forex exchange rate

Jumat, 18 Januari 2013

Will the Pound/Euro rate keep dropping?

Friday 18th January 2013

Good morning. The UK is in a cold snap, and snow is falling across the country. The UK economy and Sterling has also been getting a pretty frosty reception from investors recently. This week was another torrid one for the Pound/Euro cross I'm afraid, with exchange rates continuing to fall and dropping below the €1.20 level. In today’s report we will take a look at why Sterling has fallen & what the forecast and predictions are for the coming months. We will also look at what tools we can provide to help protect you against adverse exchange rate movements to help you make the most of your currency.

In this week’s Report:

Pound/Euro tumbles below €1.20
GDP figures this week could confirm negative growth
Pound/USD drops below the $1.60 level.
Round up of the week’s other data that may affect rates

Sterling vs. Euro; Why have the rates fallen so much?

The pound has now fallen 3% so far this year. Last week continued poor data pulled rates below the €1.20 level. It looks increasingly likely that 2013 could be a very disappointing year for sterling.

There are three main areas of concern for the pound: firstly, a raft of poor data shows the UK economy is struggling and that we could be headed back in to recession. Secondly we have the potential loss of the UK's AAA credit rating which is becoming increasingly likely. On Tuesday, the Fitch ratings agency warned that the UK's top-notch sovereign credit rating could be cut if the Chancellor of the Exchequer's March budget shows debt levels continuing to rise.

Thirdly, Britain's unclear position in the EU is also weakening the Pound. We only have to look back a few months to see that currencies react badly to uncertainty. The longer this debate drags on, the harder sterling will fall.

What could happen to rates this week?

So part of the reason for the drop is uncertainty over the UK economy. Next week will give some important clues on which way things are headed. On Wednesday we have the Bank of England (BoE) minutes, which will show how they voted on the recent decision to hold off changing interest rates or pursuing more Quantitative Easing. This may indicate further QE is on the cards and so could pull the Pound down further.

Of even more importance will be Friday’s GDP figures. A recent estimate indicated the economy shrank by 0.3% in the last 3 months of 2012. If these figures are confirmed, it would mean the economy didn’t grow at all last year, and increases the chances of the UK heading back into recession for a 3rd time.

The decline in the rate is not all down to the UK however, it’s also partly due to a strengthening Euro. In recent weeks we have had the ECB giving a very robust outlook for the Eurozone, and the markets now see the EU debt crisis being tackled. This has given confidence back to the single currency, and it has gained strength as a result.

So what are the forecasts for the rest of the year?

The UK economy is still very soft and that adds up to testing times for sterling," said Daragh Maher, foreign exchange strategist at HSBC. He has forecast the Sterling/Euro rate to drop to 1.1250 by the end of the year. "There's going to be an erosion of the view that sterling was the best of a bad bunch," he said. In stark contrast, Barclays Capital still have their 12 month forecast at 1.28! This shows how uncertain things are for Sterling/Euro rates and that nobody knows which way it is going.

In truth, nobody can accurately predict which way exchange rates will move. There are however ways you can protect yourself against adverse exchange rate movements, and make sure your currency doesn’t cost more than necessary.

How to protect against the rate getting even worse.

Regardless whether you are buying or selling Euros, one option is fixing your rate now for up to 2 years with a Forward contract. You only have to lodge 10% of the total you want to convert, and you are then protected against the rate moving against you, and this allows you to budget effectively.

If you think the rate will get better for you, then another option you can look at is a Stop Loss order. This allows you to set a rate below the current level, and if it drops below this your currency is automatically purchased. Using this tool allows you to take advantage of any gains in the rate, but should the market drop then you have a worst case scenario allowing you to budget.

Make an enquiry today for free

Given there is so much uncertainty surrounding the exchange rate at the moment, with very different forecasts from major banks, now is the time to take stock of your requirements for the year. The first step should be a free consultation. In this way I can discuss your requirements and look at all the options available to you, allowing you to make an informed choice on when to fix your rate.

