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

Monday 24th October 2011
Good morning. As always on a Monday, today we take a detailed look at the last weeks movements in GBP/EUR, GBP/USD and the weeks economic data.

In this week’s Report:

• EU debt crisis continues to affect GBP/EUR rates
• European Leaders hold summit to discuss solution
• Further Quantitative Easing possible for the UK
• 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 began the week at a five-week low versus the Euro on speculation the European Union will decisively address the region's debt crisis this week. Sterling fell as low as 1.1360, its weakest since early September.













Surprise inflation data showed UK consumer prices rose 0.6% last month. That took the annual rate of consumer price inflation to 5.2%, a three-year high. The higher inflation was due to soaring utility bills and not really a sign of increased economic activity. Instead rising prices are likely to further depress consumer spending while fiscal austerity measures also impact growth prospects and further complicate the task ahead for UK politicians and policymakers keeping concerns about stagflation very much alive. Stagflation combines rising prices and slow economic growth, historically a mix of weak growth and high inflation is negative for a currency.

On Wednesday the BoE's October meeting minutes showed policymakers voting unanimously to resume quantitative easing (QE), and considered injecting even more than the 75 billion pounds agreed. In a speech, BoE Governor Mervyn King defended the decision to launch another round of quantitative easing, citing a slowing world economy, especially in the euro zone, as threatening the recovery of the UK economy. “The minutes reinforce the view that the BoE is really concerned about the international environment and they stand ready to do more QE rather than less," said Kiran Kowshik, currency strategist at BNP Paribas.

Sterling received a late boost on Friday as rumours of a divide between France and Germany emerged ahead of an EU Summit designed to deliver a solution to the debt crisis. Despite the climb, Sterling and other perceived riskier currencies could be vulnerable to shifts in risk sentiment in the run up to the EU summits which Policymakers hope will make progress in tackling the euro zone debt crisis however remain deeply divided.

So, what now for Sterling and Euro? Well, The Bank of England seems to be prioritising growth, which leaves the door open for more QE, which risks devaluing the currency further. The EU summit which took place yesterday and concludes on Wednesday could result in a deadlock and if there is no resolution to the Eurozone debt crisis we could see the Euro fall.

Do you need to buy or sell Euros? Contact us today.

Sterling vs. US Dollar;

The start of last week saw Sterling fall 0.25% against the US Dollar after Germany surprised the market by saying that there are no quick fixes to the Eurozone debt crisis.












Sterling was also weighed down by a report from Ernst & Young’s ITEM Club, which urged the Bank of England to cut interest rates to virtually zero from a current record low of 0.5%, saying that the recovery has completely stalled and that additional QE is pointless, since prior attempts failed to stimulate business investment. A separate report from the Centre for Economics and Business Research (CEBR) said that the central bank was right to expand asset purchases, warning that Britain would be at a virtual standstill until the start of 2013.

The Pound slipped further following the release of UK inflation data on Tuesday. The year-on-year UK consumer price index accelerated to 5.2%, caused mainly by the recent increases in the cost of gas and electricity. Core CPI, which strips out volatile food and energy prices, rose to 3.3%, up from 3.1% in August.

Towards the middle of the week we saw a complete reversal in Sterling’s fortunes, as investors moved towards riskier assets. After a dovish report from the Bank of England, Sterling rose on the view that a solution to the eurozone crisis would be presented at the weekend’s EU summit.

Sterling’s gains were only short-lived however, as troika leaders warned that time is running out for Greece, urging the next tranche of bailout funds be paid soon. The warning saw risk appetite fade and sent investors into the safer US dollar.

GBPUSD closed the week at a 6 week high after the Pound soared against the Dollar on Friday, rising by over 1%. Sterling was buoyed by reported demand from a UK clearer and pushed higher along with the euro and equity markets.

Last week saw all financial markets driven by continued speculation over the European debt crisis and this week promises to be extremely interesting, with a plan for the EFSF and bank recapitalisations due by Wednesday at the latest.

Do you need to buy or sell US Dollars? Contact us today.

Weekly Economic Data that may affect exchange rates

Monday – Today markets will be reacting to the EU debt summit held at the weekend. Also from the Eurozone today we will see a host of inflation figures that could affect interest rates in the short term. Industrial New Orders are also released from the EU, so expect volatility in GBP/EUR prices today.

Tuesday – UK Mortgage approvals are released today, in addition to current account data from the ONS. There are consumer confidence figures from Germany. Further afield we have an Interest rate decision in Canada, and Housing Prices and confidence data from the USA.

