Pound/Euro hits 3 year high above €1.24 - why?

Tuesday 9th May 2012
Good morning. Pound/Euro rates are at a 3 year high after the weekends French, Italian and Greek elections caused significant political uncertainty, weakening the Euro and pushing rates to €1.24+; the best buying levels in 3 years, amid widespread discontent with the austerity drive.

In today's post I will have a detailed look at the effect of the elections on the Pound/Euro exchange rate, and the forecast for where Sterling/Euro rates may go in the coming months.

Elections in Europe weaken Euro significantly

Over the weekend we saw elections in France, Italy and Greece. The results plunged the Eurozone into a fresh crisis, as the new and potential governments have cast doubt on the durability of austerity plans aimed at tackling the euro zone debt crisis. When UK markets opened this morning, the GBP/EUR rate surged to a 3 year high. Let's have a detailed look at each country in turn, and why the rate has gone up.

French Elections/effect on exchange rates

Mr Hollande won Sunday's election in part due to his hostility towards the excessive focus on austerity pursued by his predecessor and Mrs Merkel. For Europe this is a momentous event. For a long time the centre right has held the stage; now a socialist has won and European politics will feel the shudder.

The truth is that if France is to bring its budget deficit down to 3% by 2013 then 18bn euros of cuts will have to be found next year. How that will be done did not receive much attention during the campaign. Hollande has promised to make growth rather than austerity his priority. In saying this he challenges the German prescription for solving the eurozone crisis.

He simply does not believe that austerity first is working. His first official meeting after he is sworn in will be with German Chancellor Angela Merkel - she has already written to the newly elected French President saying "necessary decisions" must be taken to resolve the debt crisis.

Mrs Merkel said she was sure the co-operation between the two countries would "continue to strengthen". She has resisted calls from Francois Hollande to renegotiate a European pact requiring government budget cuts. A meeting of EU leaders has also been scheduled to discuss the pro-growth reforms preferred by Mr Hollande.

Greek Elections/effect on exchange rates

The leader of Greece's left-wing Syriza bloc has said he will try to form a coalition based on tearing up the terms of the EU/IMF bailout deal. Alexis Tsipras, whose bloc came second in Sunday's vote, said Greek voters had "clearly nullified the loan agreement". He has three days to reach a coalition deal and has told the two major parties to end their support for the austerity terms if they want to take part.

Again like in France, this severely dents the progress made over the last year in Europe, with markets now very wary over future EU bailouts.

Italian Elections/effect on exchange rates

Centre-left and protest parties have made gains in Italy's local elections, amid widespread discontent with the government's austerity drive. The centre-right People of Freedom (PDL) party of former Prime Minister Silvio Berlusconi did particularly badly, with most votes counted.



Why have the elections pushed the GBP/EUR exchange rate up?

It's because of the fact is has cast doubt on the durability of austerity plans, aimed at tackling the euro zone debt crisis. The EU has been plunged back into crisis with Italy, France and Greece assuming with new leaders they can ignore the necessary cuts and start spending again. Spain and Portugal will then assume if those countries don't pursue austerity, why should they?

Things could get a little worse if politicians in Greece fail to form a new government, and this has left questions over the country's ability to avert bankruptcy and stick with the common currency. Also, the eurozone is widely expected to return to recession this year, with some blaming spending cuts and tax rises by national governments, particularly those of southern Europe who are struggling to get their borrowing back under control. Unemployment in the eurozone rose to 10.9% in March. In Spain it rose above 24%, while the youth unemployment rate is greater than 50%.

Pound/Euro exchange rate now at 3 year high

All of the above has pushed Sterling to Euro rates to their best in 3 years, which is great news for anybody that needs to buy Euros at the current rate. If you want to take advantage of the current rate, get in touch today.

We don't deal with holiday cash, only bank to bank transfers for amounts £5000 and above. Our rates much better than banks can offer so the savings can be considerable - find out how much you can save now.

Will the Pound continue to gain? GBP/EUR forecast May June 2012

It's quite remarkable the Pound is so strong, despite the UK being back in recession! In the coming weeks, GDP figures will be revised though, so it's likely markets are waiting for this. For the time being however, the Pound is seen as a safe haven alternative to the Euro.

Indeed the Pound may also come under pressure if debt contagion and economic slowdown in the euro zone started to affect the UK economy and fuel speculation the Bank of England could extend its asset purchase programme to boost growth. It's important to remember that the UK and EU are trading partners, so any continued issues in the Eurozone could have a knock on effect on the Pound.

