Pound/Euro exchange rates drop back below €1.30

Wednesday 21st January 2015
Today we have seen economic data that has pushed the GBP/EUR rate back below the key €1.30 level. Let’s take a look at why the Pound has fallen against the Euro, and which way the currency pair may move in the coming weeks. 

UK Unemployment and Interest Rates 

At 09:30am this morning the latest UK Unemployment figures were released, showing a drop to just less than 2 million, which is the lowest level for more than six years. However there are signals that growth in employment may be easing, as this drop is the smallest since the three months to September 2013. 

Also this morning we saw the Bank of England keep interest rates on hold, as expected, but what was surprising is that all 9 members voted to keep the status quo. Martin Weale and Ian McCafferty, who since August had called for a hike in rates, seem to have changed their mind. As all 9 members voted, it now looks like interest rates won’t be going up in the UK until mid-2016, and as a result the Pound has weakened off. 

ECB to conduct QE 

2 European Central Bank (ECB) officials today said that they will indeed pursue a Quantitative Easing programme, to the tune of €50bn per month for the next 2 years. The actual announcement is tomorrow and is widely expected to happen, but today’s comments have caused the Euro to strengthen, and coupled with the UK news I mentioned earlier, pushed GBP/EUR rates below €1.30: 

So why has the Euro strengthened if QE is going to happen? 

The market had already priced in the expectation of QE. The actual announcement however goes further than analysts had been expecting, as most thought that a 1 year programme would be announced. As today’s comments hint at a much longer QE programme, it seems that the market has taken this as a positive sign as the Euro has gained strength across the board this afternoon. It could also be the case that the expectation had been overly priced into the market and now the reality is here, there has been a correction and the 7 year GBP/EUR high seems to have been short lived. 

What next for Pound/Euro? 

We could see further movements tomorrow when the markets react to the actual announcement, however while in general I expect the Pound to keep outperforming the weakening Euro, I can’t see any further significant gains given most of Sterling’s recent strength was on the expectation of interest rates going up , which is now unlikely to happen soon. 

 So with the GBP/EUR rate at the key €1.30 level, it’s a good time for those that need to buy or sell Euros to take stock of their requirement and decide when to fix a rate. Click here to send me a free no obligation enquiry today, and I can get in touch to provide you a quote on the rates I can provide, and discuss the options you have to protect against the rate moving against you. 

Click here to send a free no obligation enquiry today.

ECB key to GBP/EUR forecast for 2015

Tuesday 20th January 2015 
Pound/Euro rates have risen by a cent today, and at the time of writing GBP/EUR remains stable around the €1.31 level, which is the highest rate to buy Euros since March 2008: 

Will Pound/Euro rates climb or fall? 

We’ve seen a significant rise in rates in the last few weeks, pushing GBP/EUR in particular to the highest we’ve seen in 7 years. Being able to trade at levels above €1.30 is excellent news. The main question now is whether rates will drop back below this level, or perhaps even go higher still. 

The next few days will be key to this. Tomorrow we have a Bank of England decision on interest rates, and the latest Unemployment figures. I think both of these will be a non-event and won’t have much of an impact. 

Of much more significance will be Thursday’s announcement by the European Central Bank (ECB), when they’ll decide whether they will start a Quantitative Easing programme where funds will be created to spur an economic recovery. 

If they do, it will likely weaken the euro. As this has been progressively priced into the market, we’ve seen the euro lose value over recent weeks which is the main reason rates are currently so high. Because it is widely expected, for the most part it is already priced into the rate. If QE is announced however it may not actually cause further gains. 

However if there’s no announcement, expect GBP/EUR to fall away as the expectation has already been partially priced into rates. Furthermore, in a week’s time, the Greek election will cause uncertainty for the Eurozone, so there is much on the horizon that could significantly harm the euro. 

If you’re buying or selling Euros, what should you do? 

In the first instance you should discuss your currency requirement with me, to talk about your specific needs and discuss what is moving the market. I can also explain the various options you have at your disposal. 

For example, euro sellers should consider buying forwards to protect against the rate getting worse. Euro buyers should consider a stop loss order, to protect against the market dropping should QE not be announced. It would be a shame to miss out on a 7 year high by holding out for a small gain. 

Whatever your currency requirement, if you’re keen on achieve the best possible rates, contact me today by clicking here to make a free enquiry.

