BoE and ECB Interest Rate Decisions today

Thursday 12th January 2011

Good morning. Today we'll look at the Pound Sterling forecast against other major currencies such as the Euro and USD. The Pound fell to a near 1 year low against the US Dollar yesterday. Against the Euro the Pound also ended the day down.



Trade balance figures were worse than expected, but the main reason was repositioning ahead of today's announcements by the Bank of England and European Central Bank. The below charts shows how rates moved throughout the day yesterday:



~Currency Movements on Wednesday 11th January~

Bank of England (BoE) announcement today





Today is a very important day for the Pound. At 09:30am we will see the latest manufacturing and industrial production figures. This is followed by an announcement at 12:00pm by the BoE on interest rates and Quantitative Easing (QE).





Most in the market expect rates to be left on hold, and no further QE stimulus. There is a small chance further money will be pumped into the ailing economy however, and it is this that is keeping the Pound in check against other currencies.



Trade balance figures were released yesterday and were slightly worse than expected, pushing the Pound slightly lower. This morning figures will be watched closely and if they are very poor, it could push the case for another round of QE.



It's an outside chance, but if it does happen expect the Pound to fall sharply. If you don't want to risk a drop, consider placing a Stop Loss order, so if rates do fall your currency will be bought at a pre-agreed level of your choice. This protects you against a drop, while allowing you to continue making gains should rates remain stable.



Contact me now to discuss Stop Loss orders.





European Central Bank (ECB) announcement today





Following the BoE decision, the ECB follow at 12:45pm with their interest rate decision. Again, I expect them to hold rates at 1%, but in recent months they have made 2 cuts in interest rates. Further cuts could weaken the already poor Euro. There are also some inflation and production figures for Germany/EU today.



Following the interest rate decision, the ECB president will give a lengthy press conference afterwards, where he will give an outlook of the EU economy. Watch this closely as quite often any positive or negative comments can significantly affect the GBP/EUR rate.



So will Pound/Euro rates continue to rise?



What will happen going forwards largely depends on if there is a resolution to the debt crisis. Some analysts think rates could continue to climb, while others cite weak UK growth as a reason to believe this spike is short term.



Nobody can predict the markets, so the only real forecast can be based on past performance. This is the 5th time in 3 years the GBP/EUR exchange rate has broken through the €1.20 level, and each and every time it has been followed by a sharp downward correction. While nobody can foretell whether the same will happen in 2012, the hard facts are this: GBP/EUR is at a near 16 month high, and nobody knows if or when global markets will stabilise.



If you need to buy or sell Euros and don’t wish to gamble on exchange rate movements, contact me today about the different ways we can help protect against any adverse exchange rate movements that could prove very costly indeed.



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/Euro forecast outlook for 2012 Q1

Wednesday 11th January 2011
Good morning. Another calmer day, with the market finishing up pretty much where we started at the beginning of the trading day. Initially sterling slipped against the Euro, falling below the €1.21 level as investors trimmed bets to sell the single currency across the board, but the pound hovered near a 16-month high hit the previous day as sentiment towards the euro remained negative. Below you can see how rates for GBP/EUR and GBP/USD moved through the day yesterday:

~Currency Movements on Monday 9th January~











Pound remains near 16 month high vs Euro

As the charts above show, the GBP/EUR rate slipped throughout the day before recovering later. This was reported to be due to Euro demand from a UK clearer ahead of one of the Bank of England's afternoon fixings had pushed the single currency to the day's high. Demand strengthens a currency, and makes it more expensive, resulting in the drop.

Later in the day however, the Euro weakened again, pushing rates back towards the 16 month high recently seen. This is because if European officials are seen taking their time on solving the debt crisis, which could push more weak countries towards bailouts or even debt defaults. This is what is keeping rates supported at the moment, despite gloomy UK economic figures causing weakness for Sterling.

The most important release of the week will be the Bank of England rate decision on Thursday. We expect them to again hold rates at 0.5% and not to pursue any further Quantitative Easing, however there is an outside chance they could do so. I certainly expect more stimulus within the next few months if the economy continues to struggle, and this could weaken the Pound pushing exchange rates back down again.