Most analysts still seem to be forecasting continued gains for the Pound, and given the information currently available I would agree. Of course, it's impossible to predict exchange rates and with economic surprises coming from all quarters at the moment, while it is likely Pound/Euro rates may climb further, it's not a given.

A 'Stop Loss' order is useful in this kind of market. This is where you can instruct us to convert your currency if it falls below a pre-agreed level, for example 1.21. You can then continue to take advantage of any further gains should rates climb, but if things move against you there is a safety net - a very useful tool when the market is moving in a favourable direction. These type of orders are available for transactions £10k and above - find out more now.

Pound falls against US Dollar

To demonstrate this, we saw GBP/USD rates fall over the weekend. This is partly due to the uncertainty in Europe causing flow back to the safe haven US Dollar, but it also shows that Sterling is not exactly a powerhouse - it's simply stronger than the beleaguered single currency.

Getting the best exchange rates

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you.It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks.

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Weekly Sterling/Euro forecast & predictions

Tuesday 8th May 2012
Good morning. Markets in the UK re-open today after the Bank Holiday break. As is usual for the first trading day of the week, this morning I will take a look back at market movements over the last 7 days, the effect on exchange rates, and the forecast for where rates may go throughout 2012.

In this week’s Report:

• EU instability keeps GBP/EUR at 22 month high
• Sterling remains supported due to safe haven flows
• Round up of the week’s other data that may affect rates

(For currencies other than GBP & EUR contact us for a consultation)

Sterling vs. Euro;

Last week saw continued volatility within the Eurozone, which has continued to weaken the Euro. Earlier in the week saw the Pound fall with poor economic data releases as I outlined in my last post; however it was soon to recover to see the GBP/EUR cross trading at a 22 month high. One of the hardest questions to answer is what is expected of the Euro for the coming months?













Eurozone weakness

Let's start with what has happened in the Eurozone. A week ago we saw Euro zone unemployment rates rise to 10.9%, the highest since the Euro was formed in 1999 with 17.4 million now looking for work and more than 3 million of those under 25.

Spain and Italy are in recession and have seen borrowing costs rise. This has increased the chances that they may need help or even bailouts resulting in Euro weakness pushing the GBP/EUR exchange rate higher.

Staying in the EU, Interest rates remained unchanged at 1% as ECB President Mario Draghi stated “We have to put growth back at the centre of the agenda”. Economic growth across the Euro zone is desperately needed to stimulate struggling economies and prevent further contraction and the need for more bailouts.

Also the political uncertainty has worried investors, and this has also gone some way to weakening the Euro. All of the above are the main reasons the GBP/EUR rate remains so good.

Pound remains supported by good economic data

In the UK, the Pound remains quite strong, despite the fact we are in recession. Recent figures have been quite positive, and the fact is that the Pound is now becoming a safe haven currency, helping exchange rates remain high.

With many countries facing credit rating downgrades, AAA rated UK government bonds are seen as a safe bet, and with volatility across the globe this has increased the demand for Sterling, helping keep the Pound relatively strong.

Also helping the Pound are the austerity measures. Regardless of your political persuasion and views over whether cuts are a good thing or a bad thing, as far as the currency markets are concerned they are welcomed and viewed as a necessity, and good for reducing the deficit. Because they have now been in place for some time while other countries still argue over levels of cuts required, the UK should be resilient and well placed to recover faster than other economies, helping the Pound outperform the Euro.

Summary

The combination of a weak Euro and Strong pound, as outlined above, are the reasons exchange rates to buy Euros are the best in nearly 2 years. UK and EU political decisions and economic data will influence how the GBP/EUR reacts in the coming weeks and months; strong data from the UK seems to be supporting the highs we have seen recently. Continued uncertainty across the EU can cause the Euro to weaken even further which is great if you are buying Euro’s but not so good if you are selling.

For those needing to sell Euros - A forward contract is an excellent tool to take advantage of if you feel that the Euro will continue to weaken. It means you can secure your currency and lock into today’s rate for up to two years in advance, protecting your funds against any adverse movements in the rate.

If you are looking to buy Euro’s - it is best to contact us to have a consultation on the options available to you. Rates are of course at a very good level at the moment, with some forecasting it will go higher, and others convinced a fall is just around the corner.