30% Swing on exchange rates this morning! EURCHF GBPEUR

Thursday 15th January 2015 
We have seen an incredibly volatile market this morning, caused by a surprise statement by the Swiss National Bank. More on that in a moment, but to outline how choppy things have been this morning, in just 20 minutes we have seen Sterling/Euro rates go from €1.29, all the way to €1.31 before dropping back and settling below the key €1.30 level. A 2 cent move in such a short time is very unusual:

What’s even more unusual, is the Euro to Swiss Franc (EUR/CHF) rate that has crashed from 1.20, falling all the way to 0.75 before settling at around 1.04 at the time of writing. That’s a fluctuation of 35% in 20 minutes! This is probably the biggest move on any major currency pair I've ever seen. So what's been going on?

Why are the currency markets so volatile today? 

Switzerland, that’s why. The Swiss National Bank (SNB) this morning surprises as all by ending their peg to the Euro, which has been set at 1.20 for 3 years. They also slashed their interest rates. The SNB were worried about their currency becoming too strong, and so in order to keep this peg to the Euro, the SNB sold CHF and bought EUR as necessary to keep the rate at this level. The ending of the peg also ends this constant Euro buying, and the market has corrected itself accordingly.

This caused the Euro to weaken significantly, which is why we saw the GBP/EUR rate shoot to 1.31 and the EUR/CHF rate plummet by over 30%. This all happened between 9.30am and 10am this morning. 

Things have now stabilised slightly and GBP/EUR is settled at just below €1.30, and EUR/CHF around 1.04. This really demonstrates how things can change significantly in a very small amount of time. Those clients that had accounts with us and Limit Orders in place have managed to take advantage of a very short-lived spike in the market. 

Do you need to get the best exchange rates? 

Get in touch with me today by making a free enquiry here. I can provide a free consultation on what’s happening with exchange rates, and provide you a quote on the currency you need. I can achieve rates very close indeed to the published mid-market rates, and these can be up to 5% better than banks. 

This morning we have placed trades at €1.30 and above, whereas your bank would have likely offered rates around 1.25. This can save you a huge amount when converting large sums. 

Click here to find out how much you could save.

Sterling rises by over a cent after inflation figures released

Tuesday 13th January 2015 
The Pound has risen well against both the Euro and US Dollar today, pushing GBP/EUR up 1 cent to close to €1.29, and GBP/USD also rose a cent to $1.5165. The rise in exchange rates comes after figures this morning showed that inflation in the UK has fallen to 0.5%, the lowest level on record. 

Why has the Pound risen on the low inflation figures?

The low inflation means that interest rates are very likely to stay on hold for some time to come. Usually this would weaken a currency, so why have the low inflation numbers caused the Pound to rise? 

It’s because the fall is seen as generally good news for the UK economy. Recent figures already indicated that interest rates are likely to stay on hold this year, so today’s figures haven’t changed that view, and that’s why the Pound didn’t fall. What the figures do mean is that spending power in the UK has increased, and this in turn should spur the economy as a whole as people have more disposable income, so things like Retail Sales should go up as people feel more confident in the UK’s economic recovery. 

It should be noted however that the GBP/EUR rate in particular keeps getting to these levels, before dropping back off again. This trend has repeated itself many times over the last 12 months. Those with Euros to buy should therefore consider taking advantage of the current levels, which are after all around the best they have been in over 6 years. 

Those converting Euros to Pounds however should be cautious, as any further indication of monetary stimulus in the Eurozone could well weaken the Euros buying power. 

Getting the best possible exchange rates.

If you have a currency transaction to perform over the next 6 months, get in touch with my by completing the enquiry form here. I can provide you a very competitive quote, discuss the current state of exchange rates, and run over the various options you can consider to ensure you make the most of your currency. 

Click here to send me a free no obligation enquiry today.

How could General Election affect exchange rates?

Friday 9th January 2015 
Where do things stand with exchange rates? Pound/Euro is hovering around its comfortable level of €1.28 and Pound/Dollar has stopped falling, for now, and sits around $1.5150. Against other major currencies Sterling is actually quite weak have fallen against most currencies. It’s only weakness in the Euro that’s keeping GBP/EUR supported at the current near 6 year high. 

The Pound could struggle this year for several reasons which I’ll look at today. Remember that if you want to achieve the best exchange rates, click here to send me a free enquiry, get a quote, and find out more about the commercial exchange rates I can offer.