Wednesday – The only UK data today is the CBI industrial trend survey. In the USA there are various releases regarding Home Sales. New Zealand has an interest rate decision and trade balance figures that may affect GBP/NZD rates.

Thursday – Inflation figures today are released by Germany. Staying in the EU we will see Money Supply data. Of course the on-going debt crisis will continue to be the main driver in the value of the Euro. In the UK there are consumer confidence figures. In the USA markets will be closely watching the numbers released at lunchtime: Gross Domestic Product, Home Sales and Unemployment data.

Friday – A quiet end to the week with no data of note from the UK or EU. Most data is US based including inflation data and consumer sentiment information.

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Sterling up against Euro on EU summit concerns

Friday 21st October 2011
Good morning. The pound fell slightly against the US Dollar yesterday, but continued it's volatility vs the Euro, and rose a point to nearly €1.15. This was because of doubts the EU summit this weekend would go ahead, and whether or not they would reach a deal on leveraging the euro zone rescue fund. This weakened the Euro and pushed GBP/EUR rates up. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1479
• GBP/USD 1.5779
• GBP/AUD 1.5416
• GBP/NZD 1.9901
• GBP/CHF 1.4044
• GBP/CAD 1.6023
• GBP/ZAR 12.919
• GBP/JPY 120.98
• GBP/DKK 8.5440
• GBP/NOK 8.8584
• EUR/USD 1.3740

Pound gains vs Euro on EU bailout doubts

Yesterday the volatility in GBP/EUR rates continued, as investors questioned how much progress would be made on resolving the EU debt crisis at the EU summit this weekend. There was a German media report that said they had not ruled out postponing the meeting.

This weekend will be very important for the future of the Eurozone, and analysts said that the Pound's value against the Euro would continue to be dictated by what happens with the Euro, and that the pound could suffer more against the US dollar if EU leaders are seen to be unable to agree on the euro zone bailout fund.

This weakened the single currency and helped push GBP/EUR rates higher. There were also some better UK retail sales data released yesterday, however it didn't do much to affect the value of the Pound, with events in the Eurozone continuing to take centre stage.

Today's Data

Australia releases import and export data which could affect GBP/AUD rates that have been dropping from the $1.60 level in the last few weeks. Germany has various confidence measures, and as the largest economy in the EU this could impact EUR prices. Finally, the weekends summit in the Eurozone could also have an effect.

On Monday I will be posting a detailed outlook of GBP/EUR rates, GBP/USD rates and all the weeks economic data that you should watch out for if you are buying or selling currency.

Getting the best Exchange rates

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Sterling up against Euro on risk sentiment

Thursday 20th October 2011
Good morning. Sterling rose yesterday and hit a 1 month high against the US Dollar, and was also up against the Euro. It was nothing to do with any particularly good data, rather it has been supported by better risk sentiment. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1477
• GBP/USD 1.5711
• GBP/AUD 1.5453
• GBP/NZD 1.9838
• GBP/CHF 1.4233
• GBP/CAD 1.6064
• GBP/ZAR 12.683
• GBP/JPY 120.44
• GBP/DKK 8.5436
• GBP/NOK 8.8596
• EUR/USD 1.3684

Sterling up on risk sentiment

Gains in European stock markets, and optimism that progress would be taken by euro zone policymakers towards solving the debt crisis pushed up sentiment towards the pound yesterday. Investors are returning to riskier currencies on the better EU outlook, and this helped the Pound gain against other currencies.

However, analysts are still saying that while there are signs that progress on tackling the euro zone debt crisis will be made this weekend, a comprehensive and a durable solution was unlikely and the UK would remain vulnerable to financial tensions in Europe.

The other factor that could pull the Pound back down is the risk of further stimulus by the Bank of England, especially after yesterdays BoE minutes hinted more asset purchases may be needed to help Britain's ailing economy. In the minutes yesterday it showed that policymakers voted unanimously to resume quantitative easing (QE) this month, and considered injecting even more than the 75 billion pounds agreed. They did discuss up to £100bn in easing, and this signals that further QE may be on the cards. This will likely keep any gains for Sterling limited.

Today's Data

UK Retail Sales figures are released today in addition to Nationwide Consumer Confidence, showing how confident consumers are about the economy. There are also inflation figures from Europe. Stateside we have various measures of unemployment.