Some analysts are forecasting between €1.15 and €1.32 for the next 12 months, and this really demonstrates the uncertainty that is currently driving exchange rate movements. If you need Euros in the next 12 months, then there are various ways we can help you take control of your requirement to try and help you avoid any potential loss if rates move against you. It is free to make an enquiry, no obligation involved, and you can then make an informed decision on the best way forward for you.

Click here to make an enquiry about getting the best exchange rates

Weekly Economic Data that may affect exchange rates

Monday – UK Markets were closed for Bank Holiday, but we saw Australian Retail sales releases, along with German Factory Orders and EU Investor Confidence measures. Very late in the evening UK House Prices were released, but there was little effect due to the closed UK markets today.

Tuesday – Despite the UK opening again today there is no major UK data today. From the Eurozone all data is from Germany: Wholesale Prices & Industrial Production. Further afield we have Trade Balance figures from Australia. In the United States there are Economic Optimism measures, along with speeches by some FED members which could affect GBP/USD rates.

Wednesday – Yet again a very quiet day for the UK. Germany leads the Eurozone data again with Trade Balance figures. Other data today is from the USA – Mortgage Applications, Wholesale Inventories and another speech by the FED.

Thursday – Finally some UK data, and we have a lot of it today! Goods Trade Balance, Industrial Production, Manufacturing Production, a BoE interest rate decision, a BoE QE decision, and a GDP estimate. It’s likely to be a very interesting day for Sterling with so much economic data being published. Other data is from the US including a monthly budget statement and the most recent Trade balance figures.

Friday – We end the week with a whole host of inflation data from around the world including UK, German and US Producer Price Index measures. There are also some unemployment measures from Canada, and a consumer sentiment survey from the USA.

Getting the best exchange rates

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you.It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.

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2012 forecast: Pound/Euro recovers to 22 month high

Thursday 3rd May 2012
Good morning. A fairly volatile week so far! The Pound fell earlier in the week when economic data was quite poor, signalling all is not rosy with the UK economy. However during trading yesterday, Sterling recovered well to hit a 22 month high against the Euro, and a 32 month high against a basket of major currencies.

In today’s post I’ll have a look at the latest data in detail, how it has affected exchange rates, and how the coming days data could have an effect on the cost of your currency conversion.


Pound falls earlier in the week

As stated above, the Pound fell back from the record highs we had seen recently, after some quite poor data was released. We had a manufacturing survey that highlighted the fragility of the UK economy, and also the risk that the strong Pound may dent exports also had an effect on the Pounds value.

The pound's losses were quite short lived and limited though, as the currency is still seen as the best of a bad bunch. The Euro is having its own well publicised problems, the US has high unemployment and the chance of further monetary stimulus, and of course the recent numbers showing the UK is in recession may be revised up after last week's unexpected contraction – all of this has helped the Pound recover.


EU data disappoints, pushing GBP/EUR back up

This week we have seen unemployment in the Eurozone reach a record high. For all 17 nations in the Eurozone the jobless rate rose again to 10.9%, the highest since the euro was formed in 1999.

In some rare good news from the EU, Greece has had its government debt rating raised out of default by credit rating agency Standard & Poor's. The country goes to the polls for national elections on Sunday, and has been racked by continual street protests over its austerity cuts.

We also have the Dutch and French political uncertainty, which could mean we see new governments not as sympathetic to the austerity measures needed for EU bailout funds. This has caused concern among investors which has weakened the Euro pushing rates back up to a 22 month high.

Better UK data helps push up the Pound

We’ve had a run of decent data for the UK in the last few days. UK construction data exceeded expectations while the euro zone manufacturing sector contracted further and unemployment rose, highlighting the divergence between their economies. The markets seemed very pleased with the solid figures as a slump in construction output was one reason behind the economy's contraction in the first quarter.

The construction data soothed some concerns about the fragility of the UK economy after manufacturing data disappointed on Tuesday, and raised expectations of a decent PMI reading from the dominant services sector on Thursday.

Furthermore, UK mortgage approvals and consumer credit data also came in above forecasts.
So in summary, the data has helped fuel safe-haven demand for the pound, which has rallied strongly against the Euro in recent months as investors diverted portfolio flows from the indebted euro zone to triple-A rated UK government bonds.

