Pound falls as interest rates set to remain low for rest of the year

Wednesday 13th August 2014 
As you can see from today's Pound/Euro graph below, Sterling has plummeted today by around 1% against other currencies on comments made by the Bank of England governor Mark Carney, effectively signalling that interest rates are to remain low for the rest of this year. In my post yesterday I warned that if he was dovish about the UK economy then exchange rates could fall, and this is exactly what we have seen happen today. Let’s take a closer look at what he said and why the Pound has fallen against the Euro. 

What did Mark Carney say in his speech? 

 
The Bank of England has halved its forecast for average wage growth, and the Bank's latest quarterly economic forecast also indicated that it believed the level of spare capacity in the UK economy has narrowed to around 1% of GDP. 

Mr Carney said there were still "a lot of uncertainties to contend with" given record participation in the jobs market, "remarkably weak" wage rises and a rising number of threats to the global economy.   

He said that whenever interest rates did increase, they would still do so gradually. Chris Williamson, chief economist at economic data firm Markit said it is was likely that "calls to raise interest rates would start to gather strength in coming months," but that an interest rate rise still looked some way off.

Read a full outline of his comments here.

What does this mean? 

Effectively he is saying that as wages aren’t growing fast enough, there isn’t enough spare capacity in the economy to allow a raising of interest rates. This means that it is likely interest rates won’t be going up anytime soon, and when they do they will only rise very gradually.

Why has this caused the Pound to fall? 

Sterling has been strong recently on speculation interest rates will be going up, as this drives investment into the currency due to the potential higher return on offer. Today’s comments indicate that rates will remain at their record low of 0.5% for some time to come. This means that investors have sold the Pound for currencies that offer a higher return, and the sell-off has caused the Pound to weaken and exchange rates to move down. 

What does this mean for your currency requirement? 

The currency markets are very volatile, and when converting large sums even a small movement in the rate can end up costing you thousands. The service I provide is twofold. Firstly you can have a free no obligation chat with me about the exchange rate, and I can explain what is moving the rate and discuss which way it could move in the future. In this way you can make an informed choice on when to fix your exchange rate. 

When the time comes to fix a rate, I can provide commercial exchange rates that are significantly better than banks offer, by as much as 5%. This means that I can save you thousands of Pounds when converting one currency to another. 

If you need to convert funds and would like to discuss what is happening with rates, and obtain a quote to compare with your bank to see how much you can save, click below to send me a free no obligation enquiry today. It is free to make an enquiry and does not obligate you in any way. 

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Pound/Euro recovers, but tomorrow is key for what happens next

Tuesday 12th August 2014 
Sterling has steadily recovered its recent losses today, clawing its way back to around €1.26 vs the Euro. This was in part due to an EU economic sentiment survey that was released this morning that showed there isn’t much optimism about the financial health of the EU economy. This caused the Euro to weaken off slightly and become cheaper to buy. 

That wasn’t the only reason though, as the Pound rose against most other currencies today including the US Dollar. I think this is purely Sterling recovering from the drops we saw at the end of last week due to geopolitical tensions in Ukraine and the Middle-East. The Chart below shows how the Pound/Euro rate has moved throughout today.

Bank of England and Unemployment figures on Wednesday - a very important day for exchange rates

Tomorrow at 09:30am we have some very important UK economic releases. The latest UK Unemployment figures are released, and as they are a good overall barometer of the health of the economy, they could affect Sterling exchange rates. I expect the figure to come in around 0.7%. Any lower than this would likely cause exchange rates to go up, and vice versa. 

Of more importance will be the BoE Inflation report and following speech by the BoE governor Mark Carney. Regular readers of my blog will now that it is the rumour of interest rates going up in the UK that has been strengthening the Pound to 2 year highs against the Euro, however it’s still not clear if rates will go up later this year, or early next. (The rumour of higher interest rates tends to strengthen a currency due to the higher return on offer, making investors buy the Pound). 

We will be closely watching what Carney says tomorrow. Any hints of rates going up would cause the Pound to rise, however if he is quite negative about the economy saying that there are lots of factors to consider such as wage growth and house prices, then the market could take this as a sign rates won’t go up until 2015. If that’s the case, expect the exchange rate to drop. 

Fix an exchange rate now or wait to see if rates will improve? 

This is a question I’m asked many times each day, and the simple answer is nobody knows which direction exchange rates will take. Personally I think that we won't see much more than €1.26/€1.27 in the near term, and there are lots of risks to the downside that could move things down, such as the Scottish Independence vote which I talked about recently. What we can do however is look at recent trends, the things that are moving rates, and make an informed decision on when to fix your rate. 

Do you need to buy Euros perhaps for property overseas? Are you bringing your funds back to the UK after selling? Maybe you are a business that deals internationally and currently use your bank? 