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Pound lower on inflation data and BoE minutes

Wednesday 19th October 2011
Good morning. Sterling fell yesterday after inflation was higher than expected. We have the Bank of England (BoE) minutes today which analysts also expect to be dovish, so the Pound is bracing itself for a possible further drop. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1411
• GBP/USD 1.5764
• GBP/AUD 1.5290
• GBP/NZD 1.9716
• GBP/CHF 1.4153
• GBP/CAD 1.5932
• GBP/ZAR 12.525
• GBP/JPY 120.92
• GBP/DKK 8.4917
• GBP/NOK 8.8114
• EUR/USD 1.3814

UK Inflation data weakens the Pound

The rate of Consumer Prices Index (CPI) inflation yesterday hit its record high in September, rising to 5.2% from 4.5%. This was higher than expected, and the latest RPI measure is the highest annual rate since June 1991.

The Bank of England had already predicted that inflation would top 5% this year as a result of higher utility bills, but it expects price rises to slow in 2012 and 2013. Despite the high numbers, many economists agree with the Bank of England that inflation may soon start to fall.

Usually when inflation is high, it signals interest rates may rise to combat it. Higher interest rates create demand for a currency and it would usually strengthen. In the current climate however with interest rates at record lows, the high inflation numbers actually weakened the Pound. This is because stagflation (high inflation with low growth) means rates have to stay low, and as a result Sterling weakened and fell against other currencies.

BoE minutes today

At 09:30am today the Bank of England release the minutes to it's latest decision to hold interest rates and pump £75 billion into the economy with Quantitative Easing. Because analysts expect the minutes to be quite dovish, this has also had an impact the Pound, weakening it and pushing exchange rates lower. The minutes show what was discussed and how the voting went.

Sterling vs Australian Dollar

The Australian dollar gained against the Pound yesterday, on reports that France and Germany were ready to sharply boost the eurozone's rescue fund amid a solid performance on regional equity markets. This combined with the weaker pound has pushed GBP/AUD rates down from it's highs in the last month, and this is expected to continue while the Pound remains under pressure.

Moody's downgrade Spain

Moody's has downgraded the rating of Spain's government bonds. The ratings agency cut Spain two notches, two days after Standard & Poor's took the same decision. Moody's said it had cut the rating because there had been no credible resolution to the eurozone debt crisis.

There has been little effect on the currency markets, because there has been so many downgrades of the main economic zones, the currency markets now seem to be paying little attention any more.

Today's Data

Today is quite important for Sterling, as we see the BoE minutes to their recent decision to pump £75bn into the economy. We will see what was discussed and how the vote went, and may well impact on the value of the Pound. There are further inflation numbers from the USA today, but no data of note from the Eurozone.

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 up against Euro, but gains may be short lived

Tuesday 18t October 2011
Good morning. Sterling fell against the US Dollar yesterday, tracking losses in the Euro. The weaker Euro however helped push GBP/EUR rates up by nearly 1%, after comments from German officials tempered optimism that a European Union summit this week will produce a comprehensive plan to tackle the euro zone debt crisis. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1495
• GBP/USD 1.5750
• GBP/AUD 1.5546
• GBP/NZD 1.9978
• GBP/CHF 1.4178
• GBP/CAD 1.6135
• GBP/ZAR 12.673
• GBP/JPY 120.91
• GBP/DKK 8.5568
• GBP/NOK 8.8865
• EUR/USD 1.3700

Euro weakens pushing GBP/EUR rates higher

The German Finance Minister yesterday dampened demand for the euro when he said Sunday's summit of EU leaders will not present a definitive solution for the region's significant debt problems. This weakened the Euro, making the single currency cheaper to purchase.

His comments helped boost GBP/EUR rates up from a 5 week low. However the Pound dropped against other currencies such as the US Dollar. The comments spooked investors and we saw a flight back to the safe haven US Dollar, which usually strengthens when there is global economic uncertainty.

Sterling at risk of falls due to poor data

Despite the gains seen yesterday, it's worth noting this is nothing to do with any strength in the Pound, rather it's Euro weakness pushing up rates. Many analysts said there was little reason to buy sterling given weaknesses in the UK economy and loose monetary policy.

The ITEM Club yesterday downgraded its growth forecasts for the UK, which didn't do Sterling any favours. We now await data on UK inflation and retail sales which are expected to show the economy's recovery remains frail, so this could mean the current spike in GBP/EUR rates are short lived.

Some analysts said this week's data may have limited impact on sterling given that the UK central bank has already moved to bolster the economy with more quantitative easing, which involves flooding the market with pounds and thereby decreasing demand for the currency.