Indeed, Sterling has performed well since April's Bank of England policy minutes dampened speculation of an increase in the bank's 325 billion pound asset purchase programme. With its high levels of debt and strong trade links to a troubled euro zone, however, the UK economy remains shaky and more monetary easing remains a possibility. Analysts, however, said a sister PMI survey on the more dominant services sector, due on Thursday, could have a bigger impact on sterling if it came in on the weak side.

Summary for Pound/Euro forecast 2012

So lots to digest with regards to the UK and EU economies and this is what has been driving exchange rates this week. In short, if we keep getting strong UK data then the Pound will likely remain supported against the Euro at the current highs. If poor data comes in though we could see it dip.

I think the main thing that will affect GBP/EUR rates in the coming days however is the political situation in the EU – continued uncertainty could weaken the Euro and the potential is there for it to weaken further.


Getting the best exchange rates

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you.It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.

Click here to send me a free enquiry

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

Monday 30th April 2012
Good morning. As always for a Monday morning, today I'll take a look back over the last weeks events in the currency markets, and the forecast for where GBP/EUR rates may go in the next few months. It was certainly a very interesting week with the UK officially back in recession, but despite this, GBP/EUR rates are at a 22 month high, and GBP/USD rates at a 7 month high. So without further ado let's find out why!

In this week’s Report:

• UK returns to recession
• Pound remains strong vs. Euro and US Dollar
• EU political uncertainty weakens Euro
• Round up of the week’s other data that may affect rates

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

Sterling vs. Euro;

What could have been a very bad week indeed for the Sterling/Euro cross ended up with Sterling sitting on a 22 month high against the Euro, despite the UK going into recession.













The start of the week saw the markets waiting in anticipation for the GDP figures which were released on Wednesday with most analysts believing that the UK economy would continue to grow. News came out that the economy had shrunk by 0.2% which led to a sharp downward spike in the markets pushing the interbank into the mid-1.21s.

It was a big surprise that the UK had slipped back into a double dip recession, the first since the mid ‘70s, especially as UK consumer confidence is at a nine month high, showed by figures released by the Nationwide Building Society. Despite the figures showing contraction, the GDP figures will be revised several times in the next 6 weeks, which is another reason the markets didn’t react too much to the news, as the revised figures could of course show that we are not in recession after all.

GBP/EUR rates briefly flirted with the idea of dropping below the 1.21 level, but the drop was short lived and gains were quickly seen for Sterling as it climbed back up towards the highs that we have seen recently. Fundamentally the Euro zone still has its problems and these seem to outweigh the fact that the UK is back in a recession, hence the reason why rates remain supported at high levels

The Euro dropped further against the pound as the fragility two Euro governments came to light. The French elections are rumbling on with Sarkozy losing in the first round, and Dutch Prime Minister Mark Rutte resigning due to losing the support of the liberal-conservative coalition government sending the Dutch Government into crisis.

Also weakening the Euro was news from the Bank of Spain, when they said that their economy contracted by 0.4% for the first 3 months of the year plus by 0.3% in the final quarter of last year. This bad news was further compounded when Spain was hit by the news that rating agency Standard & Poor's downgraded its credit rating.

All of this has helped the pound keep its strength against the Euro which is now at a 22 month high. It means that this is potentially a good time to buy Euros, so if you haven’t already spoken to your FX Trader it is time to do so. Even if you don’t need your funds for some time, with a ‘Forward Contract’ you can fix the current rate for up to 2 years into the future, and only lodge a 10% deposit of the total you want to convert.

If you need the best exchange rates, send me a free enquiry now.

Sterling vs. US Dollar;

What a week it’s been for the pound/dollar cross, after Wednesdays news that the UK slipped back into recession cable jumped to its highest levels for seven months to $1.6230 as the graph below shows. Dollar weakness was the main driver as Fed Chairman Ben Bernanke left the door open for further monetary stimulus.













After a relatively stable start the week the GDP data release on Wednesday saw Sterling fall away as the UK economy fell back into recession. As the data was released rates fell from $1.6160 to 1.6080 before recovering throughout the day and pushing back over the $1.61 mark.

The UK economy slipped back into recession after contracting by 0.2% during the first three months of 2012. A recession is described as two consecutive quarters of contraction and the recent results follow on from the fourth quarter of 2011 where the economy dropped by 0.3%.