Whatever your currency needs are, get in touch for a free quote on the rates I offer. I have over 9 years’ experience as a currency broker and can help you achieve exchange rates far better than banks and other financial institutions may offer. It costs nothing to make an enquiry and you could find the savings run into thousands of pounds. 

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A busy week for exchange rates - what could happen to the Pound?

Monday 11th August 2014 
Good afternoon. Exchange rates have recovered slightly today after the drops we saw at the end of last week, caused by global uncertainty over the conflicts in Ukraine and the middle-east, as explained in my most recent post. Today has been quite quiet as there is little economic data for the markets to digest. 

This week however will be anything but quiet, I think today could be the calm before the storm as we have some significant data releases this week that could affect which way exchange rates move in the coming weeks. 

For the UK, we have unemployment figures, a Bank of England (BoE) report, the latest Gross Domestic Product (GDP) figures, and a speech by the BoE Governor Mark Carney. In recent speeches he has given mixed signals on when interest rates may start rising, even being accused of behaving like an unreliable boyfriend, and that had caused the Pound/Euro rate to go up or down. So his comments could well cause further volatility in exchange rates. 

So, lot's that I think could affect the market this week and a full breakdown of this week’s data is listed below. 

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This week’s economic data releases 

Tuesday 12th August - There is no UK data of note, however GBP/EUR rates could still be affected as we have EU and German Economic Sentiment figures released at 10am. We also have House price data from Australia that could move GBP/AUD, and the monthly US budget statement could give indication on future US economic policy, so watch for GBP/USD today. 

Wednesday 13th August – In my view today is the most important one for Sterling exchange rates. We have the latest UK Unemployment numbers, along with a Bank of England inflation report, followed by a Speech by BoE Governor Mark Carney. As I stated above, his comments could cause changes to the value of the Pound. Elsewhere, US Retail Sales are released later this afternoon from the United States. 

Thursday 14th August – Today is busy for EU data – Inflation numbers, Gross Domestic Product, and a monthly report from the European Central Bank, all of which will give indications how the EU economy is performing and so GBP/EUR rates could be affected. From the USA today we have the latest Jobless Claims numbers 

Friday 15th August – Another important day for the Pound as we have the latest Gross Domestic Product figures. I expect the monthly figure to be 0.8% and the annual figure 3.1% - any lower than this expect exchange rates to drop and vice-versa. Elsewhere the USA has inflation figures released later in the afternoon. 

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Pound falls further as US Airstrikes begin in Iraq

Friday 8th August 2014 
The Pound has continued to fall today, partly due to further disappointing economic UK data, and also market uncertainty due to the airstrikes this afternoon in Iraq.

UK Data causes Pound to drop further 

UK Trade Balance figures were released at 09:30am this morning, and they were worse than expected causing the Pound to fall. I had warned recently that exports may be affected by the recent strength of the Pound, and it seems this is what has happened. Earlier this week I warned there could well be a further drop in the Pound. 

Yesterday the Bank of England and European Central Bank both kept policy as expected and there wasn’t much of an effect on exchange rates. 

In a few weeks we will see if any members of the BoE voted for a rate hike. If they did, the Pound may recover slightly. 

US Airstrikes cause jitters in the markets 

Yesterday president Obama authorised air strikes in Iraq, and it hasn’t taken long for them to start. In the last few hours American aircraft have started pounding targets in northern Iraq. 

This combined with unrest across the Middle East in Iraq, Gaza, Syria and Libya has given investors lots of uncertainty. Global stock markets have fallen, the price of oil and gold has risen, and safe haven currencies have gained while riskier currencies are losing value. 

So the US Dollar has gained strength, the Pound has weakened, and as a result exchange rates have fallen a further basis point in a day. 

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Pound/Euro & Pound Dollar forecast 2014

Wednesday 6th August 2014 
Good afternoon. The currency markets remain quite volatile, with Pound/Euro rates recovering slightly this week back to the €1.26 mark; however Pound/Dollar rates have fallen to around $1.68, quite a bit below the 5 year high we recently saw. Today I’ll cover what has been happening to exchange rates, including forecasts on where the GBP/EUR and GBP/USD rate may move in the coming weeks. 

Pound/Euro 

As you can see from the chart below, the Pound/Euro rate recently hit a 2 year high of €1.27. Many thought the rate would continue to climb towards 1.30 however I warned that I thought the market had peaked, and the Pound/Euro rate was as high as it may go in the short term. 

Indeed over the course of the last month the rate has failed to improve, and has dipped several times due to poor UK economic data. There have been warnings from the IMF that the Pound is far overvalued, and UK economic figures are starting to disappoint. For much of 2014 the UK has been enjoying a robust economic recovery, and this had been driving the Pound upwards. 

