Pound/Euro falls despite better data. 2013 forecast.

Friday 12th July 2013 
Good morning readers. Apologies for the blog being quiet for the last fortnight; I’m just back from a few weeks in Fuerteventura, and so today I will take stock of how the major currency pairs have performed over the last few weeks, and take a view on what the forecast is for Pound/Euro rates along with other major currencies. 

In addition to looking at the outlook for Sterling exchange rates, I’ll list the main data releases for the next week that may affect exchange rates. In this week’s report: 

• UK Interest Rates to remain on hold for foreseeable future 
• Will Pound/Euro rates rise or fall this summer? 
• Pound/Dollar rates drop below $1.50 before recovering 
• Central Banks likely to continue Quantitative Easing 
• Pound held back despite better economic data 

How has Sterling performed, and where are GBP/EUR rates headed? 

In the last few weeks, the pound had fallen sharply against other currencies after the Bank of England warned that markets were wrong to assume that it would start raising interest rates soon. The fall came just over a week ago when the Bank of England held interest rates at 0.5% and kept its quantitative easing programme (QE) unchanged, which was expected. 

The decisions were made at the first meeting of the Bank's Monetary Policy Committee since Mark Carney took over as governor from Sir Mervyn King. Next Wednesday we’ll see how the members voted, and whether Carney followed King on voting to increase its asset purchasing programme. The MPC said that the recovery "remains weak by historical standards and a degree of slack is expected to persist for some time". 



With interest rates expected to remain low for longer and the chance of more monetary stimulus, the pound became less attractive on currency markets, sending sterling lower against other currencies and pulling rates down. 

The pound also fell sharply against the euro, but has now recovered somewhat after the European Central Bank committed to maintaining its interest rates at or below their current level for an "extended period of time", sending the euro lower against all currencies. 

Releasing a statement alongside the decision is new; Mervyn King didn’t used to do that. IN doing so despite there being no change in policy is significant, as it suggests that further quantitative easing is likely and interest rates will remain low for the foreseeable future. This will keep the Pound weak. 

Many of my clients are expecting rates to rise, and if you take the recent improvement in economic data from the UK alone, I would agree. However the markets are more complex than that. Sterling is being held back global investors, as the view is that the British currency will continue to offer very little return of interest. Couple this with the threat of more QE along with low interest rates, and I would expect rates to fall in the next 3 months, before recovering later in the year. 

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Pound/Dollar rates drop below $1.50 before recovering 

The pound didn’t just fall against the Euro – in the last few weeks it fell below $1.49 against the dollar, close to a three-year low, as markets digested the prospect of UK interest rates staying at 0.5%, and the strengthening US economy. The slide began with the Bank of England saying rates could stay flat. 

In other news last week, we saw that US employment grew by 195,000 in June gave the dollar more support, pushing rates lower. We have since seen rates climb back above the $1.50 level, but we will have to wait and see whether it will stay there. 

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Are you looking for the best exchange rates? 

I write this blog to keep existing and potential clients informed what is moving exchange rates, and to give my view on what may happen in the future. 


Hopefully the insight I provide can help to make an informed decision on when to fix an exchange rate. 

We don’t just provide information however – we also provide commercial rates of exchange to private and business clients that are often up to 5% better than the banks. 

So why not find out how much we could save you? You can click here and have a free consultation on exchange rates, and discuss the options available to you to help you make the most of your currency. Combined with the exchange rates we provide the savings can be enormous. 

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Economic Data releases for the next 7 days 

Every day economic data is released across the world, and is often the most common thing that affects exchange rates. 

Below I list the main data releases for the coming week that I think could affect exchange rates. For a free consultation on how these released could affect your particular currency requirement, send me a free enquiry now by clicking here. 

Monday – It’s a very quiet start to the week, with no data of note from the UK or EU. Over in the States, we have Retail Sales which are a good overall barometer of economic activity. In New Zealand we have inflation numbers which could dictate future interest rate movements. 

Tuesday – In the UK today we have a raft of inflation numbers, Retail Sales, the Bank of England inflation letter and a speech by one of the MPC members, so a few things that could affect the value of Sterling. In the Eurozone, inflation numbers come at 10am followed by Trade Balance numbers. There are also measures of Economic sentiment from Germany. In the USA we have further inflation numbers along with industrial production figures. 

Wednesday – Today is the most important one for Sterling. Firstly we have the Bank of England minutes showing the voting and discussion for QE. Released at the same time are the latest unemployment figures, so I expect a choppy day for the Pound. There is nothing of note from the EU. In Canada we have an interest rate decision, and in the USA we have figures from the housing and building sectors. 