The news that the UK economy had shrunk for a second consecutive quarter came as a bit of a surprise, over the last few weeks we had seen a batch of positive data support claim that the UK could avoid the double dip. However, a fall in construction output was believed to be the reason behind the unexpected contraction.

You would think that the UK heading back into a technical recession would have led to further losses for the GBP/USD cross. But with U.S unemployment being so high it was always likely that Mr Bernanke would keep the door open for further monetary stimulus; these thoughts were also supported by the US data release that core durable goods orders contracted by 1.1% when the forecast had been for 0.6% growth.

On the back of the Fed Chairman’s speech Sterling climbed to its highest level for more than seven months against the dollar, Mr Bernanke said that U.S monetary policy was “more or less in the right place” but the central bank would not hesitate to enter into another round of quantitative easing if the U.S economy were to weaken.

It seems the UK has bounced back from Wednesdays news as data released towards the end of the week showed that UK consumer confidence reached a nine-month high in March, according to the Nationwide Building Society, the confidence index increased to 53, up nine points from February.

There is so much uncertainty surrounding the U.S and UK economy, getting the timing right on your currency transfer remains critical, if you are buying or selling dollars in the coming months contact your FCG account manager to discuss the different options available.

If you need the best exchange rates, send me a free enquiry now.


Weekly Economic Data that may affect exchange rates

Monday – We kick off the week with a host of data from the Eurozone: German Retail Sales, EU Money Supply and EU Consumer Price Index. In the afternoon we have Canadian GDP figures and Industrial Production, followed by Income data from the USA. There is no UK data of note today.

Tuesday – In Australia today we have an interest rate decision, and there is the chance of a cut. House Prices and commodity index is also released from down under this morning. UK data is quite light with only Purchasing Managers Index being released at 09:30am. We are data heavy from the US today including Construction Spending, Manufacturing, a FED Speech and vehicle sales.

Wednesday – We’ll start in the UK today where we see Halifax House Prices, Money Supply, Consumer Credit and Mortgage approvals. Over in the EU we see German Inflation data and unemployment measures, EU wide inflation numbers are also released. In the USA we will see employment data, mortgage applications and factory orders.

Thursday – We have Nationwide House Prices and UK PMI data this morning from the UK. In the EU we see Producer Price Index numbers, an Interest Rate decision and a speech by ECB president Mario Draghi. In the USA there is also another speech from the FED.
Friday – Starting in the EU we see German inflation data and EU wide Retail Sales. The main data today though is from the USA where we see Non-Farm Payrolls, which often causes volatility for GBP/USD rates. Staying in the states we also see average earnings and the unemployment rate.

Getting the best exchange rates

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you.It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.

Click here to send me a free enquiry

Why is Pound still high despite UK Recession?

Friday 27th April 2012
Good morning. It's been a very busy week in the currency markets. In today's post I will look at the Pound/Euro forecast and predictions for exchange rates in a week that saw the UK heading back into recession. Read my analysis of the effect EU political instability could have on exchange rates, and why the Pound is still strong despite gloomy growth figures showing we are in recession. If you need the best exchange rates, send me a free enquiry for a detailed consultation on the options available to you.

UK back in recession

The UK economy has returned to recession, after shrinking by 0.2% in the first three months of 2012. The technical definition of a recession is defined as two consecutive quarters of contraction. The economy shrank by 0.3% in the fourth quarter of 2011 so the latest figures confirm we are back in recession – just!

The numbers were a surprise to analysts including myself, as most of us expected slight growth of around 0.3%. When the actual figures were released earlier this week, the Pound tumbled across the board, however the fall in rates was very short lived, and have since rebounded.

So despite the fact the figures were slightly worse than many expected, and the fact that the UK is now technically back in recession should not detract from the underlying reality, which is very much as predicted; The UK economy has been bumping along the bottom for more than a year and is still struggling to gain momentum.

So why is the Pound still strong?

This week’s GDP figure is only an early estimate, and is subject to at least two further revisions in the coming months. This is part of the reason why it didn’t have much of an impact. The numbers are compiled using 40% of the data gathered for later revisions, and as it’s only fractions of a percent, the markets haven’t reacted too much to it. This has surprised me.

Another reason the Pound is still strong is the fact all other general economic figures of late have been quite good. This was also underlined this week when UK consumer confidence hit a 9 month high last month. 26% of respondents asked by the Nationwide Building society said now would be a good time to make major purchases, which was the highest level for 10 months. Consumer confidence is a good barometer of overall economic optimism.