While the EU debt crisis remains unresolved, and the UK retains its AAA credit rating however, it's likely GBP/EUR rates will remain supported.

UK Data disappoints

Other data released yesterday showed house prices fell at a marginally slower pace in the last quarter, but were expected to fall further. Retail Sales figures were also up for December, but the figures were being compared to last year, when you needed a snow shovel and ski-gear in order to get to the shops, so markets took the spike with a pinch of salt (unavailable at the time of the snow ironically!)

Sterling slips near dollar; USD strength could weaken Pound more


The pound was up a little against the US Dollar, but remained just below the $1.55 levels. Analysts see a risk of sterling weakness if the safe haven USD continues to get stronger and appreciates as the euro debt situation worsens. This could spell more weakness for sterling given that it has been closely tracking moves in the single currency against the greenback.

Today's Data

Today we will see UK Trade Balance figures, which often affect Sterling, especially if the numbers show a deficit. Germany releases GDP growth figures. In the USA there are Mortgage Applications and the Fed’s Beige Book, which is a report on the current economic conditions in the USA.

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.

Sterling remains range bound vs Euro

Tuesday 10th January 2012
Good morning. It was a much calmer day on the markets yesterday, after the volatility we saw last week. Sterling/Euro fell a small amount, but stayed around the 16 month high seen last week. The cross was range bound between just below €1.21 and €1.2130. The GBP/USD rate was also fairly stable yesterday. The charts below show rate movements:

~Currency Movements on Monday 9th January~











Sterling remains Range-bound vs Euro

There was no key data of note released for the UK yesterday, and as such there was little movement in the Sterling/Euro rate yesterday, but buying levels remain around the 16 month high, ahead of Spanish and Italian debt auctions later in the week.

These auctions are going to be seen as a key test of sentiment towards the beleaguered Eurozone. They will gauge investor willingness to invest in troubled euro zone sovereigns after newspaper reports over the weekend added to concerns the crisis is intensifying.

Also to look out for this week will be the meetings between French President Nicholas Sarkozy and German Chancellor Angela Merkel. They are due to meet to discuss final details of a deal to increase fiscal coordination in the region, but analysts said no significant new measures were expected. Indeed, the last few times they have met with many in the market expecting landmark measure, the markets were left disappointed, and we expect much the same with this meeting.

The euro zone debt crisis has helped the Pound in recent months, as it created investment in the UK gilt market due to investors seeking a safe haven away from the Euro.

But analysts said this flow was more a result of concerns about the euro zone than confidence in UK economic fundamentals. UK growth was weak in 2011 and is expected to remain so. Some in the market expect the UK to fall back into recession, so comments from the Bank of England later this week will be interesting to see.

There is also the outside chance we will see more Quantitative Easing by the Bank of England this week, although Personally I think this is unlikely until February at the earliest.

Today's Data

In the UK today we see BRC Retail Sales and RICS Housing Prices. There are no EU releases today, but Australia has Building Permits and confidence measures. Stateside, there are measures of economic optimism.

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 9th January 2011
Good morning. Pound/Euro rates have surged to a 16 month high, so today as usual for a Monday morning, I will take a look at movements in the last week for Euro, US Dollar, forecasts for where exchange rates may go in 2012, and the weeks economic data that could affect exchange rates.

In this week’s Report:

• Sterling/Euro hits 16 month high above €1.21
• EU problems continue, weakening Euro
• GBP/USD rates fall as US jobs data surprises
• Round up of the week’s data that may affect rates

(For currencies other than GBP, EUR and USD, contact us for a consultation)

Sterling vs. Euro;

Last week the Pound benefited against the Euro as the single currency slumped to its lowest level in 16 months, driven by fears that the Eurozone countries and their banks may be crumpling under the mounting pressure of their debts.













Shares in two Italian banks, including Unicredit, were suspended after sustaining heavy losses. Spanish banks also suffered last week after the Spanish finance minister said the banking sector would need a €50bn injection to aid recapitalisation. French and German banks were also hit, although to a lesser extent. The seemingly inexorable debt crisis led economists at the International Monetary Fund (IMF) to urge Asian banks to prepare themselves for turbulent times ahead.