Thursday – The only UK data of note today is the latest Retail Sales numbers. In the United States we have unemployment and jobless numbers, along with some manufacturing figures. 

Friday – We end the week with German Trade Balance Data, UK Public Sector Borrowing and inflation numbers from Canada

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Will Pound/Euro rates go up or down in the coming months?

Friday 28th June 2012 
Good afternoon. The last week has seen the Pound/Euro exchange rate fall away as I have been predicting could happen for a few weeks. Sterling also fell against other currencies, due to data showing the UK economy is not quite as healthy as thought. 

In today’s post I will look over what has caused rates to move recently, what data is coming this week that might affect rates, and look at ways you can protect against the exchange rate moving against you.

• Pound weakens following revised growth forecasts 
• New Bank of England governor takes over this week 
• Announcement due Thursday on QE and interest rates 
• Where GBP/EUR and GBP/USD could go in coming months 
• Getting the best exchange rates

Pound weakens following revised growth forecasts 

There was a revision to UK GDP this week, which is an overall measure of growth in the economy. The numbers were both good and bad news. Let me explain. The ONS periodically updates its previous measures of growth, and they have said that growth was flat in the first quarter of 2012, revised from an earlier estimate of a 0.1% contraction. This means that the UK economy did not experience a double-dip recession at the beginning of 2012. That was the good news. 

However the revised figures showed that the economy is now estimated to have dropped by 7.2% from peak to trough, against a 6.3% fall previously recorded. That means that GDP in the first quarter of 2013 was 3.9% lower than its peak in the first quarter of 2008 - previously it was estimated to be 2.6% below. 

So in a nutshell this means that the UK had fallen deeper into recession than previously thought, meaning we therefore have further to go to recover lost ground. 

So what does all this mean for exchange rates? Well after the numbers were released, Sterling fell quite sharply against other currencies. This is due to the fact the economy is not as healthy as previously thought, and increases the chance of robust action from the Bank of England to combat the slump. I will go into more detail about what the BoE might do, and the effect this could have on exchange rates… 

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New Bank of England governor takes over this week 

This week the new governor Mark Carney takes of the helm of the Bank of England. So what does he have to look forward to? The economy remains trapped in the longest downturn for a century, the banking system is still broken, and the financial markets are in a febrile state. Interest rates have been at a rock bottom 0.5 per cent since March 2009 and £375billion has been pumped into the economy through quantitative easing to drive growth despite inflation remaining stubbornly above the 2 per cent target. A nice welcome then!

He knows the challenges he is facing, and he has already hinted that he will take robust action to return the economy to growth. This could mean, amongst other things, a re-start of Quantitative Easing. 

If he does decide to add more to the £375bn already pumped into the economy, then the likelihood is that the Pound may weaken significantly, pulling exchange rates down. Of course he may decide instead to start raising interest rates, which may strengthen the Pound due to the better return on offer. 

Click here to have a free no obligation consultation on exchange rates. 

First meeting for new Governor this week 

On Thursday, Carney will make take his first meeting at the BoE’s rate setting Monetary Policy Committee, and it will be interesting to see how many of the 9 members vote for an increase in QE. We’ll have to wait 2 weeks to see who voted for what, but it will be interesting to see what Carney does in his first week in the job. I personally don’t expect QE, but it remains a possibility.

Protecting against adverse exchange rate movements 

With so much volatility and uncertainty surrounding the UK and global economy, it’s impossible to predict where exchange rates will move. Let’s look at Pound/Dollar rates as an example: In the last month alone we have seen rates as low as 1.50 and as high as 1.57 – a fluctuation of nearly 5% in just a few weeks, meaning a typical purchase of $350,000.00 has differed in cost by over £10,000, clearly illustrating how quickly exchange rates can move, and the impact of these fluctuations on the cost of a currency purchase. 

Against the Euro, we have seen rates between €1.13 and €1.23 this year alone. And nobody knows which direction rates will take for the remainder of the year. Some forecasts suggest more QE could weaken Sterling by between 10% and 15% which would mean exchange rates could tumble. 

Other forecasts suggest an escalation of the EU debt crisis will weaken the Euro and rates will rise. One thing is for sure, rates will not remain stable and any fluctuations can have a huge impact on how much your currency costs you. There are ways to take control of the market however, and not simply leaving things to chance and hoping rates will move the way you want them too. 