Finally, EU political instability has kept the Euro weak and rates supported…

EU political uncertainty keeps GBP/EUR rates above €1.22

One of the main drivers of exchange rates is economic information, of which we have lots to choose from in the last few years! Often overlooked is political instability, but it can have an equal or greater effect. This week we have seen Dutch Prime Minister Mark Rutte tender his government's resignation, paving the way for early elections.

His cabinet was plunged into crisis when Geert Wilders' Freedom Party (PVV) quit talks aimed at slicing 16bn euros (£13.1bn) from the budget. Mr Wilders refused to accept austerity demands to bring the budget deficit in line with EU rules. His party was not part of the coalition but supported the minority government. The crisis has also fuelled fears that the Netherlands might lose its triple A credit-rating.

We have also seen some surprise events unfold in the French elections. It was thought that Sarkozy would easily win a majority, but results in the first round of voting suggest otherwise.

So why does political instability in Holland and France affect exchange rates? It’s all to do with investor confidence. A new government in Holland or France may not be as sympathetic to austerity measures as the current ones. Indeed this is likely to be quite a vote winner amongst very low popularity of cuts needed. So with uncertainty surrounding the political future of some major EU economies, it casts doubt on the whole EU bailout plan.

Thus, the instability has weakened the Euro, and kept rates around the €1.22 level despite the UK falling back into recession.

Pound hits 7 month high vs. US Dollar

Sterling rose to its highest level in over 7 months against the US Dollar yesterday, keeping rates well above the $1.60 level, and briefly touching $1.62. It’s quite a surprise to see rates remaining strongly supported, despite the fact the UK is back in recession. So what caused rates to continue to climb? GBP/USD rates have been pushed up by weakness in the US Dollar, as policymakers in the states kept the door open for more monetary easing.

Federal Reserve Chairman Ben Bernanke said earlier this week that U.S. monetary policy was "more or less in the right place" even though the central bank would not hesitate to launch another round of bond purchases if the economy were to weaken. So despite the Pound being in Limbo due to the latest growth figures, weakness in the US Dollar caused by the fact more QE is possible, has made it cheaper to purchase.

Moving forwards, the forecast for GBP/USD rates will depend on events in the Eurozone. With debt problems and political instability giving continued uncertainty to the global economy, and further surprises could cause the Dollar to gain strength due to its safe haven status. When there is uncertainty, investors flock to safe haven currencies like the US Dollar, which can in turn make it more expensive to purchase. Failing any safe haven buying, I think GBP/USD rates will now remain above $1.60

Getting the best exchange rates.

If you need to buy or sell foreign currency at the best exchange rate, then take advantage of a free consultation with an expert. It's free to make an enquiry, and we can let you know all your options to help you make an informed decision on when to convert your funds, and what type of contract is best for you.

Take the next step and send us a free enquiry and have a consultation on all the options available to you.It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.

Have a great weekend. On Monday morning I'll do my usual weekly retrospective and forecasts.

Click here to send me a free enquiry

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

Monday 23rd April 2012
Good morning, I hope everyone had a lovely weekend. As usual for a Monday morning, today I will look back over last weeks events that pushed Sterling up to new highs against the Euro and Dollar. I will also analyse the exchange rate forecast for Euros and Dollars, in addition to what economic data is out this week that I think could affect exchange rates.

In this week’s Report:

• Pound Surges through €1.22 / $1.60
• Positive BoE report and unemployment strengthen Pound
• UK GDP figures this week key to future rate movements
• Round up of the week’s other data that may affect rates

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

Sterling vs. Euro;

Euro purchasers celebrated last week after Sterling extended gains against a beleaguered Euro as investors scaled back expectations of further stimulus from the Bank of England, putting the Pound on course to allow it to rise against the euro to levels not reached since the middle of 2010.













Pound gains very well against Euro

The pound rose to its highest weekly average in over 3 years against the single currency and a five-month high against the U.S. dollar, which helped it to climb to a 20-month peak on a trade-weighted basket of currencies, data from the Bank of England showed.

Minutes from the BOE's policy meeting released on Wednesday showed the committee voted 8-1 against further stimulus, with one policymaker Adam Posen who had consistently voted for more stimulus moving away from a dovish to a more hawkish stance.


