Why has Pound fallen against Euro August 2011

Wednesday 10th August 2011

Good morning. Sterling has fallen quite a bit in the last 24 hours, pushed down ahead of today's Bank of England (BoE) inflation report, that may well present a poor assessment of the UK economy. At 08:30am this morning rates are as follows:



• GBP/EUR 1.1312

• GBP/USD 1.6254

• GBP/AUD 1.5691

• GBP/NZD 1.9465

• GBP/CAD 1.5964

• GBP/ZAR 11.579

• GBP/JPY 124.76

• GBP/DKK 8.4263

• GBP/NOK 8.8614

• EUR/USD 1.4366



Sterling down vs Euro and US Dollar



So why has the Pound fallen against the Euro August 2011? It's mostly due to today's BoE inflation report, that is expected to issue a poor assessment of the economy today. This follows data earlier in the week that showed a surprise fall in manufacturing output. This reminded investors of the fragility of the economy as it faces new challenges from global financial turmoil and also the widespread riots in London and other cities.



Today's BoE report will show it's latest growth and inflation forecasts today. Markets will be looking for clues to more Quantitative Easing, and it's this expectation that has hurt the Pound and dragged it down from highs against the Euro seen earlier in the week.



Just a few days ago markets were talking about Sterling being a new safe haven currency, however analysts now realise Sterling's gains are mostly due to the fact it's the best of a bad bunch. With issues in the USA and the EU regards debt, the Pound had gained as other currencies lost out.



However, according to Reuters, in the coming weeks sterling could be "well-placed" for more gains given the concerns about debt problems in the United States and its credit ratings downgrade, as well as the debt crisis in the euro zone. Meanwhile rioting and looting across London and in other cities this week also darkened the outlook for sterling as it pointed towards spreading social unrest.



Today's Data



German inflation figures will be closely watched today, for any hint of a further EU interest rate hike. In the UK we see a confidence report, and there is a Bank of England inflation report, along with a speech by BoE governor Mervyn King. Watch for any comments regards further fiscal stimulus (Quantitative Easing) that may weaken the Pound further.



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.

Market Turmoil continues to affect exchange rates

Tuesday 9th August 2011

Good morning. Sterling continues to trade near a 2 month high against the Euro, which has weakened further as investors worry about the EU debt crisis. The Pound has gained from the US downgrade and Euro weakness. At 08:30am this morning rates are as follows:



• GBP/EUR 1.1493

• GBP/USD 1.6353

• GBP/AUD 1.6072

• GBP/NZD 1.9983

• GBP/CAD 1.6303

• GBP/ZAR 11.826

• GBP/JPY 126.48

• GBP/DKK 8.5584

• GBP/NOK 8.9783

• EUR/USD 1.4229



Market Turmoil continues in US and Europe



This morning stock markets around the world are plummeting, as investor confidence is eroded due to issues in the US and Europe. Following the downgrade of the US Credit Rating, and issues in the Eurozone meaning France's sovereign credit rating is now at risk, markets are very volatile as investors sell the Euro.



The result is a weaker single currency that is cheaper to purchase, and exchange rates are close to a 2 month high. The US Dollar has fared better, and we haven't seen a significant weakening of USD as dollar funded asset positions are liquidated.



Sterling could also be at risk with BoE Inflation report



Sterling could be at risk if the Bank of England cuts its growth forecast in its quarterly inflation report due on Wednesday. UK economic data has consistently surprised on signals that it will not raise interest rates within the next year. Although inflation has been stubbornly above the BOE's target range, the central bank is not going to push up interest rates any time soon.



In fact, some in the market are speculating that the BOE may have to resort to more quantitative easing if growth remains sluggish domestically and external risk factors like a stuttering global recovery intensify. If they do, then Sterling will likely also fall, as it's only the fact it's the best of a bad bunch that has given the Pound some support.



Markets are very volatile, and rates could move for or against you as investors buy or sell a currency on the perceived risk. To ensure you don't lose out, contact us today to discuss our Stop Loss and Limit Orders, which are very useful when exchange rates are so volatile.



Today's Data



Lots of UK data today; Manufacturing Production, Trade balance, Industrial Production and a GDP estimate. We could therefore see significant volatility for Sterling today. There is also an interest rate announcement and press conference by the US Federal Reserve.