To give you just a few examples: You could fix the rate now for up to 2 years, and only lodge 10% of the total to be converted now. This protects against the rate dropping. Alternatively you could place a ‘Stop Loss’ or ‘Limit’ Order, which automatically secures your rate if it rises above, or drops below, a pre-agreed level. 

Click here to discuss how we can help you protect against rates falling.

So how do you go about getting the best exchange rates? 

I can help you achieve commercial exchange rates up to 5% better than the banks, and you can also take advantage of my 10 years’ experience in the FX markets in help you decide when to fix a rate. 

Whatever currency you need to buy or sell, why not take advantage of a free consultation with an expert currency broker. I can discuss your requirement, the forecasts and possible direction of your exchange rate, and explain the options you can consider. In this way you can make an informed choice on when and how to fix a rate, and not simply leaving things to chance. As I have said before, hope is not a reliable economic tool. Take action now, click below to send a free no obligation enquiry and take the first step to making the most of your currency. 

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Economic Data 

Every day economic data is released across the world, and is often the most common thing that affects exchange rates. Below I list the main data releases for the coming week that I think could affect exchange rates. For a free consultation on how these released could affect your particular currency requirement, send me a free enquiry now by clicking here. 

Monday – Today we have various inflationary measures from Europe, which could dictate future interest rate movements. Staying in Europe, we have Unemployment numbers. In the UK we have Inflation data, and the new Bank of England governor Mark Carney takes over today. Over in the USA we will see Inflation and Construction data that may affect GBP/USD rates. 

Tuesday – There are only 2 UK releases today Construction data and Retail Sales data. In Europe we have further inflation numbers. Further afield we have an Interest rate decision from Australia. The only other data of note is Factory Orders from the United States. 

Wednesday – Starting in Australia today, we have Retail Sales and Trade Balance data. In the UK we have House Prices and Inflation data, along with a BoE report on Credit Conditions. Over in Europe its Retail Sales and more inflation numbers. In the USA today we have some unemployment numbers and Trade Balance figures. 

Thursday – A very important day, as we have the BoE decision on Quantitative Easing and interest rates, and it will be the first meeting with the new governor at the helm. Whether he will make changes to interest rates or QE we will have to wait and see. Shortly after, the ECB make their decision on rates. 

Friday – Sterling gets a day off today as there are no releases of note. It’s quiet in the EU also, with German Factory orders the only data of note. It’s all about the USA today – Unemployment, Non-Farm Payrolls and average earnings. Expect a volatile day for Pound/Dollar.

Pound/Euro exchange rate forecast outlook 2013

Wednesday 19th June 2013 
Good afternoon. Sterling exchange rates have fallen back away from recent highs, after high UK inflation numbers and a strengthening Euro. In today’s post I’ll have a look at recent market movements in more detail, and also look at how Quantitative Easing (QE) in the UK and abroad is still driving exchange rate movements. In this weeks report: 

• Bank of England still split on QE
• UK Inflation higher than expected 
• Euro gathers strength after Mario Draghi comments 
• FED to make QE announcement this evening. 
• Data for rest of the week that might affect rates 
• How to get the best exchange rates 

Bank of England still split on Quantitative Easing

Earlier today the Bank of England (BoE) released its latest minutes on its decision to keep the QE programme and interest rates on hold. It showed that for the fifth month in a row, the monetary policy committee (MPC) voted 6-3 in June against increasing the programme of quantitative easing (QE). Sir Mervyn, along with Paul Fisher and David Miles, voted to increase QE by £25bn, as they have done in recent months. 

Sir Mervyn steps down from his role as BoE governor next month, to be replaced by the former governor of the Canadian central bank, Mark Carney, as I outlined in a recent post. While recent surveys of the economy had indicated an improvement in conditions, they said the outlook was no stronger than projections in the Bank's latest inflation report. They also said that the risks from the Eurozone remained "substantial". 

As you can see from the graph of today's movements, initially Sterling fell as a result, however it recovered all of it’s losses and just after lunchtime, rates were back where they started, with the Euro at €1.1690 and the US Dollar at $1.5660. 

As outlined in detail in my last post, there are concerns the new Governor will push for more aggressive QE and this is what is holding the Pound back at the moment. 

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UK Inflation 

Yesterday we saw some surprising inflation numbers for the UK. The rate of consumer price index (CPI) inflation increased to 2.7% in May, up from 2.4% in April, the Office for National Statistics (ONS) said. The Bank of England has said it expects inflation to exceed 3% this year. May's rise in inflation was higher than analysts predicted. 