How is the debt crisis in Europe affecting things

Analysts and Traders commented that while sterling was potentially poised for more gains, a lot would depend on how the euro zone debt crisis panned out. The Spanish 10 Year bond auction went through smoothly but with limited success and borrowing costs have been rising as investors remain sceptical about whether other countries in the Eurozone can solve their fiscal problems without seeking more aid from agencies like the IMF. While a steady erosion of confidence in the euro zone supports sterling against the euro, the pounds gains can be limited to a certain extent, given the UK's large exposure to the crisis-hit euro zone.

What about further UK data? How could that affect exchange rates?

Furthermore the UK's labour market is at best sluggish at the moment, domestic demand patchy and the economic recovery uneven. So while the signs of a slight recovery lessen the need for further stimulus, a rapid deterioration in the euro zone crisis could actually worsen the UK's outlook and drive the BOE towards quantitative easing again.

On Thursday, BoE's Posen said he is worried that underlying inflation pressures have not eased in recent months and added if last month's pick-up in inflation persists, the central bank would need to rethink policy.

Whilst the Pound’s performance against the Euro can be welcomed by those people in the UK buying a property abroad, a degree of care should be taken. It is certainly true that Sterling has benefited from negative Euro sentiment recently, however the Pound shifted this week on reasonably indifferent news. The news that further QE is unlikely for the time being, acted merely as a trigger to push the cross in Sterling’s favour, although it certainly wasn’t a green light to indicate that all is well within the UK economy.

Next week sees a host of data releases including preliminary GDP figures that could potentially push Sterling back and undo that gains that we have seen this week.

In order to ensure that you remain in control of your currency purchases in order to capitalise on positive market movement and protect yourself in the event of the market moving against you, you should speak to us about our exchange rates.

Click here to send me a free rate enquiry now.

Sterling vs. US Dollar;

Last week saw the Pound continue its bullish start to 2012 against the Dollar, with the enticing level of $1.60 tangibly close as a trading level to buy. A string of positive data releases in the UK allowed the pound to flex its muscles throughout the week, with several choppy trading sessions representing fantastic buying opportunities as well as a few selling opportunities for those who got their timing right.













Many people had wondered whether the surge in rates would continue in the back drop of an improving US economy, thinking, and not illogically, that the Dollar would strengthen with economic growth. Perhaps however, US growth is exactly what is supporting the Pound in its rise against the Dollar?

Regular readers of this report will be keenly aware of the phrase ‘safe haven currency’. The US Dollar has benefited from this throughout the global recession, with investors seeking low risk investments where their money would at least be safe, even if it wouldn’t grow.

Risk sentiment drives investment away from the US Dollar

With the US economy still the largest in the world people ploughed funds into the Dollar through cash and low yield bonds to see out the storm and subsequently the Dollar strengthened massively; remember the 1.36 ‘s back in 2009? Indeed even through the mildly positive 2011 we entered this New Year with the pound struggling in the low 1.50’s with the real changes seen amid the positivity in the US economy in 2012. Droves of previously risk averse investors have sold their bonds and got out of cash and back in the hunt for yield, unsurprising then that the Dollar is now testing levels in the early 1.60’s.

So, great news then if you are looking to buy Dollars. As always though, in the most volatile markets in the world a cautionary note should be heeded. Next week sees the official GDP figures released for the UK in Q1 2012.

Have we all got ahead of ourselves? Will the OECD’s prediction of a second UK recession come true or has the UK Chamber of Commerce correctly predicted growth, however small, in the UK last quarter? Wednesday could be a key day to see whether the pound surge kicks on and continues these great buying opportunities but may still prove a sting in the tail for those looking to squeeze that little bit more out of the market.

If you are looking to buy Dollars, now is obviously a great time to talk to us given that it went to a 5 month high on Friday.

Click here to send me a free rate enquiry now

Weekly Economic Data that may affect exchange rates

Monday – UK Nationwide House Prices are released today, which reflect the health of this sector and is a barometer of overall economic activity. In the Eurozone, inflation data from Germany will be closely watched as it could affect EU interest rates in the future. Elsewhere the only data of note is Producer Price Index info from Australia, which is an inflationary measure.

Tuesday – Today the only UK data is Public Sector net borrowing, released at 09:30am. EU Industrial New Orders are released at 10am, along with some further EU inflation data. Across the pond we have US Home Sales, Consumer Confidence numbers, and Canadian Retail Sales.