Don’t simply leave things to chance and hope the rate will get better. Hope is not a reliable economy tool. Contact us today and take the first step to making the most of your currency.

Weekly Economic Data that may affect exchange rates

Monday – Fairly quiet today as it’s a market holiday for Martin Luther King day. We do have some House Price data for the UK, and some inflation numbers from Germany, the EU’s largest economy.

Tuesday – In the UK today we will see the latest Public Sector borrowing numbers, in addition to an industrial trends survey. In the Eurozone we have the EcoFin meeting and an economic sentiment survey. In the United States we will see the latest Home Sales and manufacturing numbers.

Wednesday – An important day for the Pound: First we have the Bank of England minutes, showing how the vote went for the most recent QE and interest rate decision. This is followed by a raft of unemployment numbers. The only EU data of note are Trade Balance numbers from Italy. In Canada we see the latest interest rate decision.

Thursday – UK Mortgage applications is the only data of note for Britain today. In the EU however we have Inflation data from France, Spain Germany, and the EU as a whole, which may dictate interest rate movements this year. Over in the states we have unemployment and jobless claims numbers.

Friday – We end the week with the all-important UK GDP numbers. We could see confirmation the economy is in retraction again. Elsewhere there are some business climate assessment figures from Germany, and Home Sales data from the United States.

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

Rabu, 16 Januari 2013

Will Pound/Euro drop further? 2013 Exchange Rate Forecast

Wednesday 16th January 2012
Good afternoon. I thought I’d post up a mid-week update on what’s been happening with exchange rates, and Sterling in particular. In a nutshell the Pound is still struggling to make any headway, remaining between 1.20 and 1.21 against the Euro, and just below $1.60 against the US Dollar. In today’s post I’m going to have a look at recent UK economic data, and what effect this may have on exchange rates in the coming weeks, including the forecast and outlook for the best exchange rates in 2013.

Euro strength means GBP/EUR is quite low

The Euro has gained much strength in the last week, pushing GBP/EUR rates to their lowest in 9 months. A European Central Bank policymaker soothed investor concerns today however, that officials might take steps to undermine the currency's recent strength.

ECB member Ewald Nowotny said the exchange rate was "not a matter of major concern", contrasting with comments from Eurogroup head Jean-Claude Juncker who on Tuesday prompted investors to sell the euro by saying it was "dangerously high". This is what caused the slight uplift in rates in the last 24 hours, but after the recent comments, the general downward trend has now continued.

UK Inflation: Could there be more Quantitative Easing on the cards?

UK consumer prices inflation held steady at 2.7% in December, official figures have shown this week. John Longworth, the director general of the British Chambers of Commerce, said however that he expected inflation to rise in the near term, as further rises in utility and food prices kicked in. Higher inflation is clearly a concern for the UK economy as it increases the squeeze on both businesses and consumers, further exacerbating an already weak economic environment.

Now usually, the Bank of England would combat this with higher exchange rates, and this in turn would strengthen the Pound. At the moment though, rates are at a record low of 0.5%, and there is little prospect of them being raised to head off rising inflation. Instead, they would likely do more Quantitative Easing, which many are rumouring will happen again this year. If so, there is a risk to the downside for the Pound as QE would weaken Sterling.

UK Credit Rating at Risk

There is more risk to Sterling than just QE however. Part of the reason rates have plummeted in the last week is the fact that the UK continues to risk losing its top AAA credit rating if it does not reduce its debt, as a senior figure at Fitch Ratings agency recently said. Fitch has had the UK's AAA rating on "negative" outlook since March 2012, meaning that it is warning it may cut it.

If they do, it would mean the UK is a less attractive place to invest, and so this is weighing on the Pound and stopping any recovery in rates.

Summary

Pound/Euro Rates have been dropping for a while now, due to poor UK data and a stronger Euro. What will happen in the coming weeks depends on further UK data to come this month, and market reaction to the EU debt crisis. I do believe that longer term we will see rates recover as the UK economy picks up, however I think things may get worse before they get better.

If you are buying Euros, then you can place a ‘Stop Loss’ order, which is where we can secure your currency if it drops below a pre-agreed level. This means if rates improve you can still take advantage, but have a worst case scenario should the market continue to fall.