Usually high inflation would strengthen a currency, as it means that interest rates could rise to combat the rise in inflation. However with interest rates expected to remain at their record lows for some time to come, this isn’t an option. My view is it really means that investors are very nervous about the BoE's ability to keep inflation in check, and that’s why the Pound dropped immediately after the release.

Euro gains strength, pushing GBP/EUR rates lower.

Just a week or two ago GBP/EUR rates were in the €1.18’s. We have now seen rates drop by a few points, and part of this is due to a strengthening Euro. The reason it has risen in value and become more expensive to purchase was due to comments by the European Central Bank (ECB) President Mario Draghi. In a speech he said that the ECB have numerous standard interest rate policy and other non-standard measures that they can use if necessary.

What these measures are he didn’t expand on, but many think that he will do whatever it takes to protect the Euro, and this could mean negative interest rates. Markets responded positively to the news and the Euro gained strength, pushing GBP/EUR rates lower.

Looking to convert Pounds to Euros, or Euros to Pounds? Click here to send me a free no obligation enquiry and find out more about the rates I can provide. 

US FED decision on interest rates and QE

At 7pm this evening it’s the turn of the US Federal Reserve to announce its latest decision on interest rates and Quantitative Easing. I don’t expect any movement in interest rates. There has been speculation that the FED would be reducing its QE programme, so should this be the case I would expect the USD to gather strength and pull GBP/USD rates back down.

Only a few weeks ago rates were close to $1.50, but after the biggest 1 day gain in 4 years the rate shot up, and currently sits in the mid $1.56’s. Most forecasts are still suggesting that rates will fall back below $1.50, mainly due to an improving US economy and the threat of further QE in the UK.

If you need the best USD rates, click here. 

So, will Pound/Euro exchange rates rise or fall?

I’m asked this question many times each day, and the truth of the matter is I don’t know, nobody knows, and it’s impossible to predict. If anyone could then they would become very rich very quickly! What I can do is explain what is driving the market to help you make an informed decision on what to do.

On the one hand, better UK data and continued problems in the Eurozone suggest Pound/Euro rates will rise. Indeed a forecast I read this morning from Barclays suggested just that, and they are predicting that rates will soar above €1.20 this year.

On the other hand, you have robust policy from the ECB that is keeping the Euro strong, and the risk of a devaluing Pound through Quantitative Easing as outlined in my last post. So rates continue to be pulled in both directions, with no indication as to which way it will go in the medium term.

Want to discuss market movements? Send me a free enquiry. 

How to protect against rates moving against you

Despite the uncertain direction of rates, there are various ways you can protect against adverse rate movements and get the best possible rate.

You could place a Stop Loss order which give you a worst case scenario while still allowing you to aim for a higher rate.

A limit order is the opposite; you place an order to buy at a higher level than the market is currently at, and should rates rise even briefly, your currency is automatically bought.

You could fix today’s rates on a Forward contract for up to 2 years, and only lodge 10 % of the total, thus guaranteeing your rate, protecting against a decline and allowing you to budget.

To discuss your particular requirements, send me a free enquiry by clicking here. I can discuss your needs, run over your options and when you decide to convert your funds, the rates we can source on your behalf are exceptional – up to 5% better than the banks. You could be surprised on how much you can save.

Have a free consultation and find out about the rates I can provide. 

Economic Data

Tomorrow we have UK Retail Sales in addition to a speech by one of the Bank of England’s monetary policy committee. This could be interesting should include anything to do with Quantitative Easing and the markets will be listening closely to what he has to say.

On Friday we have some minor Public Sector Borrowing figures, but they could still affect the value of the Pound. 

Pound could fall by up to 15% this year

Monday 10th June 2013 
Good afternoon. It’s been relatively stable in the world of exchange rates over the last week or two. Both the Bank of England and European Central bank have kept interest rates on hold again, as expected. We now look towards the new Governor taking over in a few weeks, and I’ll go in to detail below on how this could potentially weaken the Pound considerably. 

We also saw a surge in the GBP/USD exchange rate last week, rising more than 2 cents in just a few hours. So what do we have in store in today’s report? 

• New Bank of England governor could weaken Sterling
• Pound/Dollar rates surge by 2 cents 
• Positive comments from ECB increase risk appetite 
• Economic data releases this week that might affect exchange rates 

New Bank of England governor could weaken Sterling 

The Bank of England has kept its stimulus programme of quantitative easing (QE) unchanged and also held interest rates at 0.5% at its recent meeting last week, as expected. However there could be a change in policy when the new Bank governor, Mark Carney, arrives in July. The BoE has been split in recent months over whether to increase QE from its current level of £375bn. 