Wednesday – A very important day for Sterling, as we have the latest UK GDP figures. This could move the Pound either way depending on the results showing growth or contraction. This is the most important release of the week. In the USA we have Mortgage Approvals, an Interest Rate decision and a press conference from the FED.

Thursday – Quite a lot from the EU today, including Economic Confidence, Consumer Confidence, Industrial Confidence and Retail Sales for Germany. There is nothing of note from the UK. The USA has some jobless numbers and Home Sales, and in New Zealand we will be privy to their latest interest rate decision.

Friday – We end the week with German Consumer Confidence and a US GDP data. Also in the US is consumption expenditure data and measures of Consumer confidence.

Getting the best exchange rates

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you.

It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.

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Why has Pound/Euro surged above €1.22.

Thursday 19th April 2012
Good morning. Well what a day we saw in the currency markets yesterday! The Pound surged higher against all major currencies, breaking €1.22 against the Euro and $1.60 against the US Dollar. So why has the Pound gone up against the Euro? The reason was lower than expected unemployment data and general optimism surrounding the UK economy following the BoE minutes. In today's post I'll look at each event in detail and why it caused Sterling to gain.

UK unemployment much better than expected

UK unemployment has registered its first fall since last spring, according to official figures released yesterday. Unemployment fell by 35,000 to 2.65 million over the 3 months since December, and the Claimant Change was 3600 against a forecast of 7000 - so much much better than the markets had forecast.

The data was released by the Office of National Statistics and presents the number of unemployment people in the UK. There is a tendency to influence the GBP volatility. Generally speaking, a rise in this indicator has negative implications for consumer spending which discourage economic growth, so because it was much lower than had been anticipated, we saw Sterling make significant gains when the actual figures were released. It was the start of a good rally for the Pound, which was compounded when the latest BoE minutes were released...

Bank of England Minutes

Signs more stimulus from the Bank of England is now off the cards. Yesterday morning, minutes from the bank's last policy meeting showed it voted 8-1 against further Quantitative Easing, with one policymaker who had voted for QE several times seemingly changing his stance and not voting for it this time, and another now seeing the decision as "finely balanced".

The results were a big surprise to the currency markets. Most analysts, myself included, expected quite a bit of negativity surrounding the minutes. The fact that they were very positive caused Sterling to push much higher against other currencies.

Pound vs Euro

Sterling pushed through the €1.22 level against the Euro after yesterday mornings news.

When the trading floor opened rates were sat at around €1.2130, but at 09:30am when the data was released, we sat rates shoot upwards, peaking at 1.2231 before settling back at around the €1.22 level.

This is a fresh 19 month high, and if you look at weekly averages over the last few years, we're pretty much at the best exchange rates to buy Euros since the end of 2008 when the financial crisis hit.

General Outlook for Sterling/Euro

With rates so good, many clients will want to fix the exchange rate now while it is favourable. Others may want to wait hoping it will go further up. So what is my view? I think sterling could well strengthen further due to the fact further QE is no longer on the cards. However, this is not a given.

The UK's labour market is at best sluggish, domestic demand patchy and an economic recovery uneven. So while the signs of a slight recovery lessen the need for further stimulus, a rapid deterioration in the euro zone crisis could worsen the UK's outlook and drive the BOE towards easing thus pushing the Pound back down.

What you should do if you need to buy Euros

You could fix a rate now while it's so good. Even if you don't need your funds for some time, for a small deposit you can lock in the current rate for up to 2 years. If you want to gamble on rates continuing to rise, then you could place a 'Stop Loss' order. This is where you place an order to buy your currency should it fall below a pre-agreed level, for example 1.20. In this way you can still take advantage of any gains, but have a safety net and worst case scenario should we see rates start to drop.

If it were me I would want to fix the rate now while it is good, but then I am quite risk averse and not much of a gambler!

Of course each clients situation, needs and attitude to risk will be different, so to discuss the best option for you click here to send me an enquiry, and take advantage of a free consultation where I can run through all your options. Simply leaving it to chance is not a good strategy; chance is not a reliable economic tool.

Today's Data

Unusually for a Thursday there are no UK releases today. In the EU there are consumer confidence measures which in the absence of any other EU or UK data could have a bigger impact than normal. In the USA we have Home Sales data and the Philadelphia Manufacturing Survey.


Getting the best exchange rates

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you.

It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.

Click here to send me a free enquiry