The euro dropped to 82.39 pence (1.2137), its lowest level since September 2010. The pound's strength was down to euro zone weakness rather than a strong domestic economy, even though data on Thursday showed an increase in UK service sector activity.

However, figures released on Friday showed UK house prices fell 0.9 percent in December, in contrast to analysts’ forecasts. This however, had little impact on the currency and the Pound continued gaining strength against the Euro, gains which are expected to continue according to some analysts.

"I think euro/sterling will continue to go lower. All the problems that have caused euro zone bond markets to sell off in the fourth quarter have not only not been resolved, they look set to intensify," said Neil Mellor, currency strategist at Bank of New York Mellon.

Sterling’s gains last week were helped by Investors preferring the UK over euro zone government debt, boosting sterling, given UK deficit-cutting austerity measures that are already in place and the Bank of England's independent monetary policy committee.

To put last week’s gains into perspective, a typical purchase of €200,000 would have been £2080 cheaper on Friday than if it had been bought on Tuesday.

If you need to buy or sell Euros, send me a free enquiry now.

Sterling vs. US Dollar;

The New Year has seen a renewed level of volatility in the currency markets, which as the chart below shows, has been witnessed on the GBP/USD cross. Overall the Pound has had a positive start to 2012 initially rising against the Dollar after having dipped off in the tail end of December:













This early move can in part be explained by a surprising uplift in the manufacturing sector which was reported on the first working day in the UK. Indeed, an up-lift in global economic data from varying sectors had a positive impact for the perceived risky currencies, of which the pound is one and the Dollar is not.

Analysts’ expectations were not as overly positive as traders however, they were swift to remind the markets that although the final 2011 UK manufacturing figures were positive, they were the exception not the rule. The overall Q4 manufacturing figures were actually the worst since Q2 2009 and the overall view is that it may be unavoidable for the UK not to slip back into a technical recession. Again the chart below shows the dip off in the Pound as analysts’ views hit the market.

Indeed the slip in rates was compounded further last week by the hotly expected Non-Farm Payrolls on Friday lunch time. The marquee data release for US employment data showed a creation of 200,000 jobs in the non-farming sectors of the US economy last month, nearly 50,000 more than the predicted rise.

Furthermore these rises lead to a drop in overall unemployment in the US from 8.7 to 8.5%. The graph above went to print slightly before these figures were release otherwise another downward spike would be visible as over a cent was lost on cable after the NFP broke.

Looking ahead to next week we forecast further volatility that could easily see the spikes we saw in the week gone by. The market is still very much all eyes on Europe; what happens with the upcoming Bond sales across the EU will have a great effect on the Dollar which is still heavily benefiting from its safe haven status. Any further boosting of US technical data will only enforce this further.

To the upside for those looking to buy Dollars, the housing market over the pond is still stuttering so watch for further figures there, and any unilateral and positive moves from the big guns in Europe to sure up their issues will see cable rates move in their favour.

If you need to buy or sell US Dollars, click here to send me a free enquiry now.

Weekly Economic Data that may affect exchange rates

Monday – We kick off the week with Australian Retail Sales and Home Sales. In the Eurozone there are German Trade Balance and Industrial Production Figures, in addition to EU wide investor confidence Measures. The only data of note from the UK is Halifax House Prices. The USA releases measures of the amount of consumer credit.

Tuesday – In the UK today we see BRC Retail Sales and RICS Housing Prices. There are no EU releases today, but Australia has Building Permits and confidence measures. Stateside, there are measures of economic optimism.

Wednesday – Today we will see UK Trade Balance figures, which often affect Sterling. Germany releases GDP growth figures. In the USA there are Mortgage Applications and the Fed’s Beige Book, which is a report on the current economic conditions in the USA.

Thursday – As usual, today is the biggest day of the week for UK and EU data, so expect choppy movements in the GBP/EUR rate. Starting in the UK, we have Industrial Production, Manufacturing Production and an Interest Rate decision from the Bank of England. In the EU we see German Inflation figures, EU Industrial Production, an Interest rate decision followed by a speech by the ECB president. There could be a rate cut in the EU which may weaken the Euro. Across the pond, we see Jobless figures from the USA, in addition to Retail Sales and a Budget Statement.