Today's Data

Retail Price Index, Consumer Price Index, and CBI trend survey are all released for the UK today. All of this can impact future interest rate movements and so can affect GBP. In the EU we see Economic sentiment figures. US data comprises inflation data.

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 and the weeks data

Monday 17th October 2011
Good morning. As regular readers will know, on a Monday I take stock of movements in GBP/EUR & GBP/USD over the last week, with forecasts on what may happen in the coming week. I will also list the most important economic data to watch for that may affect rates.

In this week’s Report:

• Poor economic figures hurt Sterling
• G20 discuss EU debt crisis
• Downgrading of Banks continues
• 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 lost over 2% against the Euro last week as it fell from above 1.16 on Monday, to end the week struggling to remain above 1.14. The main data releases couldn’t have been more confusing when trying to gauge the current state of the UK economy with jobs figures on Wednesday showing that the UK unemployment rate is at its highest since 1994, rising above 8%, followed by data on Thursday that showed the trade deficit figures for August were narrower than expected.













The improvement in trade figures was a result of £0.2billion increase in exports, reaching their highest levels since records began in 1998, and a £0.2billion fall in imports, and is something the Bank of England have been hoping for since the credit crunch took hold in 2008 as increased exports should stimulate growth in the economy (and potentially create more jobs...)

Unfortunately news from the Eurozone was pretty downbeat. At the beginning of the week there were concerns that Slovakia would be the only 1 of the 17 member nations not to ratify the increased European Financial Stability Facility which is where every Eurozone member (including the smallest nations like Slovakia) are putting together a bailout fund of €440billion. It was thrown out in the first vote but went through in the second round on Wednesday and the Euros performance was visibly better afterwards, gaining another cent against the Pound, and moving nearly 2% against the US Dollar to reach a 1 month high of 1.3890.

Even the downgrading of Spain’s sovereign debt rating by ratings agency Standard & Poors, just a week after another of the big agencies Fitch had done the same couldn’t stop the Euros rally.

Looking ahead the Pound will most likely be driven by goings on within the UK as opposed to further afield. We know now that the bailout fund for the Eurozone has been approved it doesn’t look like the EU or IMF are willing to let the Euro fail, especially after there were more rumours today that Greece would be receiving another bailout before the end of October.

It therefore looks like the Bank of England could be solely responsible for which way the Pound moves as we get closer to Christmas since they announced a further £75 billion quantitative easing on 6th October. If this turns out to be the only time then the Pound may start to find its feet as we move through the 4th quarter. However, MPC member Charles Beans said in a national newspaper last week that the Bank of England would expand its asset purchase programme if necessary meaning any further concerns about the UK economy could swiftly be followed by more QE, and potential further falls in the value of Sterling.

With this in mind make sure you are in touch with the Foremost Currency Group about your Sterling/Euro currency requirements to help you avoid any adverse market movements.

Are you looking for the Best Exchange Rates for Euros? Contact us now.

Sterling vs. US Dollar;

Last week saw the markets start to settle following the frivolities of the previous week. After cable reached a 10 month low of 1.527 (Interbank) the previous week’s trading after the Bank of England initiated a £75 Billion program of quantitative easing (QE) the Pound seemed relatively buoyant at the start of last week finishing the day almost 3% higher against the Dollar.

Under normal circumstances the market would normally expect the currency of an economy that enter a QE program to remain consistently weak for some time after the event happens. However because most of the other major banks are themselves considering QE it has not weighed as heavily on the Pound this time around.













After Sterling's impressive rebound on Monday the currency was again stopped in its tracks following poor growth data with traders stating that Sterling was still vulnerable to further selling off. Fundamentally Sterling is still a weak currency and a weak cable cross is beneficial to the UK export market which is often commented on by the BoE governor ‘Mervin King’. Sterling’s recovery against the Dollar was always going to be limited as the US Dollar remains a safe haven currency for investors whilst there is uncertainty within the world markets.

The Dollar slipped on Wednesday against all the major currencies including the Pound after investors scaled back on long term positions in the Dollar as it was broadly seem that the exposure to the market was too great and the risk was too high. This knocked the Dollars performance and Sterling gained over 1 % against the greenback despite damning UK employment figures being released the same day. The figures showed that unemployment claimants are on the rise and worryingly almost a quarter of 16-24 year olds are now out of work.