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 Outlook Forecast

Monday 8th August 2011

Good morning, As always on a Monday morning, today we'll take stock of the last weeks movements that has created best exchange rates to buy Euros and US Dollar is some time, following the turmoil in the financial markets last week.

In this weeks Report:

• EU debt crisis significantly weakens Euro
• World markets rocked by sovereign debt worries
• US Debt agreed, Job figures better than expected
• 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;

This week European markets have again fallen sharply amid a crisis of confidence in the ability of Eurozone leaders to deal with debt problems. Due to this the pound has risen sharply against the euro reaching a two month high last Thursday.

Investor confidence was severely hit after European Commission President Jose Manuel Barroso warned that financial markets are not convinced that Eurozone governments are prepared to take necessary action to defend the stability of the Eurozone.

Barroso says that the Eurozone crisis is no longer “just in the Euro-area periphery”, a reference to the uncertainty spreading from Ireland, Portugal and Greece to Spain and Italy which are now at the eye of the storm. The fear that these countries would need assistance has significantly weakened the Euro giving some great opportunities to buy at the moment.

The European Central Bank has said it will offer a fresh round of loans to banks in light of continuing fears about the Eurozone debt crisis. "Given the renewed tensions in some financial markets, the ECB has decided to conduct a supplementary refinancing operation," said the bank's president, Jean-Claude Trichet. He added that economic uncertainty was "particularly high"'.

Last week bonds issued by the Irish and Portuguese were bought up by the ECB but there was concern that they did not appear to have intervened to help Spain and Italy, whose borrowing costs have risen significantly recently.

Time will tell whether the EU manage to come to an agreement to avert the crisis escalating, but in the meantime you should look at the positive; you can buy Euros at a much better price than has recently been available. It's very important to note however that this is purely due to movements with the debt crisis in the US and fundamental UK data is still very poor.

If you need to buy Euros in the next 6 months, consider discussing the options available with a currency broker such as Forward contracts, Stop Loss orders and Limit orders, to ensure you secure the best possible exchange rate.

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

Sterling vs. US Dollar;

The US Dollar suffered last week as fears escalated that the US economy was heading towards another recession. Stock markets tumbled to their lowest point since 1978 and Sterling climbed close to 1.65 as continued political and economic woes weighted on the dollar.












Carrying over from the week previous, a last minute deal to raise the U.S. borrowing limit cleared its biggest hurdle in Congress on Monday, warding off the risk of a debt default after weeks of feuding which damaged America's image abroad but failed to dispel fears of a credit downgrade.

Moody's Investors Service and Fitch Ratings maintained U.S. ratings for now, but said additional deficit-reduction measures were needed for the government to put its finances in order, Underscoring that threat, Moody's assigned a negative outlook to the AAA rating, which means a downgrade is possible in the next 12 to 18 months.

Fitch promised to conclude a more thorough review of the United States by the end of the month and did not rule out slapping a negative outlook on the rating. Now investors await Standard & Poor's. The agency has been tougher than its rivals, threatening to downgrade U.S. ratings by mid-October if lawmakers did not come up with a plan to meaningfully cut the budget deficit.

The dollar fell further on Friday despite stronger-than-expected U.S. jobs growth, the much anticipated Non-farm payrolls accelerated more than expected and the unemployment rate dipped to 9.1 percent from 9.2 percent Markets however remain sceptical on the inability to stem the spread of the euro zone's debt crisis, but Friday's employment report offered a glimmer of hope.

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

Weekly Economic Data that may affect exchange rates

Monday – House Prices and Retail Sales from the UK today will give some idea how confidence in the economy is faring. Eurozone confidence figures are also due, which in the current climate are unlikely to be positive.

Tuesday – Lots of UK data today; Manufacturing Production, Trade balance, Industrial Production and a GDP estimate. We could therefore see significant volatility for Sterling today. There is also an interest rate announcement and press conference by the US Federal Reserve.

Wednesday – German inflation figures will be closely watched today, for any hint of a further EU interest rate hike. In the UK we see a confidence report, and there is a Bank of England inflation report, along with a speech by BoE governor Mervyn King.

Thursday – A bit quieter today, with a report from the European Central bank the only thing likely to affect GBP/EUR. In the USA there are various jobless measures.

Friday – We end the week with Industrial production figures from the EU, and Retail Sales from the United States.

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.