Friday – Today the UK releases its latest inflation figures. The Eurozone and USA releases Trade Balance numbers, and there is also a US consumer Sentiment measure.

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 at 16 month high vs Euro above €1.21

Friday 6th January 2011
Good morning. Sterling has surged against the Euro, and risen to its highest in nearly 16 months. This was due to a weak Euro, over worries about EU sovereign funding pressures and after data showed a pick-up in UK service sector activity. At 08:30am this morning rates are as follows:

• GBP/EUR 1.2123
• GBP/USD 1.5609
• GBP/AUD 1.5127
• GBP/NZD
• GBP/CHF 1.4770
• GBP/CAD 1.5796
• GBP/ZAR 12.642
• GBP/JPY 119.69
• GBP/DKK 9.0151
• GBP/NOK 9.3128
• EUR/USD

Pound at 16 month high vs the Euro

Sterling rose against the weak Euro yesterday, breaking through the €1.21 level and creating the best buying opportunities for 16 months. The euro was down broadly and not just against the Pound. It hit lows versus the dollar and a decade low versus the yen as major concerns about euro zone countries' ability to raise funds in coming months pushed investors away from the common currency.

France's first bond auction of the year also happened, where investors mindful of the threat to the country's AAA rating demanded higher returns than they had for the same maturities in December. Italian and Spanish debt sales next week were seen as further key tests of investor sentiment as both countries grapple with huge budget deficits.

If you need to buy Euros, now is a good time to consider a Stop Loss order, whereby you can set a lower level below the current rate, and if the exchange rate falls below this, your currency will be purchased, protecting you against adverse rate movements.

Sterling outperforming the Euro

If UK economic data continues to show improvement, this will dampen expectations for further quantitative easing by the Bank of England, also helping the pound. Economists polled by Reuters still expect the BoE to expand its asset purchasing programme though by less than they forecast in a poll in December.

"The manufacturing, services and construction PMIs have all surprised on the upside and offer some hope that there is still life in the UK economy," said James Knightley, economist at ING.

Today's Data

We end the week focused on EU data: Consumer Confidence, Economic Confidence, Retail Sales and German Factory Orders. We end in the USA with unemployment figures and Non-Farm Payrolls.

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 makes good start to 2012

Wednesday 4th January 2012
Good morning. The Pound has started 2012 well, rising against the US Dollar and staying close to a 1 year high against the Euro. This was following better than expected data from the manufacturing sector yesterday. Below shows how rates moved through the first global trading day of the year.

~Currency movements on Tuesday 3rd January 2012~











Pound remains near 1 year high vs Euro

The Pound rose a little yesterday after better than expected global data lifted the markets, and boosted riskier currencies, of which the Pound is one. Better Manufacturing data also gave the Pound a little boost, but analysts said the survey would not alter the view that the UK risks slipping into another recession. Over the fourth quarter as a whole it showed manufacturing recorded its worst performance since the second quarter of 2009.

Many are sceptical that sterling can be considered a safe haven asset like the USD is, and given the fragility of the UK economy and its debt levels, which are still high despite government austerity measures aimed at reducing the country's deficit, some say that the Pound could drop against the Euro as UK data comes into focus.

There is still no consensus however, with other analysts expecting the Pound to gain further against the Euro, so it's very hard to know in which direction this cross could take in the coming weeks and months.

So if you need to buy Euros in 2012, what are your options?

The Euro debt crisis has weakened the Euro significantly, and currently rates are very close to the best in a year. While of course you will hope rates go up further, but don't want to leave yourself exposed to a fall - remember, only a few months ago rates were in the €1.13's, and a recent Financial Times survey showed economists expect a bleak 2012 which could rival 2009 for economic weakness in Britain as output is hit by the euro zone debt crisis, so there's lots that could happen to push rates the wrong way.

Many of my clients have therefore chosen to employ 'Stop Loss' orders. This is where you can place a lower level below the current exchange rate, and if the exchange rate then drops, your currency is purchased giving you a worst case scenario. In this way you can keep taking advantage of any gains in the rate, while having protection should the market move against you.

To discuss this and other ways to get the best exchange rates, send me a free enquiry now.

Pound makes small gains against US Dollar.