Recent economic data has painted a mixed picture of the UK economy. Official figures showed retail sales fell in April, while unemployment rose in the three months to March. Last month the Bank upgraded its own forecast for growth, and recent data confirmed that the UK has avoided a triple-dip recession, growing by 0.3% in the first quarter of the year.

Due to the mixed data, 3 of the 9 MPC members have voted for more QE at recent meetings. There is now speculation the new Governor Mr Carney will pursue more QE which could weaken the Pound significantly.
 

Pound could fall by up to 15%

Mr. Carney, the current Bank of Canada governor who takes over from Sir Mervyn King in July, said central bankers should consider “changing the policy framework” to stimulate a desperately weak economy. 

His words were directed at the Bank of Canada but will be seen as a hint that he will push for radical QE action in the UK, where the economy has been stagnant for two years. Some reports have suggested Mr. Carney will try to devalue the pound by as much as 15% in a last ditch attempt to cement the UK recovery. This of course would mean the cost of buying overseas could increase. 

It seems likely that Mr Carney is going to try and use Quantitative Easing to weaken the Pound. This is because while a high exchange rate is attractive for overseas property buyers, it’s not helpful for returning the UK’s economy to growth. It makes our exports more expensive, and 50% of UK exports go to the Eurozone. A weaker Pound would make exports more attractive and aid economic growth. 

Looking for the best Pound/Euro exchange rate? Click here to send a free enquiry.

Pound/Dollar rates surge by 2 cents 

Last week we saw a surge in the GBP/USD rate, pushing up over 2 cents in just a few hours. This was a little unexpected, and has been put down to increased risk appetite. Generally when there is global economic uncertainty as we have seen recently, investors buy US Dollars as it is seen as a safe haven currency. Comments from Europe last week seem to have calmed the markets a little, and the more positive outlook for the EU has meant investors are more confident. As a result, all these investors that had bought US Dollars sold them off, and it was this that caused the weakening of the USD. 

Moving forwards, as outlined above the threat of more QE means there is a real chance we could see rates fall back to below $1.50. It all depends on how UK economic data fares in the coming weeks, which I’ll go over later in today’s post. 

Looking to buy or sell US Dollars at the best rate? Click here to find out more about our rates. 

Economic data releases this week that might affect exchange rates 

We have quite a few important releases this week that could cause exchange rate volatility. 

Today we had some minor EU inflation data and investor confidence measures. The numbers were little worse than forecast, and this caused the Euro to weaken off and push GBP/EUR rates close to €1.18. 

Tuesday - we have Industrial and Manufacturing production figures from the UK at 09:30am. These are a good indicator of UK economic activity, and so can affect Sterling. Also on Tuesday we have the NIESR UK GDP estimate. This is very important as the report is highly reliable, and could affect whether the new BoE governor will pursue more QE when he takes over. 

Wednesday - UK data is unemployment data. In the Eurozone we have Industrial production measures and inflation data, which could affect future interest rate movements in the EU. Also on Wednesday we have the latest decision on Interest Rates from New Zealand, so this might affect GBP/NZD rates. 

Thursday - Nothing of note from the UK on Thursday, but we do have a monthly report from the ECB so we could see movements in the GBP/EUR rate. Most data today though is from the United States – Jobless Claims, Retail Sales, Trade Balance figures. If these numbers are better than expected, then GBP/USD could drop away. 

Friday - sees a host of inflation and employment data from the EU, so expect a choppy day for the value of the Euro. We also have inflation data from the USA. 

Want to talk about how economic data could affect your currency requirement? Click here to send a free enquiry and have a free consultation. 

Getting the Best Exchange rates 

The rates I can help you achieve are up to 5% better than banks offer, so the savings you could make are significant. 

We are fully authorised and regulated by the Financial Conduct Authority, so you can be confident your funds are safe. 

Make a free no obligation enquiry today to see how much you could save. 

Pound falls after growth forecasts revised

Wednesday 19th May 2013 
Good afternoon, and I hope everyone enjoyed the extended bank holiday break. The markets re-opened yesterday but it was pretty flat. Today has been busier and we have seen the Pound/Euro rate drop today after a cut to UK growth forecasts. In today’s post I will take a look at this, and also the increasing threat of more Quantitative Easing in the UK that could weaken the Pound further. 

