Pound Euro Rate Forecast GBPEUR

Friday 12th August 2011

Good morning. Sterling had a choppy day in the markets yesterday, swinging up and down vs the Euro and other currencies as investors try to make sense of all the volatile data we have had this week. Today we'll look at Pound vs Euro, Pound vs US Dollar, and the options available to help you achieve the best exchange rates, whatever your currency requirement.



Pound vs US Dollar



Sterling hovered near 3 week lows against the dollar yesterday, with the Pound struggling after the Bank of England downgraded its growth forecast earlier in the week, and also due to risks of further declines growing as the UK government's fiscal cuts continue to bite. With the recent downgrading of the US, many expected the USD to weaken, however it remains a safe haven currency and this is keeping the dollar strong. Hard to call where this currency pair will move, but at the moment it remains around the $1.61 - $1.63 level.



Pound vs Euro



GBP/EUR rates fell this week as the Bank of England gave a gloomy outlook for economic growth. Rate then went back up on rumours that France was about to lose its AAA credit rating and that Societe Generale was in line for a government bailout. The rumours were denied by credit rating agencies, the French Treasury and Societe Generale. As such focus returned to poor UK figures, and this dragged rates back down again. The swings seem to be in line with markets deciding whether Sterling or the Euro is the best bet.



It was very choppy in the markets yesterday, with rates swinging between €1.1360 and €1.1445 as analysts tried to make sense of the growth figures and credit rating rumours.



In Europe, the concern centres on whether Spain and Italy will have to follow Greece, Portugal and the Republic of Ireland and require bailouts. The fear has since spread this week to whether other eurozone countries, and most notably France, can afford to put funds into an expanded European Financial Stability Facility that will pay towards any required future bailouts.



Swiss Franc has huge movements.



The GBP/CHF rate in the last week has moved between 1.1650 and 1.2700 in the last week. This is a huge movement, and caused by the Swiss National bank cutting the interest rate to try and weaken the currency. As the Swiss Franc (CHF) is a safe haven currency, it had become incredibly strong in the current market turmoil. As this was hurting the economy, the move was made to weaken the currency, and it's certainly had an effect.



The Euro also rose against the CHF, boosted by talk the Swiss currency could be pegged against the euro. If this were to happen, it would be aimed at weakening the CHF. The speculation is that the euro/Swiss franc pair may be pegged at 1.15 francs.



What are your options?



Whether you are buying or selling currency, exchange rate movements at the moment are very volatile, and could move either way by some margin. This could of course work for or against you, depending which way the market moves.



So, you could simply leave it to chance and hope rates move your way, however hope is not a reliable economic tool. There are various ways to take control of the market to ensure you don't get caught out by rates moving the wrong way.



Stop Loss and Limit Orders allow you to place an order to buy/sell currency if it goes up to a level not currently achievable, or below a pre-agreed level. In this way you take advantage of any gains in the rate, without leaving yourself open should things not move your way.



Alternatively you could fix the rate now with a Forward contract, and this is the best option for those of you that are risk averse. This give you the cost of your currency for up to 2 years, and you are protected against movements in any direction.



Whatever your currency requirement, don't just leave it to chance. Contact us today to discuss the options available with an expert currency broker.



To discuss these types of contract with us, send us a free enquiry today.

Pound falls on BoE cut in growth forecast

Thursday 11th August 2011

Good morning. Sterling fell yesterday after the Bank of England cut it's growth forecast. This pushed the Pound down against other currencies. Against the Euro, Sterling gained slightly due to rumours the credit rating of French banks may be at risk. At 08:30am this morning rates are as follows:



• GBP/EUR 1.1351

• GBP/USD 1.6162

• GBP/AUD 1.5774

• GBP/NZD 1.9746

• GBP/CAD 1.6003

• GBP/ZAR 11.585

• GBP/JPY 123.86

• GBP/DKK 8.4564

• GBP/NOK 8.9185

• EUR/USD 1.4234



Bank of England cut growth forecast



The Bank of England has cut its UK growth forecast for 2011 from 1.8% to about 1.5%, warning that the "headwinds are growing stronger by the day". Bank governor Mervyn King said Europe's debt crisis and fears of contraction in the US overshadowed the world economy.



The Bank's report was compiled before the latest meltdown on financial markets, and Mr King acknowledged that "the mood in markets has taken a sharp turn for the worse". Some analysts believe the crisis in the markets will add to the Bank's existing concerns.



"It is important to remember that the report itself was compiled before the recent market volatility and so the forecasts will not have reflected the recent plunge in equities and commodity prices," said James Knightley, an economist at ING.



The news pushed Sterling down against other currencies and exchange rates fell.



French downgrade rumour weakens Euro



Despite Sterling falling against other currencies, against the Euro the Pound rose slightly on speculation that France could be the next triple A-rated sovereign to suffer a downgrade. Ratings agencies have since states this is not the case, however this demonstrates how volatile the markets are at the moment, and even the slightest rumour is enough to significantly alter exchange rates.



Today's Data



It's 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.



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.

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.