It now seems the good news is all priced into the value of the Pound, and that’s why the rate has leveled off. This morning we had some poor UK Manufacturing and Industrial production figures that knocked the Pound lower, however it soon recovered as we saw poor German factory orders that weakened the Euro and reversed the drop. 

The next mover for exchange rates will likely be tomorrow’s Bank of England and European Central bank statements. Clues could be given to monetary policy, and any surprises could easily cause exchange rates to move significantly. 

Which way could Pound/Euro move in the coming months? 

It’s impossible to predict the market, but my view is that the Pound is unlikely to break higher in the short term. The fact that interest rates will only rise slowly in the UK is likely to keep the Pound in check, so if you need to buy Euros this year, you should consider fixing the rate while it’s so good. You can fix the rate for up to 2 years into the future by lodging 10% of the total you want to convert. Click here to find out more about these types of contracts. 

Those with Euros to move back to Pounds should also be cautious. While rates have stopped moving against you, you don’t want to leave yourself exposed. A Stop Loss order protects you against the exchange rate getting worse, while still allowing you to take advantage of any gains in your favour. 

If you are looking for the best rates between Pounds and Euros, click here for a free no obligation enquiry on how we can help you and the rates we can offer. 

Pound/Dollar forecast 2014

Recently Sterling/Dollar was comfortably above the $1.70 mark, however has been falling in recent weeks. I expect this to continue due to the fact the US economy is starting to recover, and this is strengthening the Dollar making it more expensive to purchase. 

The political uncertainty in Ukraine and the Middle East is also causing the ‘safe haven’ US Dollar to gain strength. I wouldn’t be surprised to see rates back towards the $1.60 mark by year end. 

Need to buy or sell US Dollars at the best rate? Click here for a free quote. 

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Buying or selling property abroad? 

Converting Euros back to Pounds? 

Buying goods from overseas? 

Topping up your Euro account in France? 

Import materials from China for your business? 

Want the very best rates of exchange?

- See more at: http://www.foreignexchangerateforecasts.blogspot.co.uk/2014/07/pound-falls-further-against-other.html#sthash.iBgo6lMi.dpuf

Get in touch for a free quote on our exchange rates 

• Buying or selling property abroad? 
• Converting Euros back to Pounds? 
• Buying goods from overseas? 
• Topping up your Euro account in France? 
• Import materials from China for your business? 
• Want the very best rates of exchange?

Whatever your currency needs, large or small, my service can help you achieve the best exchange rates and utilise contracts that can protect your bottom line. 

Click here to make a free enquiry today and find out how I can help. - See more at: http://www.foreignexchangerateforecasts.blogspot.co.uk/2014/07/pound-falls-further-against-other.html#sthash.iBgo6lMi.dpuf

Get in touch for a free quote on our exchange rates 

• Buying or selling property abroad? 
• Converting Euros back to Pounds? 
• Buying goods from overseas? 
• Topping up your Euro account in France? 
• Import materials from China for your business? 
• Want the very best rates of exchange?

Whatever your currency needs, large or small, my service can help you achieve the best exchange rates and utilise contracts that can protect your bottom line. 

Click here to make a free enquiry today and find out how I can help. - See more at: http://www.foreignexchangerateforecasts.blogspot.co.uk/2014/07/pound-falls-further-against-other.html#sthash.iBgo6lMi.dpuf

Pound falls further against other currencies

Thursday 31st July 2014 
As I said may happen in my recent post, the Pound has fallen further against the Euro and Dollar this week. Let’s take a look at what has been happening… 

Pound/Euro drops into the €1.25’s 

Looking back, the GBP/EUR rate has risen by more than 10% in the last year, however it now looks like the Pound’s year-long rise may have come as far as it can, at least in the short term. On the one hand many remain positive on Britain’s economic prospects however the feeling is growing that Sterling is “overvalued” and this may hamper efforts to re-balance the British economy. 

The IMF agree - this, the International Monetary Fund has warned the Chancellor that the pound is 5% to 10% overvalued. Wages are growing very slowly and although output is beginning to pick up, the recovery is still at an early stage and there is still a lot of slack in the economy. Another risk for the Pound is Scotland’s September vote on independence might pose to sterling. Morgan Stanley analysts said that a “yes” vote could cause sterling to slip by up to 10% on a trade-weighted basis, retracing its gains over the past year. 



This week, poor UK consumer confidence and better economic figures from the Eurozone have pushed Pound/Euro lower. 

It’s impossible to know which way exchange rates will move of course, but if you need to buy or sell Euros, click here to have a free consultation on how I can help you get the best exchange rates, and protect you against the market moving the wrong way. 