For those converting Euros back in to pounds, then if it were me I would probably take advantage of the 9 month high. It hasn’t got any better in the last day or two, and if we continue to get conflicting messages from the ECB, investors could sell off the Euro.

Regardless which currency you need to buy or sell, send me a free enquiry today to see how we can help you achieve the best exchange rates possible. I look forward to hearing from you.

Click here to send me a free enquiry

Jumat, 11 Januari 2013

Pound/Euro falls to lowest rate since April 2012

Friday 11th January 2013

Good afternoon. Things have not gone well for the Pound/Euro cross I'm afraid. It's been in general decline now for a few months, and this week saw further drops. Today alone it has dropped from 1.2280 to 1.2075 in the course of a few hours. This is not welcome news for those needing to buy Euros, however those converting the single currency back in to Sterling should consider taking advantage of the current highs.

All is not lost for those buying Euros however, as there are still ways you can protect yourself against further declines in the rate which I will go in to more detail about below.

In this week’s Report:

Pound/Euro rates drop further due to strengthening Euro
Dollar weakens, pushing GBP/USD rates higher
UK GDP estimate indicates triple-dip recession
Round up of the week’s other data that may affect rates

Sterling vs. Euro;

As I stated above, Pound/Euro rates have not been faring well so far in 2013. We have seen the rate drop steadily to the lowest since spring last year. In today’s Euro report we will look at what has caused the fall, and what may be in store for Pound/Euro rates in the coming months.

Despite the UK government resisting pumping more money into the economy via its QE program at its latest MPC meeting this week, the pound weakened significantly, hitting its lowest levels for nearly 9 months. Any news that could have helped sterling was over shadowed when the president of the ECB Mario Draghi in a TV interview said he was confident the Euro economy as a whole should slowly recover throughout 2013.

This news really gave the Euro a boost, giving the single currency some strength and making it more expensive to purchase. He did not however remove the possibility of further interest rate cuts in the future from the table.

UK headed back in to recession

The decline in the rate continued today, when we saw further woes for the pound with much weaker than expected industrial production and manufacturing data being released, as well as a GDP estimate coming in below forecast at negative 0.3%, indicating a contraction of the UK economy in the fourth quarter.

If the figure is confirmed by official data later this month, it will mean that the economy returned to growth for only a single quarter. It would also mean the economy saw zero growth for the whole of 2012. A triple-dip recession would likely weaken the Pound even further, so we might see raets drop even more.

With most data being released from the UK below forecast it also further outlines the threat of the UK losing its prized triple A rating and If Chancellor George Osborne continues to fall short of his targets, a downgrade could very much be on the cards which will hinder investors’ appetite for buying sterling as it indicates the UK could go into a triple dip recession.

If you are buying Euros

For those looking to buy Euros, serious consideration should be given to fixing your rate now. Even if the funds are not needed for some time, you can lock in today’s rates for up to 2 years, and only lodge a 10% margin of the total amount you want to convert. This will protect you against a further decline in the rate. Alternatively, you can place a Stop Loss order. This is where your currency is purchased automatically if it drops below a pre-agreed level. So if rates recover you can still take advantage of any gains, however should the market continue to fall, you have a worst case scenario. Find out more.

If you are selling Euros

For those selling Euros, it’s the best it’s been in some time. Despite the outlook for the euro looking better, the euro economy as a whole is still walking a very fine tightrope. Greece for example has reported the highest level of unemployment ever recorded in the EU taking over Spain as the highest with a rate of 26.8%. This means we could easily see the rates swing back in the other direction if we see any bad data from any of the euro countries and especially any further indications of a rate cut.

So things remain very uncertain, however you can have some control over the markets by knowing the options available to you, in order to make an informed decision on when to fix a rate and which type of contract to take. Take the time for a free consultation with us to discuss your requirements today.

To put these movements into perspective, in just the last week a property purchase of 200,000 Euros would have a difference of around £3500. This outlines the importance of staying in close contact with your account manager ensuring you are aware of the latest rate movements and news on the markets. If you have not already done so, follow the link to open a no obligations trading facility today.

