think will affect currency rates for the coming week. For those looking at GBP/EUR, there are lots of inflation figures from the UK and EU, and also UK GDP figures that could affect the rate. 

For GBP/USD, look for hints on interest rates from FED member speeches later today. 

If you have a currency transfer to make, would like a quote, or simply a chat about what is moving exchange rates, click here to send me a free enquiry today. 

Monday 28th September 2015 – Very quiet other that data from the USA – Inflation numbers, Home Sales and Speeches by FED members could all affect GBP/USD. So far rates have risen today, but the general trend in Pound/Dollar rates is likely to be down 

Tuesday 29th September 2015 – There is a speech by Bank of England governor Mark Carney, and he may give clues on UK interest rates that could affect the Pound. Also in the UK today we see Mortgage approval numbers and a measure of Consumer Confidence. Elsewhere, Germany has inflation figures, the USA also releases Consumer Confidence figures. 

Wednesday 30th September 2015 – We have the latest GDP figures today that could affect Sterling. European data includes Germany releases Retail Sales numbers and Unemployment figures, along with EU wide unemployment figures and inflation. The FED’s Janet Yellen gives another speech – watch for any hint on US monetary policy. 

Thursday 1st October 2015 – There is data on manufacturing today from Germany, Europe and the UK, in addition to an ECB monetary policy meeting, all of which could affect GBP/EUR rates. The USA has Manufacturing and Construction data due in the afternoon. 

Friday 2nd October 2015 – We end the week with Jobs day in the USA, with Non-Farm Payrolls one of the key releases that could affect the US Dollar this week. The EU releases inflation numbers. 

If you would like to know how any of the above data could affect exchange rates, or would like to get a quote for your currency exchange to compare with your bank or existing broker, then click here to send me a free enquiry today. 

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

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Pound rises on employment data, but will it go higher?

Wednesday 16th September 2015
Today we saw the Pound/Euro rate rise on positive jobs data from the UK. Average earnings and the claimant count were both much better than expected, and you can see from the chart below that this strengthened the Pound, pushing the GBP/EUR rate from €1.36 to €1.3750 before dropping back away. We also had worse than expected inflation numbers from the EU, which helped push the rate higher as the Euro weakened and became a little cheaper to buy. 

Will the Pound continue to go up against the Euro? 

This is the question I’m asked daily by my clients looking for the best exchange rates to buy Euros. It is of course impossible to predict what will happen, but I don’t think the rate will get higher in the short to medium term. Indeed the current strength of the Pound is a problem for the Bank of England as it makes our exports more expensive, so if the rate does continue to climb, then I would expect the BoE to make noises about an interest rate being a long way off, in order to weaken the Pound to stop it hindering the economic recovery. 

Yes, the rate has fallen from the 8 year highs of €1.40+ we were enjoying last month. Those that need to buy Euros however should consider that the rate is still significantly better than when it was at €1.25 at the start of this year, so in the grand scheme of things it’s still a good time to buy Euros. 

It’s important to remember the only reason rates were so high before was 1) due to weakness in the Euro due to the Greek debt crisis that has now been resolved and 2) speculation interest rates were going to rise in the UK, which is no longer the expectation. For these 2 reasons I don’t think the rate will get back to €1.40 until into 2016, so if you need to buy Euros then consider fixing a rate sooner rather than later. (Click here to get a quote on your exchange and see how much you could save using my currency exchange services). 

All eyes on the FED 

Tomorrow’s decision by the Federal Reserve on US interest rates is the most anticipated for a very long time. The consensus is still that rates will be left on hold however there is a small chance they will increase rates. If they do, expect GBP/USD rates to drop sharply. 

Do you need to convert currency? 

I don’t just provide commentary on the currency markets, I am also the Foreign Exchange Manager at one of the UK’s leading currency exchange companies. I can help you achieve exchange rates much better than bank and existing brokers may offer you. If you need to buy or sell any international currency then get in touch with me today for a free quotation on what I can offer you. 

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GBP/EUR falls 4 cents in 1 week, before recovering to €1.42

Tuesday 18th August 2015 
It’s been an interesting week in the currency markets since my last post a week ago. (Apologies for the lack of updates recently; my girlfriend managed to break her leg quite badly so I’ve had other priorities!)

In the last week we saw Sterling weaken significantly, pulling GBP/EUR rates down from €1.42 back into the €1.39’s. Today however we have seen a significant recovery, and during trading today we have seen the rate shoot back up over €1.42. After a look at the last 7 day GBP/EUR chart I’ll explain what has been causing the volatility. Sterling/Euro over the last 7 days: 

What caused the Pound/Euro rate to fall into the €1.39s? 

It was a combination of poor UK economic data, positive data from Euro, and a 3rd €86bn bailout finally agreed for Greece. 

Let’s start with the UK numbers. Sterling fell sharply last Wednesday as numbers showed that wage growth had slowed, reflecting a slowing of the UK’s economic recovery. In turn the numbers means it’s more and more unlikely that the Bank of England will raise interest rates this year. Investors duly sold the Pound, causing it to weaken significantly. GBP/EUR fell 4 cents in a 1 week period, which goes to show just how quickly exchange rates can change in the currency markets. 

It was a different story in Europe, with figures showing that the EU economy grew by 0.3%. Even Greece managed 0.8% growth, and it seems that the ECB Stimulus program seems to be working. The Euro gained strength as a result and became more expensive to purchase. 

Finally, Greece was back in the headlines but this time for the right reasons. The 3rd bailout of €86bn has finally been agreed after months of negotiations, which regular readers of my blog will be well aware of. Greece’s debt problems have been one of the main factors weakening the single currency recently, so with the issue finally sorted, the Euro gained against other currencies. All of the above caused the decline in GBP/EUR pushing rates below the key €1.40 level. 

GBP/EUR pushes back above €1.42 

Pound/Euro rates fought back today however. When I returned to work this morning the rate was sat around €1.4050. At the time of writing, we have seen the pair rise by more than 1% to rest just above the €1.42 mark. This morning the latest UK inflation numbers were released and were better than expected. While still very low at 0.1% and well below the Bank of England’s target of 2%, it does mean that we could now see a UK interest rate hike sooner than thought. 

One of the BoE’s Monetary Policy Committee members Ms Forbes has said that a rate hike took between one and two years to take full effect, and as a result, rates would need to rise "well before" inflation hit the Bank's 2% target. 

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

In addition to explaining what moves exchange rates, I can also provide you a quote for your exchange. I am the foreign exchange manager for one of the UK’s largest currency brokerages, and the rates we can achieve are some of the best available and as much as 5% better than your bank can offer. 

I can offer a quote in almost every currency pair including GBP/EUR, GBP/USD, GBP/AUD, GBP/NZD and many more. If you would like a quote, or to discuss which way the exchanges rates may move, then contact me today by clicking below. It costs nothing to make an enquiry, and I can usually save my clients around 2 to 3% on their exchange. This may not sound much, but when converting large sums the savings are thousands of pounds. 

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