Sterling rose against the US Dollar yesterday as pretty good global economic data supported riskier currencies and after a survey showed UK manufacturing activity contracted less than forecast in December. The USD is seen as a safe haven currency, and so when investors are less risk averse when better data comes along, often the Dollar weakens and becomes a little cheaper to buy.

Today's Data

We have quite a bit coming from the UK today, including UK money Supply, Mortgage Approvals, Lending and Construction data. In Europe we have further inflation figures from the EU and Germany. In the USA we see 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.

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

Tuesday 3rd January 2012
Good morning. The currency markets enter a new year, and today we'll have a look at what happened towards the end of 2011 regards Pound vs Euro, Pound vs US Dollar, and a round up of the weeks data that may affect exchange rates.

In this week’s Report:

• Sterling/US Dollar hits near 3 month low
• Pound remains supported against weak Euro
• EU debt crisis fears continue as Italian Bond auction disappoints
• Round up of the week’s data that may affect rates

(For currencies other than GBP, EUR and USD, contact us for a consultation)

Sterling vs. Euro;

The final week of 2011 was not surprisingly a very quiet week with the UK only taking part in 3 days trading. There were only a splattering of fiscal data releases of note with the most notable being the Italian Bond auction.













The refinancing caused a mild stir as they as they managed to reduce their cost of borrowing €7bn from 7.56% to 6.98% although there are still concerns about the high cost of borrowing considering they are expected to need to borrow €450Bln in 2012.

Friday saw the Nationwide house prices data released and despite a slight reduction from November to December of -0.2%, overall house prices in the UK saw a positive movement of 1% during 2011. Nationwide’s outlook for 2012 is for low levels of activity with prices moving sideways for modestly lower.

After a quiet week last week this week we are back into things full swing with a whole host of data releases across the board with a focus on inflationary data releases in the UK and the Eurozone. Keep in contact with your FCG Account Manager for up the minute market movements to help you make the most of your currency.

If you need to buy or sell Euros, send me a free enquiry now.

Sterling vs. US Dollar;

Last week saw Sterling hit a 2 ½ month low versus the dollar, GBP/USD dropped to its lowest since October as investors looked towards the dollar and its safe-haven status. This was on the back of weak demand at an Italian bond auction highlighted risks the euro zone debt crisis could worsen in 2012.













Analysts expect the pound to suffer versus the dollar in 2012 as worsening European debt problems could wreak havoc on London's financial sector, while speculation about more Bank of England quantitative easing may also sting sterling in the New
Year.

Michael Derks, chief strategist at FXPro, said flows into the dollar would continue next year to the detriment of the pound, which could fall towards $1.50 early in 2012. “I would be surprised if the recent spate of dollar demand didn't continue into the New Year, and if that is the case, then we're likely to see Cable drift back further."

With the currency markets being so volatile it is important to keep in touch with your account manager at the Foremost Currency Group to ensure you stay up to speed with the market. If you are buying or selling currency in the next 12 months we can help you make an informed decision to making the most of your currency.

If you need to buy or sell US Dollars, send me a free enquiry now.

Weekly Economic Data that may affect exchange rates

Monday – UK Markets closed for Bank Holiday. There were however some Inflation figures for Germany and Europe however they had little effect on exchange rates.

Tuesday – Global markets re-open after the Christmas break. In the UK the only release of note is PMI data that is a measure of inflation. There are German unemployment figures released at 9am. In the USA there are manufacturing figures and the FOMC minutes showing discussions during their last interest rate decision.

Wednesday – Data starts flowing in earnest now, with UK money Supply, Mortgage Approvals, Lending and Construction data. In Europe we have further inflation figures from the EU and Germany. In the USA we see Mortgage approvals and Factory Orders.

Thursday – There are various Australian releases of note today, including Home Sales, Trade Balance figures and the RBA commodity index. Closer to home, German Retail Sales kicks off the EU data, closely followed by EU Industrial Orders and EU PPI figures. In the UK we see PMI numbers in addition to Halifax House Prices. In the USA there are various Jobless and Manufacturing numbers.

Friday – We end the week focused on EU data: Consumer Confidence, Economic Confidence, Retail Sales and German Factory Orders. We end in the USA with unemployment figures and Non-Farm Payrolls.

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.