The end of the week saw the Pound continue to gain against the Dollar after a sharp rise in the performance of the Euro which saw the Dollar slip. Traders encouraged caution over cable as there are still risks to the downside, not least that there is still the threat of further QE. However for now sterling seems to be content with riding on the back of other currencies performances, albeit good or bad and until Sterling’s fundamental show consistent signs of improvement the status quo is unlikely to change.

Unfortunately for currency purchasers this uncertainly makes life a bit trickier. Whether you are buying or selling it is important to keep up to date with market movements to ensure you maximise your position in this difficult market.

Are you looking for the Best Exchange Rates for US Dollars? Contact us now.

Weekly Economic Data that may affect exchange rates

Monday – We have a fairly quiet start to the week, with no data of note from the UK or EU. Any further developments regarding the EU debt crisis however could still affect rates. From the USA we have some industrial production figures.

Tuesday – Now we get going with UK fundamentals: Retail Price Index, Consumer Price Index, and CBI trend survey are all released today. All of this can impact future interest rate movements and so can affect GBP. In the EU we see Economic sentiment figures. US data comprises inflation data.

Wednesday – Today is quite important for Sterling, as we see the BoE minutes to their recent decision to pump £75bn into the economy. We will see what was discussed and how the vote went, and may well impact on the value of the Pound. There are further inflation numbers from the USA today, but no data of note from the Eurozone.

Thursday – UK Retail Sales figures are released today in addition to Nationwide Consumer Confidence, showing how confident consumers are about the economy. There are also inflation figures from Europe. Stateside we have various measures of unemployment.

Friday – On to Friday, and Australia releases import and export data. Germany has various confidence measures, and as the largest economy in the EU this could impact EUR prices.

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

G20 meet to discuss EU debt crisis

Friday 14th October 2011
Good morning. Despite Trade Balance figures for the UK being better than expected, Sterling fell against the US Dollar as both the Pound and the Euro weakened after the European Central Bank said that the sovereign debt crisis could damage the euro's reputation. I would have thought that obvious, but there was still market reaction to the statement. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1443
• GBP/USD 1.5759
• GBP/AUD 1.5452
• GBP/NZD 1.9828
• GBP/CHF 1.4152
• GBP/CAD 1.6073
• GBP/ZAR 12.368
• GBP/JPY 121.21
• GBP/DKK 8.5169
• GBP/NOK 8.8737
• EUR/USD 1.3771

UK Trade Balance better than expected

The UK's trade deficit narrowed in August official figures have shown. Analysts said the stronger exports may boost the economic growth figures, however there were limited gains for Sterling on the news.

Howard Archer, chief UK economist at IHS Global Insight, said the August figures were "appreciably better than expected". The latest trade figures come a week after the Bank of England announced that it would inject a further £75bn of new money into the UK economy through another round of quantitative easing.

G20 Finance ministers to meet over Eurozone

Finance ministers from the G20 group of nations are meeting France later today to continue efforts to find a solution to the EU debt crisis. Greece remains the focal point but there are also fears that the crisis could spread to other countries such as Spain and Italy. This comes a day after the ECB warned that the Euro's reputation is at risk due to the debt crisis.

This weakened the single currency a little pushing GBP/EUR rates up, but as the UK is also exposed to the debt problems, gains were limited and today rates remain in the mid €1.14's.

Other news yesterday from the Eurozone was that Spain has had it's credit rating cut. Standard & Poor's reduced Spain's long term rating by one point saying there was weak growth and high levels debt. This is only one week after rating agency Fitch also cut Spain's rating.

There were other downgrades yesterday of the creditworthiness of UK banks Lloyds and RBS, and also UBS. This shows that there are real concerns both over the health of UK and EU banks. The markets have reacted very little however, probably as there have been so many downgrades all over the world, it's the same for everyone and so there has been no real effect on exchange rates.

Sterling vs Australian Dollar

The Pound had been making some gains against AUD in recent weeks. Antipodean currencies tend to weaken when there is global economic uncertainty, as they are perceived as risky. When there is volatility investors tend to unwind Carry trades and return to the safe haven currency, weakening AUD.

As some risk has returned to the markets following better US Data, we have seen GBP/AUD slip back slightly of late however. Generally Australia largely avoided the recession, and it's higher interest rates have been keeping it strong and exchange rates low relative to where they have been in recent years. If we see an interest rate cut in Australia in the coming months then we could see the rate increase more, but while there is so much turmoil in the markets investors will remain wary of the AUD.

Today's Data

Lots of EU data today. Trade Balance figures from the EU are released at 10am, followed by various measures of inflation. In the US, retail sales will show how confident consumers are in the economy.

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.