If you need the best exchange rates, send an enquiry now.

Weekly Economic Data that may affect exchange rates

Monday – Data is mostly from Europe today, including German Wholesale prices in addition to Italian and EU wide Industrial Production. In the USA we have speeches by key FED members.

Tuesday – UK data today comprises of House Prices, Inflation numbers and Retail Sales. We also have inflation data from Germany and Italy. There is also EU wide Trade Balance figure released at 10am. Over in the states there are also a raft of inflation figures & Retail Sales numbers.

Wednesday – There is nothing of note from the UK today. In Europe we have EU wide inflation numbers. The rest of today’s data is from the states: Consumer Price Index, Industrial Production and Housing Market data.

Thursday – Unusually for a Thursday, there are no UK releases today. The ECB gives its monthly report, and there are also some EU construction numbers. The USA has jobless numbers, and further afield we see inflation figures from New Zealand.

Friday – We end the week with UK Retail Sales, Italian Industrial Orders, and a US Consumer Sentiment survey.

Getting the best exchange rates

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Jumat, 04 Januari 2013

Pound/Euro & Dollar forecast for 2013

Friday 4th January 2013

Good afternoon, and a very happy new year to all my regular readers, and of course those finding my site for the first time!

It's the first post of the year, so this afternoon I'm going to go in to quite a bit of detail on GBP/EUR rates, GBP/USD rates, look what's happened recently and where rates may be headed in the coming months.

If you need the best exchange rates, don't forget to send me a free enquiry to find out about the exchange rates I can provide - they are significantly better than you can get at banks and other financial institutions!

In this week’s Report:

Pound/Euro recovery short lived as rates start to drop again
Pound/Dollar also drops slightly from 16 month high
Fiscal Cliff deal agreed in United States
Round up of the week’s other data that may affect rates

Sterling vs. Euro;

In recent months the GBP/EUR rate has been falling; however at the start of 2013 we saw rates pick up slightly. This wasn’t to last however, as by the end of this week the rate had started to drop again. In today's report we’ll look at the reasons why, and where rates may be headed.

How has Fiscal Cliff affected Euro

The New Year ushered in a late fiscal cliff deal, and with it a resurgent euro, at least initially. Much of the focus last week was on the United States; not only due to the fiscal cliff, but also on the US debt ceiling and the country’s most recent data releases. These results have largely been the driving force behind Sterling/Euro rates and this week’s Euro report will look at how this and other events have affected the GBP/EUR cross.

The compromise between the White House and Congress’s dissident Republican faction meant that the US economy would not be automatically plunged into recession. As the world’s largest economy, the state of America’s finances will always have a peripheral effect on economies like those within the Eurozone; and as such, stalemate in the fiscal negotiations would have been disastrous for the single currency.

Late on January the 2nd the act was signed into law, close enough to the deadline to avoid any drastic price movements. The equity markets, which largely mirror the euro, responded favourably with the FTSE 100 breaking through the 6000 mark. The euphoria was short-lived however, as the following day euro strength receded as fear began to re-enter the public imagination. An undesirable side-effect of avoiding the cliff is the effect on US spending. The debt ceiling has been an issue for some time and the new taxes imposed on the wealthy are viewed as not enough to justify current public spending.

This meant that the risk-on approach adopted early in the week was side-lined in favour of repurchasing safe-haven assets, like the dollar, which had previously been subjected to aggressive selling. The shift from investors buying the euro to buying the dollar was further exaggerated by the publication of the Fed’s minutes, which hinted at an end to the QE infinity program, and by positive data stateside which would act as catalyst to a winding down of Central Bank intervention.

How has UK data affected Pound/Euro

Friday saw a fight back from the single currency against the pound. Month on Month Italian CPI and Year on Year European CPI both exceeded expectation yet the UK’s PMI Services Index was down from 50.2 to 48.9; a score of 50 is the minimum level required to indicate growth. The move indicated that the UK economy could have contracted as much 0.2% in the final quarter of 2012 reawakening fears that our exit from recession may have been largely due to events like the Summer Games. If the UK were to fall into a triple-dip recession, sterling-euro rates could continue to fall, making the purchase of euros a more expensive process.