In today’s report: 

•  OECD cuts UK economic growth forecasts
• Poor UK data increases chance of more QE 
• Central banks in currency war to devalue currencies 
• How to protect against adverse rate movements 

OECD cuts UK economic growth forecasts 

Today we have seen Sterling drop sharply against the Euro, after a leading economic think tank has forecast that Britain's economy will grow at a much slower pace than expected. The reasons were given as spending cuts and a lack of consumer and business confidence restrict the recovery. 

In its 6 monthly forecast, the Organisation for Economic Co-operation and Development (OECD) warned that a long and bumpy recovery in the Eurozone would continue to hit exports. They have also said the the UK governments deficit reduction programme would act as a brake on growth. 

The OECD said the UK government's austerity plans had affected growth, but said the measures were "necessary" and warned that "further fiscal consolidation" was needed. I read this as further confirmation that the Bank of England will have to pursue more Quantitative Easing. 

I’ll get into more detail regarding this in a moment, but in a nutshell further QE would weaken the Pound and bring rates further down. 

Click here to find out more about our exchange rates

Poor UK data also increases chance of more QE; Pound/Euro on the way down? 

Last week we had some quite poor UK data, including Retail Sales that were much lower than expected, and inflation numbers that also disappointed. There is now growing expectation that when the new Bank of England Governor takes over in a month, he will be more aggressive in pursuing the asset purchasing programme. 

The more and more likely this is, the more the Pound will come under pressure so we could see rates continue to fall away throughout June. Of course it’s not a given that GBP/EUR rates will drop, as the currency pair is being pulled in both directions. 

On the one hand, the threat of QE and poor data is weakening the Pound. On the other hand, the Euro is also relatively weak due to it’s own sluggish growth, so the direction of GBP/EUR will probably come down to investor sentiment, and so could go either way. 

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Pound/US Dollar could fall in coming weeks

The muted and slow recovery in Britain contrasted with the forecast for the US, which is expected to reach almost 3% growth next year. This coupled with the fact the US Dollar is a safe haven currency will probably mean GBP/USD rates fall in the coming weeks. 

Good news from the states will strengthen the US Dollar, making it more expensive to buy. Don’t be surprised to see rates drop back below the $1.50 mark. 

Currency Wars 

As I mentioned above, the Bank of England may well pursue further Quantitative Easing. But they’re not the only ones doing this. The USA and Japan also have asset purchasing programmes. What they are actually doing, is attempting to manipulate the value of their respective currencies. 

Why? Well taking the UK as an example, the problems in the Eurozone are affecting our exports (50% of our exports go to the EU). So, buy flooding the market with Sterling through QE, they are diluting the pool and thus lowering the value of the Pound. In turn, this makes our products more attractive to buyers in the Eurozone, and so the idea is to help boost these exports in order to return the UK to steady growth. 

The truth is that it’s really an unproven tool . You can read an interesting article on the subject by the BBC economics editor Stephanie Flanders here

How to protect against adverse exchange rate movements 

The uncertainty and differing forecast for exchange rates over the coming weeks and months, means it is impossible to predict where exchange rates are headed. For those that need to buy or sell currency, this should be a worry, as when moving large sums, the difference can be huge. For example earlier this year, the cost of buying €150,000.00 increased by over £10,000 in just a few months. 

So, to protect against an unnecessary increase in the cost of the currency you need to buy, a popular solution is a ‘Forward Contract’. This allows you to fix today’s exchange rates for up to 2 years in to the future, and only lodge 10% of the total you want to convert. Then at any time in the next 2 years, you can settle the remaining funds on the contract, in part of in full, and take delivery of your currency. 

In this way you can give yourself a finite cost, protect against rates moving against you, and remove all your exposure to the volatile currency markets. 

To discuss this, and the other tools I can offer, click below to send me a free enquiry. In addition to various contracts and expert knowledge on the currency markets, I can offer you commercial rates of exchange that are up to 5% better than you can achieve at the banks. 

I look forward to hearing from you. 

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BoE upgrade UK growth forecasts / Currency Forecast

Thursday 16th May 2013 
Good afternoon. Sterling Exchange rates remain fairly stable, with GBP/EUR sat just above €1.18 and GBP/USD around $1.5250 at the time of writing. The Pound is being supported by robust UK data, including the upgraded economic growth forecasts for the UK. This is what I’ll be looking at in today’s report, along with an outline of the types of contract I can offer to help you get the best exchange rates. 