Eurozone debt worries spook the markets

Friday 5th August 2011
Good morning. Sterling vs Euro rates shot up to a new 2 month high yesterday, as comments from various quarters of the Eurozone gave markets the jitters and the Euro was sold off, creating significant weakness in the single currency. Rates at 08:30am this morning are as follows:

• GBP/EUR 1.1489
• GBP/USD 1.6272
• GBP/AUD 1.5535
• GBP/NZD 1.9448
• GBP/CAD 1.5926
• GBP/ZAR 11.2586
• GBP/JPY 127.60
• GBP/DKK 8.5561
• GBP/NOK 8.9185
• EUR/USD 1.4164.

Eurozone debt worries weaken the Euro

Investor confidence was hit in a big way yesterday, after European Commission President Jose Manuel Barroso warned that the eurozone's sovereign debt crisis was spreading, sparking fears that Italy and Spain might become engulfed in the problems. His comments further rattled the markets, which closed sharply lower. The Euro significantly weakened, and at one point GBP/EUR rates hit €1.1554, before dropping back away.

So far, Greece, Portugal and Ireland have needed bailouts. The European Commission is concerned that it might not be able to afford to rescue Italy and Spain, which have the eurozone's third and fourth largest economies.

The European Central Bank (ECB) has said it will offer a fresh round of loans to banks in light of continuing fears about the eurozone debt crisis. "Given the renewed tensions in some financial markets, [the ECB] has decided to conduct a supplementary refinancing operation," said the bank's president, Jean-Claude Trichet. He added that economic uncertainty was "particularly high"'.

Trichets comments coupled with Barroso's spooked world markets which all fell throughout trading yesterday, creating some good Euro buying opportunities.

UK and EU Interest Rates

Both the Bank of England (BoE) and ECB left interest rates on hold yesterday as expected. It was the EU comments after the decision, as outlined above, that caused most of the movements in exchange rates.

Today's Data

A busy end to the week, with PPI (Inflation) data from the UK, in addition to Industrial Production figures from Germany. A busy day in the states also, with Unemployment and Non Farm Payrolls at lunchtime.

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.

Interest Rates and effect on Exchange Rates

Thursday 4th August 2011
Good morning. Services sector data yesterday gave Sterling a boost against the US Dollar and Euro, but gains were limited as concerns remain about the fragility of the UK economic recovery, particularly after data earlier this week showed manufacturing activity contracting. Today we have the BoE and ECB interest rate decisions. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1450
• GBP/USD 1.6361
• GBP/AUD 1.5330
• GBP/NZD 1.9196
• GBP/CAD 1.5797
• GBP/ZAR 11.070
• GBP/JPY 130.31
• GBP/DKK 8.5289
• GBP/NOK 8.7929
• EUR/USD 1.4285

Swiss Cut Interest Rates

Yesterday the Swiss National Bank unexpectedly cut interest rates to stem a sharp appreciation in its currency, causing several currencies such as the Euro to spike higher. With the problems in the US, the Swiss France is a safe-haven currency and had become very strong, so they had to intervene. This caused GBP/CHF rates to rise from 1.24 to 1.2730.

UK Interest Rates today

Generally disappointing UK data has added to the view that UK interest rates will remain at a record low for a prolonged period, while some have suggested more quantitative easing (QE) may be needed to revive sluggish growth rates. Today at lunchtime the BoE will announce their decision, but it's widely expected rates will again be left on hold. If however they announce any further QE, we could see the Pound fall. This is unlikely however.

Investors have steadily priced out the chances of a rate hike and are not expecting an increase in 2012, whereas late last month they expected a rate rise in November 2012. This is keeping Sterling weak compared to other zones with higher rates.

EU Interest Rates

The ECB also announce their decision, and we expect rates to be left on hold. They have already raised rates twite this year, and there may be further hikes which may strengthen the Euro slightly, making it more expensive to purchase.

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.