Time will tell whether the Conservative Party can grow an economy through cuts; what is clear however, is that Friday’s data brought negative direction to a cross that was largely range bound, but erratic, in its path.

Do you need to buy or sell Euros?

If you are purchasing euros, I can guide you through methods of protecting yourself against adverse movements in the rates.

For those needing to sell, we’re close to the best rates in 8 months; Forward contracts can lock in today’s price giving you certainty in a volatile economic climate.

Alternatively, if you have a minimum rate you need to achieve, a limit order can be placed in the market, which can be bought twenty-four hours a day, seven days a week, if the rate drops below the pre-agreed level.

Send me an enquiry now to discuss further.

Sterling vs. US Dollar;

As mentioned in the Euro report, the main driving force behind fluctuations in the GBP/USD rate this week has been the apparent resolution to the US ‘fiscal cliff’ problem. The fiscal cliff was the forecasted sharp decline in the US budget deficit that could have occurred at the start of the New Year, due to increased taxes and reduced spending.

The deficit—the difference between what the government receives in revenues and what it spends—was projected to be reduced by roughly half in 2013. Although reducing a country’s deficit is seen as a positive move, the associated tax increases and spending cuts were forecast to plunge the US economy back into recession and increase unemployment levels as a result.

The American Taxpayer Relief act of 2012 was signed into law by President Obama on January 2 and eliminated much of the tax side of the fiscal cliff. As a result, the safe-haven dollar fell sharply on Wednesday as investors moved away from the US currency into riskier assets.

As a result, GBP/USD hit a seventeen-month high of 1.6337. However, optimism over the US budget deal quickly waned; giving way to concerns that more budget wrangling may lie ahead. Consequently, the dollar began gaining strength with safe-haven flows driving GBP/USD rates lower. The dollar is often favoured at times of market uncertainty and as initial optimism over the budget deal was replaced with scepticism, the trend in rate movements reversed and the dollar regained the ground it had lost over the previous two days.

The greenback continued its march as the week drew to a close as minutes from the Federal Reserve’s latest meeting indicated the central bank looks set to continue its bond-buying scheme over the coming months, helping to stimulate economic growth. However, rate movements were not entirely one-directional as US employment figures caused a brief rise in Cable. However, this was only temporary with the rate sliding further as market players unwound their positions ahead of the weekend.

Overall, it was a fairly eventful week for the currency pair, with a 2% difference between the high and the low. This is considerable, considering the short trading week and the usual post-Christmas lull in activity. To put this movement into perspective, the cost of purchasing $250,000 early in the week was around £3000 less than if the dollars had been purchased on Friday.

Considering current market volatility, if the Dollar is the currency you need to trade, send me a free enquiry now.

Weekly Economic Data that may affect exchange rates

Monday – Today’s UK data comprises of UK House Prices, and the CB Economic Index, which looks at overall economic activity and is considered as a measure for economic stability. In the Eurozone we have some inflation numbers and a measure of Investor confidence.

Tuesday – The only UK data of note are the latest Retail Sales numbers. It’s quite busy in the Eurozone however with Trade Balance data from Germany and France, EU wide Retail sales, Unemployment and Industrial orders. In the USA we have an economic optimism survey along with some consumer credit numbers.

Wednesday – Today is the UK’s turn for Trade balance figures which show overall imports and exports. In Europe we have some important GDP figures along with industrial production numbers from Germany and Greece. Further afield we have Trade Balance figures from New Zealand at 21:45pm.

Thursday – Today we have the all-important interest rate decisions from both the Bank of England and European Central Bank. We will also see the latest decision on whether the UK will increase its Quantitative Easing programme. Also in the EU today we have Inflation figures from France and Greece. We also see Greek unemployment figures. In the USA we will see Jobless Claim numbers, and speeches by some key members of the Federal Reserve.