If you are looking for the best exchange rates, or are trying to work out whether the Pound will go up or down against the Euro or any other currency, then read on below. You can also have a free consultation on your particular requirements by clicking here.

Bank of England upgrades growth forecasts 

The Bank of England yesterday upgraded its economic growth forecast, with the Governor Mervyn King saying that "a recovery is in sight". He also said that the projections are for growth to be a little stronger and inflation a little weaker than they expected three months ago. "That's the first time I've been able to say that since before the financial crisis.” 

This was good news for the Pound, and as a result exchange rates remain at relatively decent levels compared to earlier in the year. Economic growth this year is now expected to be greater than 1%, up from the Bank's previous estimate of 0.9%. As you can see from today's chart, optimism has pushed the Pound up nicely against the Euro.

The underlining picture remained subdued however. Sir Mervyn said: "This hasn't been a typical recession and it won't be a typical recovery. Nevertheless, a recovery is in sight." So, while the outlook was slightly more rosy than it was three months ago, we are not quite out of the woods yet, with the BoE saying that the recovery will remain weak by historical standards". 

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Problems in Eurozone could hurt the Pound. 

While the UK is doing better than it had been, the same can’t be said for the Eurozone. Figures released yesterday showed that France fell back into recession, and the Eurozone economy as a whole contracted for the sixth quarter in a row. 

Many of my clients thought that the problems in Europe would weaken the Euro and push rates higher. Of course this may be the case, but it’s important to remember that the poor Eurozone data means that UK exporters will face obstacles in the coming months. 

The UK is trying to bounce back on an export led recovery, and a weak Eurozone means there will be less demand for UK products. Touching on this yesterday, the BoE said that the "main risks to the recovery continue to emanate from abroad". So with the Eurozone economy remaining weak, this could hurt the pound. 

As I mentioned in my previous report, this means that we may see the Bank of England try to devalue the Pound to make our exports more attractive. This is what we saw earlier in the year when the GBP/EUR rate fell from 1.2350 to 1.13 in just a few months. 

You can read an interesting article here from Reuters, where they are forecasting the new Governor will opt for aggressive easing, which would really weaken the Pound and potentially send exchange rates tumbling.

If you need to buy or sell currency at the best rates, send me an enquiry. 

Types of Contract I offer 

As a Senior FX broker for one of the UK’s leading foreign exchange brokerages, I can help you get exchange rates significantly better than the banks, by as much as 4%. 

In addition to better rates, there are various contract types I offer that can help protect you against rates moving the wrong way. Let’s take a look at the main types: 

SPOT CONTRACT 

The Spot Contract is the most basic and popular foreign exchange product. It is an agreement to buy or sell one currency in exchange for another. You have 2 days to settle the contract, at a price based on the prevailing "spot exchange rate" the current value of one currency compared to another. 

Although the spot market lets you buy or sell currency as you need it, spot exchange rate movements are highly unpredictable, even during a single trading day. Upon receipt of cleared funds currency is available for onward transmission. 

FORWARD CONTRACT 

A Forward Contract lets you buy or sell one currency against another, for settlement no later than on the day the contract expires. Unlike spot contracts, a forward contract eliminates the risk of fluctuating exchange rates by locking in a price today for a transaction that will take place in the future (up to a maximum of 2 years). You also have the flexibility to take delivery of your currency in an agreed time period before the expiry date. 

A 10% deposit is required to secure the contract and is payable within two working days with settlement due on the day the contract expires. 

LIMIT ORDER 

A Limit Order is an order to secure currency at a specific price that may not be currently available. This type of contract is particularly useful when the markets are moving in a positive direction for you. This is one of the two most common types of orders, the other being a Stop Loss Order. 

STOP LOSS ORDER 

A Stop Loss Order is used when the market is moving in a negative direction for your currency. An order is placed on file with your broker to help ease the stress of adverse market movements. A stop loss order instructs your broker to buy when the currency hits a certain point. The purpose of the stop loss is obvious – you want to prevent any further movement before the currency falls any further. 

Make a free enquiry with me now 

If you need the best exchange rates, or would like to discuss my service in more detail, click here to send me a free enquiry today. I can provide a free consultation on the options available to you, to help you decide when to fix your rate and on what type of contract. 


There is no cost or obligation involved, and you may be surprised how much you can save in using me to secure currency at the best exchange rates. 

I look forward to hearing from you.

Alastair Archbold.