Best Exchange Rates to buy Euros August 2011

Wednesday 3rd August 2011
Good morning. We are at a 2 month high vs the Euro, as the single currency weakened further on due to renewed worries about euro zone debt and the risks of it spreading to countries like Spain and Italy. Despite its gains versus the euro, the pound slipped against the US Dollar, stronger now the debt bill has been passed. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1450
• GBP/USD 1.6305
• GBP/AUD 1.5138
• GBP/NZD 1.8851
• GBP/CAD 1.5652
• GBP/ZAR 11.069
• GBP/JPY 125.75
• GBP/DKK 8.5256
• GBP/NOK 8.8074
• EUR/USD 1.4236

Pound vs Euro at 2 month High

Fears that countries like Italy Portugal and Spain may follow Greece and Ireland in defaulting on their debts have weakened the Euro further, pushing exchange rates up to their best in 2 months. This is despite the Pound falling due to a run of poor UK data showing the economy is sluggish.

Analysts still expect rates to drop back away as focus shifts back to fundamental data. It's a great time to buy Euros, and if you need the best exchange rates to buy Euros in the next 6 months, send us a free enquiry now to find out more about our exchange rates and how you can fix the current rate, even if you don't need your currency for some time.

US Debt bill passed into law

President Barack Obama has signed legislation to increase the US debt ceiling and avert a financial default, after Congress voted in favour of a bipartisan compromise deal. But the bill's passage failed to lift financial markets.

On Wall Street stocks ended Tuesday down by more than 2%, amid poor consumer spending data for June. Moody's rating agency reacted to the bill by placing Washington's AAA credit score under a "negative outlook". Without a deal to raise the debt ceiling, the US would have been unable to meet all its bills, the treasury department had warned.

You can read more about this here on the BBC website. In terms of the effect on the currency markets, the US Dollar has not strengthened significantly as expected. It may be that the agreement is simply viewed as delaying the inevitable, and is merely a plaster on a gaping wound.

Today's Data

Australian Retail Sales and Trade Balance figures are released today. From the Eurozone there are also Retail Sales figures. The EU and UK both release Purchasing Managers Index which is a measure of inflation. Stateside, watch for Mortgage Approvals and Factory orders.

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.

Pound vs Euro rates surge up August 2011

Tuesday 2nd August 2011
Good morning. Sterling fell yesterday after poor manufacturing data, however as we'll see in a moment the US debt problems have resulted in GBP/EUR rates surging, nearly at €1.15 this morning. We'll look at the reasons for this after the usual rate snapshot as at 08:30am:

• GBP/EUR 1.1488
• GBP/USD 1.6276
• GBP/AUD 1.4968
• GBP/NZD 1.8640
• GBP/CAD 1.5577
• GBP/ZAR 10.958
• GBP/JPY 125.71
• GBP/DKK 8.5558
• GBP/NOK 8.7917
• EUR/USD 1.4169

US debt agreement and the effect on currency exchange rates

The agreement to congress raising the US debt ceiling has had some interesting effects on the currency markets. As there have been problems in the US, the Dollar had weakened significantly. As it was perceived as a risky investment, other currencies such as the Euro and Sterling benefited.

Now that there is an agreement, investors have been buying dollars again, mostly with Euros. The net effect of this Euro sell off is a severe weakening of the single currency, making it much cheaper to purchase.

Pound vs Euro rates surge up August 2011

The weakening of the Euro has helped push GBP/EUR rates up to nearly €1.15 this morning, creating the best exchange rates for Euros for some time. It's very important to note however that this is purely due to movements with the debt crisis in the US. Fundamental UK data is still very poor, and Sterling is down.

Sterling still weak due to poor data

Further poor data from the UK yesterday highlighted the fragile recovery. Manufacturing activity shrank for the first time in 2 years, and the fact interest rates in the UK will remain low for many months is weighing on the Pound.

As a result Sterling has actually dropped against most currencies, however this has been masked by the upwards movement in GBP/EUR following the developments in the USA.

Summary; what you should do if you need Euros.

If you need to buy Euros, you should seriously consider fixing the rate with a Forward contract, where you can lock in today's rates for up to 2 years, and only pay 10% now, the remainder when you need the currency.

With poor UK data continuing to weigh on Sterling, most analysts think exchange rates are going to fall back away. Buying €200,000 today compared to a few weeks ago is an astonishing £7500.00 cheaper, clearly illustrating the huge spike we have seen.

Do you need to buy Euros? Send as an enquiry now to find out more about our rates.

Today's Data - After the holiday in Australia yesterday, today we have House prices, building permits, commodity Index and an interest rate decision, all of which could strengthen the Aussie. Closer to home, we have Inflation data for both the UK and Eurozone. Also from the UK there are shop price index figures from the BRC.

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.