Friday – We will see the latest GDP numbers from the UK today, along with Industrial and Manufacturing production figures. The only EU data of note is the French budget and Portuguese inflation figures. We round off the week in the states with a Budget statement and the latest Trade balance figures.

Getting the best exchange rates

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Senin, 24 Desember 2012

Weekly Pound/Euro & Pound/Dollar forecast

Monday 24th December 2012, Christmas Eve.
Good morning. Firstly I would like to wish everyone including my regular readers a very merry Christmas and a Happy New Year! Today I will take a look at last weeks movements, and what may happen this week.

In this week’s Report:

Pound/Dollar rates reach fresh 1 year high
Sterling/Euro is still near lowest since May
Round up of the week’s other data that may affect rates

Sterling vs. Euro;

A much quieter week last week as expected with the run up to Christmas as investors unwound positions and the markets generally traded flat. On the Sterling v Euro cross we saw only half a cent between the high and low of the week as the mid-market generally hovered around the 1.2275 level.

On the data front there were mixed readings from both sides of The Channel as UK inflation read slightly higher than expected and German IFO Business Climate figures were released slightly higher also.

Wednesday’s main release was the Bank of England minutes from the December meeting where the 9 member MPC voted to hold interest rates at the current all-time low that we have been at since March 2009. The vote on the asset purchase programme (QE) however showed one of the members voting for a £25million increase in the current level which shows that we could perhaps see more QE next year should the current growth levels not be sustainable.

This started to weigh on Sterling and bought it down from a weekly high of 1.2325. Thursday came with a drop in monthly UK retail sales which will probably be better next month with the Christmas period factored in.

Next week will be very quiet with no data released Monday followed by 2 bank holidays and finally some UK mortgage approvals and house price data on Thursday. With this in mind the rate will probably remain pretty flat and over the next fortnight most moves in GBP/EUR will be down to how investors view the current Eurozone crisis and more importantly how the ECB are managing it.

At present they seem to be making all the right noises about keeping things under some form of control which has helped strengthen the Euro over recent weeks but not only do we normally see confidence erode eventually, it could be months or even years before we know the true scale of the crisis in Europe.

Sterling vs. US Dollar;

Things tend to be quieter during the Christmas week due to the fact volumes are down with most traders enjoying their turkey sandwiches rather than worrying about ichimoku clouds and candlestick charts.

The Dollar has weakened against Sterling in the last week giving a nice little gift for all those Brits jetting off to Aspen for a skiing holiday this festive period, mainly due to the impending fiscal cliff in the US. The uncertainty as to whether new fiscal policy will be put in place before 1st Jan to resolve the cliff will mean US politicians may not have as relaxing a Christmas as they are used to with this decision seemingly going to the wire.

Sterling/Dollar rate has surged to the best in over a year, due to continuing uncertainty surround the U.S economy. If you are thinking of buying dollars in the coming months it may be a good idea to consider securing your rate of exchange before President Obama and White House representatives reach an agreement to avoid the looming Fiscal Cliff.

As stated above, if an agreement can be reached before the 1st January 2013, we could start to see rates decline as investor confidence returns.

You can either fix a ‘Spot rate’ which has to be settled within 2 working days, or if your requirement is some time away, you can still fix the current rates for up to 2 years into the future, and only lodge a small deposit to do so.

Next week the back and forth between the democrat White House and the republicans in the house will dictate the course for the Dollar, but I suspect the biggest movement will be the following week when the timeline runs out on New Year’s Eve.

Economic Data that may affect exchange rates

Monday – UK House prices is the only release of note.

Tuesday – Bank Holiday

Wednesday – UK/EU Bank Holiday. The only data release is US Mortgage data and Manufacturing numbers.

Thursday – UK data is House prices and Mortgage approvals. In the EU we see French Consumer Confidence. US Data comprises of Home Sales & Jobless Claims.

Friday – The only data today is French GDP, Spanish Retail Sales, and US Home Sales.