Pound/Dollar drops into the $1.68’s 

We recently saw this currency pair hit a 5 year high well above $1.70. I’ve been expecting it to come down for some time once the US economy starts looking better. This has now happened with this week’s US GDP numbers coming in better than expected, showing their economy is starting to recover. As it does, they will wind up their Quantitative Easing programme, raise interest rates, and this may pull rates lower towards the $1.60’s. 



The turmoil in Ukraine isn’t helping GBP/USD rates either. As global economic uncertainty gathers in the markets, international investors move funds to the safety of the US Dollar, and this also pulls rates lower. 

Get in touch for a free quote on our exchange rates 

• Buying or selling property abroad? 
• Converting Euros back to Pounds? 
• Buying goods from overseas? 
• Topping up your Euro account in France? 
• Import materials from China for your business? 
• Want the very best rates of exchange?

Whatever your currency needs, large or small, my service can help you achieve the best exchange rates and utilise contracts that can protect your bottom line. 

Click here to make a free enquiry today and find out how I can help.

Currency Exchange Rate Forecast 2014

Tuesday 29th July 2014 
Good morning. It’s been a very quiet start to the week for the currency markets, with no data of note being released yesterday. Today is also quiet, so in today’s post I will give a quick round up of where exchange rates stand, and list the rest of the week’s economic data releases that I think could affect exchange rates. 

Pound/Euro 

The GBP/EUR rate cannot seem to sustain its highs. We have seen the rate climb into the €1.26’s before dropping back off. That’s exactly what we’ve seen happen again this morning. So why is the rate to buy Euros peaking and failing to climb higher? 

It’s because all the recent good news regarding the UK economy is no longer surprising the markets, and is now largely priced into the value of the Pound. I think in the short to medium term it’s unlikely we’ll see any more significant gains. In the medium to longer term however, if the EU needs to try and pump money into the economy then the Euro could weaken further and push rates higher. Also the closer we get to interest rates going up then the Pound could start climbing, but that’s probably some way off. 

Those looking to buy Euros should consider fixing the rate while it’s at a 2 year high, given that the rate seems to have peaked. Those that need to convert Euros to Pounds over the next year should consider fixing the rate on a Forward contract. While I don’t expect the rate to go higher in the short term, I do expect it up around €1.30 into next year. 

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Pound/Dollar 

With this exchange rate, we keep seeing it break above $1.70 before dropping back off again. This morning rates have dipped back into the $1.70’s.The reasons for this are the same as outlined in the Euro section above – the impressive UK economic figures are now largely priced into the Pound. 

Unlike Pound/Euro however, I expect Pound/Dollar rates to drop back away. There are 2 reasons I think this. Firstly, the US economy is starting to recover, and as this continues the Dollar will gain strength and become more expensive to buy. Secondly, as the Euro gets weaker, generally the Dollar gets stronger, so I expect this currency cross to drop off in the coming months.

Get a Pound/Dollar quote

 

Do you want the best exchange rates? 

Are you buying selling property abroad and need to convert funds? Do you have accounts overseas you need to keep topped up? Perhaps you are a business that buys and sells goods in the Eurozone and need to convert between Pounds and Euros? 

Whatever your currency needs, I can help you source excellent exchange rates, fast international transfers, and various contract types to protect against markets moving against you. 

Send me a free enquiry today to get a quote and see how we can help you. 

This week’s economic data that could affect exchange rates 

Tuesday 29th July 2014 - The only data of note today was released earlier this morning, with UK mortgage approvals coming in slightly better than expected but lending figures slightly below the forecast. They effectively cancelled each other out so no change for the Pound. Later this afternoon we have US Consumer confidence numbers, which could affect Pound/Dollar rates. 

Wednesday 30th July 2014 - There is nothing of note from the UK today other than consumer confidence figures at midnight. We do however have lots from the EU and US so it could be a volatile day on the currency markets. 

Starting in Europe, we have Industrial Confidence, Economic Sentiment measures, in addition to inflation numbers from Germany. So lots here that could give an indication how the EU economy is faring, and this could affect Pound/Euro rates. 

It’s a very busy day in the states. We have Gross Domestic Product (GDP) figures which often affect exchange rates. There is also an interest rate decision, and although I expect rates to stay on hold, any comments or hints at future policy could affect GBP/USD. 

Thursday 31st July 2014 - Pound/Euro could be affected today by German Retail Sales and Unemployment numbers, and EU wide inflation figures. Canada releases its latest GDP figures, and over in the USA we have measures of unemployment. 

Friday 1st August 2014 - Inflation figures from Europe and the UK will be watched closely today by Sterling/Euro buyers. Other than that all data is from the states: Earnings, Unemployment, Inflation, Sentiment, and the all-important Non-Farm Payrolls that often causes large swings in the GBP/USD rate. 

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