Decent UK data keep Sterling supported

Friday 10th May 2013
Good morning. Sterling remains supported at relatively high levels against the Euro, close to the best in around 3 months. Against the Dollar however, the Pound has fallen due to a strengthening of the US currency.

All in all, the UK economy has posted some decent figures this week, which has helped the Pound remain buoyant against other currencies, and has also influenced the decision this week by the Bank of England to keep interest rate and QE on hold. So what do I have in store for you today?

• UK industrial and manufacturing figures better than expected
• Bank of England leaves interest rates and QE on hold
• US Dollar gains strength, pushing GBP/USD rates lower.
• How Stop Loss orders can help you achieve the best exchange rates

UK economic figures better than expected, boosting Sterling

We had several UK released this week that impressed the markets, and this has helped the Pound stay relatively strong against the Euro and other currencies. We had UK industrial and manufacturing production numbers released mid-week, and these were stronger than forecast in March, as they were boosted by manufacturing and a recovery in oil and gas output. Manufacturing output, a sub-sector of industrial production, rose 1.1%, boosted by electronics, metals and machinery.

These numbers were higher than the markets were expecting, and as a result the Pound has remained supported against the Euro and other currencies. This follows a decent run for UK data in the last few weeks, and this recent improved news on the UK economy has boosted hopes that activity is gaining a firmer footing. This is one of the reasons the Bank of England held off any further stimulus this week, which I’ll look at in a moment.

This morning however we had Trade Balance numbers from the UK that were slightly worse than expected. This has taken the steam out of the Pounds run, and pulled rates slightly lower.

Looking for the best exchange rates? Send me a free enquiry.

Bank of England refrains from changing interest rates or QE levels.

The Bank of England has kept its stimulus programme of quantitative easing (QE) unchanged and also held interest rates at 0.5%. The decision had been widely expected, and certainly I did not expect any change in policy.

I think this will remain the case until the new Bank governor, Mark Carney, takes over the helm in July. This was the existing governor’s penultimate meeting, with his last one in June. It will be interesting to what kind of approach Carney takes when he takes over, and if he follows the same route of trying to weaken the Pound as King had done. Time will tell.

In the last few months, 3 of the members had voted for an increase in QE. The better numbers coming from the UK however, including the 0.3% growth in the first 3 months, seems to have had an impact on the chance of further stimulus.

In 2 weeks’ time, we’ll be privy to how the 9 members voted, and this will give a clearer indication of where the Pound may move in the future. If for example only 1 of the members voted for QE, I would expect the Pound to make gains.

US Dollar gains strength, pushing GBP/USD rates lower.

Despite better UK numbers, the Pound/Dollar rate has actually fallen in the last couple of days. Part of this was due to comments yesterday evening by one of the FED members, in which they hinted they may look to reduce the Fed's on-going monetary stimulus.

Currently they buy $85bn of bonds every month in open ended Quantitative Easing. The news strengthened the US Dollar, and the GBP/USD rate has fallen a point overnight to 1.5390.

Buying or selling US Dollars? Click here to compare my rates.

How ‘Stop Loss’ Orders can help you get the best exchange rates

Most of you reading this blog are doing so because you want to achieve the best possible exchange rates, and convert your funds at the best time. Of course it’s impossible to predict where rates will go, however there are tools that you can use to help you make the most of your currency. One of these is the ‘Stop Loss’ order.

These work by placing a lower limit in the market, a ‘worst case scenario’ and should the rate drop below this, we purchase your currency automatically.

For example let’s say you need to buy Euros, and the current GBP/EUR trading rate is 1.18. You will be hoping the rate goes higher, but of course you don’t want to lose out should the market drop. So in this example, you could place a Stop Loss order to buy your currency should the rate drop below 1.17. If the market goes up, you can take advantage of any gains. If however the rate starts to drop, you know the lowest rate that you will achieve; 1.17.

Stop Losses are very useful tools when the market is rising, as you can raise your Stop Level at any time as the market rises. They are very popular for those buying property or need Euros, as it allows effective budgeting.

• Want to know more about Stop Loss Orders?
• Need the very best Exchange Rates to buy or sell currency?
• Would you like to discuss what’s happening in the market to help you time your purchase?
• Sick of getting poor rates and service from your bank?

If you have answered yes to any of the above questions, then you would benefit from a free consultation with me about you requirements. I can discuss what you need to do, and explain the options you can consider within your time frame. The rates of exchange I source for my clients are commercial levels that are up to 5% better than available at banks or other financial institutions.

Click here to send me a free enquiry today.

Have a great weekend.