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

Minggu, 16 Desember 2012

Pound/Euro rates continue to fall

Monday 17th December 2012

Good morning. As always for a Monday, today I'll take a look back at last weeks movements, and what may happen to exchange rates in the run up to Christmas. The Pound/Euro rate fell steadily last week, to it's lowest rate in nearly 7 months.

In this week’s Report:

UK’s AAA Credit Rating under threat
Pound/Euro rates continue to fall
Sterling Dollar remains near 2 month high
Round up of the week’s other data that may affect rates

Sterling vs. Euro;

Last week we saw sterling euro rates steadily decline on the back of several positive data releases from the Eurozone, coupled with negative data from the UK. In this week’s euro report we’ll look at what those releases mean and how they have affected the single currency and sterling.

The main driving force behind the movements was due to a newly agreed plan to make the European Central Bank (ECB) the Chief Regulator of European banks. This in turn paves the way for direct recapitalisation of struggling Eurozone banks using funds from the €500 billion European Stability Mechanism (ESM).

The news that the ECB will regulating struggling European banks coupled with the possibility that the UK could have its credit rating downgraded from its prestigious AAA all helped the single currency gain ground on a now floundering pound , making the 4 and a half year highs of 1.2860 seen only a few months back seem a distant memory.

Rates are now at their lowest in quite some time, and give or take a point, you have to go back to May to see rates significantly lower. This is great news for anybody looking to sell Euros, however anyone with a requirement to buy Euros should consider their options now to protect themselves against further falls in the rate.

The Christmas period is expected to be just as volatile as we expect more news from the EU summit that took place last week along with the typically reduced trading that happens at this time which makes the market more sensitive to any data releases.

If you are buying/selling Euros what should you do?

If you have a euro purchase in the near future a forward contract enables you to fix a rate of exchange today for anything up too two years into the future and remove and risk from the market, protecting you from any volatility and giving you one less worry over Christmas. Alternatively if you think rates will recover, consider a Stop Loss order.

A stop loss enables you to place a trigger at a pre-agreed level in the market to give you a ‘worse case’ scenario. In this way you can still hope rates recover, but have a 'safety net' should they fall.

This is also perfect for any euro sellers at the moment, who may well be riding the rates in the right direction, however should the UK not find its credit rating downgraded we can expect to see it regain some of the ground it has lost to the single currency over recent weeks.

Either way you look at the market it is a difficult time to gauge any future movements, reinforcing the importance if having a good currency broker on your side.

Why not contact me for a free consultation? In this way we can discuss all the options available to you, so you can make an informed decision on when to fix your rate and what type of contract to take.

Click here to send me a free enquiry now.

Weekly Economic Data that may affect exchange rates

Monday – The only UK data of note today are the latest House Prices from Rightmove. IN the Eurozone, we have Trade Balance figures. In the USA there is a speech from the FED.

Tuesday – Lots from the UK today including Consumer Price Index, Producer Price Index, Retail Price Index and a Bank of England Quarterly Bulletin. There is nothing of note from the Eurozone or USA today.

Wednesday – Today we see the Bank of England minutes to the latest interest rate and QE decision. This could indicate future policy so will be closely watched by the markets. In the Eurozone we see Business Climate assessment from Germany, Industrial Orders from Italy, and EU wide construction output. In the States there are housing and Building numbers, and New Zealand releases its latest GDP numbers.

Thursday – Retail Sales numbers from the UK today are a good barometer of overall economic activity. In the EU we have German inflation data, Italian Retail Sales and Trade Balance numbers. Over in the states we see GDP numbers, Inflation data, Home Sales and the latest manufacturing figures.

Friday – We end the week with a host of UK data: Consumer Confidence, GDP numbers, Public Sector borrowing and business investment figures. In the EU we will see German confidence and Import Prices, Italian Consumer Confidence, and a French Business Climate assessment. In the USA we have inflation data, Personal income numbers, and a consumer sentiment survey.

Getting the best exchange rates

Click here to send me a free enquiry

Kamis, 13 Desember 2012

GBP/EUR & GBP/USD forecast 2012/2013

Thursday 13th December 2012

Good afternoon everybody. In this afternoon’s post I’m going to take a detailed look at Pound/Euro rates, and the forecast for where rates may go in 2012 and 2013. I will also have a look Sterling/Dollar rates.

I will also run over some of the options and contract types I can offer for any currency requirement you may have in the next 2 years, to help you get the best exchange rates and make the most of your currency.

Pound/Euro stable in the mid €1.23’s

The Sterling/Euro exchange rate has fallen slightly in recent weeks, but still remains firmly above the 1.20 mark. The reason for the fall is twofold, and will be familiar to regular readers as it’s been the main driver of exchange rates all year!

Firstly we have the progress made in Europe, which the markets have taken to be positive. This has seen the Euro gain some strength and thus become more expensive to purchase. We also have the threat of the UK’s credit rating being downgraded, which has taken some steam out of the Pound.

Some in the market are now saying that the euro could gain further support after the European Union agreed to make the European Central Bank the bloc's banking supervisor. This is positive news for the Eurozone, and so could pull rates down further. Of course things are so volatile in the Eurozone, it’s impossible to predict what will happen in the coming weeks. You can read about the new Bank rules here.

What UK news is affecting the Pound?

On the UK side, data has shown that British factory orders rose this month, although there was little reaction in the currency markets with the Pound remaining largely unaffected. Of more important to Sterling at the moment are growth prospects and credit ratings.

In his recent autumn statement, George Osborne downgraded growth forecasts and said the country will miss debt-cutting goals. This has increased concerns the UK will lose its prized AAA credit rating. Only the UK and Germany retain good credit ratings from all major agencies. This could of course weigh on the Pound should we be downgraded.

In my opinion however moves in the Pound/Euro rate will be driven more by developments in the euro zone in coming months rather than what will happen in the UK. Markets are waiting to see whether Spain will apply for aid, triggering the European Central Bank's bond-buying scheme that is seen as providing a backstop to peripheral debt markets.

So which way will Pound/Euro rates go now?

In a nutshell, if things remain positive in Euros, GBP/EUR rates could fall. Should there be any unexpected deterioration of the situation in any of the troubled EU countries such as Spain, Italy, Portugal or Greece, then we could see renewed weakness in the Euro, causing rates to climb again.

Regardless of whether you are buying or selling Euros, simply sitting back and hoping the market will move in your direction invariably means you are simply chasing the market using hope as your only economic tool. A wiser strategy would be to use tools such as Stop Loss and Limit orders, so you can take control of your requirement and allow you to budget effectively for any requirement you may have in the coming months.

If you would like a free consultation on the types of contract we offer such as Stop Limit orders, then get in touch with me today. I can discuss your requirements, let you know all your options and give you my view on the current market forecasts. In this way you can make an informed decision on what to do and when to buy your currency. Simply leaving things to chance could cost you dearly.

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Pound Dollar remains near 6 week high vs. US Dollar

The Pound has recently been at a 6 month high vs. the US Dollar, however fell a little today during trading. Sterling pulled back somewhat because investors took some profits after the news that the FED has announced a new round of monetary stimulus, which was expected.

Moving Forwards, rates I think will now remain above the $1.60 mark against the Dollar for the rest of the year, especially if we see hints that the Bank of England wills hold off from signalling further Quantitative Easing in the UK.

If you need to buy US Dollars at the best exchange rates, there are 2 things you should consider. Firstly, you can fix the rate now while it’s so good, using either a Spot of Forward contract. A spot contract needs to be settled in full within 2 working days of booking your rate. A Forward contract allows you to fix the current rate for up to 2 years, and only lodge 10% of the total to be converted. The remaining 90% becomes due when you want to have your US Dollars transferred.

A second option is if you think the rate will rise further. You can place a ‘Stop Loss’ order at a level slightly below the current rate. This means if the market drops, your currency is secured at that rate, protecting you from a further decline, and giving you a worst case scenario. The advantage of a Stop Loss is that if the market continues to rise, you can continue to take advantage of any gains, raising your stop level in line with market movements.

Click here to send me an enquiry to find out more about these types of contracts.