• How General Election could affect Sterling exchange rates 
• When will interest rate go up, and will the change Pound/Euro 
• QE in Europe and will this make GBP/EUR rates go up 
• Pound/Dollar will it drop below $1.50 

Election uncertainty could weaken the Pound 

Political uncertainty is one key thing that can weaken a currency, and this year’s election is one of the most uncertain in a generation. Whatever happens it’s going to be very rare indeed. There has only been 2 occasions in the ‘50s when a government in power for more than a few years has increased its share of the vote, and Cameron needs exactly this to win. For Miliband to come back after Labours defeat last time and win a majority has only happened 3 times in the last 100 years, so that’s also unlikely. The 3rd option is a coalition; the last time that happened on two consecutive occasions was over 100 years ago. So any of the possible outcomes will be almost unprecedented. 

This means Sterling could come under pressure this year and fail to move higher, and could keep exchange rates in check. 

Interest Rates may not rise this year 

The Bank of England again kept interest rates at 0.5% yesterday, and a rise in interest rates in 2015 is looking less and less likely, after inflation levels have fallen recently. Last year there was much speculation rates would be going up, but it now seems the UK’s recovery has proved less robust than hoped, so hopes of a rate rise seem to have evapourated. HSBC for example have now pushed back its forecast for the next rate hike to 2016 due to political uncertainty, weaker inflation and an economic slowdown. 

So this along with the election is also likely to keep the Pound from rising. 

ECB closer to doing Quantitative Easing 

One thing that could move GBP/EUR higher however is the EU that could be soon embarking on a QE programme. They have miserable growth and little improvement is on the horizon and doing nothing is not an option. The ECB president is dropping stronger and stronger hints that they will embark on a stimulus programme. Nobody knows if it will work, but three countries that have embarked on it in the past (UK, USA & Japan) all saw their currency weaken. This is partly priced into the value of the Euro and is the one thing that is stopping Pound/Euro dropping away. 

If you need to buy or sell Euros at the best rates, would like a quote, or want to find out more about which way the exchange rate may move, click here to send me a free enquiry today. 

Pound/Dollar rate stops falling, for now 

The sharp decline in GBP/USD has also been halted. The rate dropped into the $1.50’s but has now recovered back to $1.5150. however due to the reasons above, and the fact the United States are likely to push up their interest rates soon, it could drop below the $1.50 mark later this year. 

Do you want the best exchange rates for conversion between any major international currency?

click here for a free consultation on how we can help you. 

Pound continues to fall against Euro and US Dollar

Tuesday 6th January 2015 
Sterling initially had a good start to 2015 against the Euro, hitting highs of over €1.29 on Friday. As has been the case of late however, when it tested these highs it quickly dropped back away again. Against the US Dollar, the Pound has fallen to its lowest in well over a year. Let’s take a more detailed look at what’s been happening. 

Sterling/Euro 

The Euro is fundamentally weak at the moment, and this is reflected in its value. Over the New Year, comments from the European Central Bank president Mario Draghi indicate they are getting closer to a Quantitative Easing stimulus programme. This weakened the single currency and made it cheaper to buy. There are also the Greek elections later this month, with a strong chance the anti EU party could win. This also raises questions about a possible Greek exit from the Eurozone, and this is also keeping the Euro on the back foot, pushing GBP/EUR rates to above €1.29 last week: 

  
The gains were short lived as is often the case. With the New Year, came concerns over the Pound, and Sterling has weakened in the first few days trading. Much of this is probably due to the political uncertainty the upcoming election will generate, with the result quite open at the moment. This coupled with the fact that UK interest rates aren’t likely to rise for at least 6 months mean the Pound could be facing further pressure in the coming weeks. 


Longer term, I expect Pound/Euro to break the €1.30 barrier, probably in the latter part of this year. In the shorter to medium term however, those that need to buy or sell Euros should weigh up their options now, as a small movement in the wrong direction could cost you a significant sum. If you need to buy or sell Euros in the next 3 to 6 months, contact me today to find out what could happen, what your options are, and obtain a quote on the rates that I can offer you. 

Sterling/Dollar 

The downward trend for cable continues. The rate fell to $1.53 yesterday, and today has fallen below the $1.52 mark which is the lowest it’s been since August 2013. The main reason for this is Dollar strength, caused by uncertainty in the global oil markets, unrest in Ukraine and the Middle East, and a robust US economy that is going from strength to strength. The drop could continue, but I think the rate will struggle to drop below the $1.50 mark as this is a key technical level. 

If you need to buy or sell Dollars, would like a quote or would simply like to chat about which way the exchange rate is moving, click here for a free consultation. 

Click here if you are looking to achieve the most competitive exchange rates possible.

Pound/Euro remains near 6 year high

Monday 29th December 2014
Good morning and welcome back to the currency markets after the Christmas break. Given the market holidays there has not been much movement in exchange rates, so today’s report is a reminder how you can take advantage of the commercial exchange rates that we can offer. 

Pound/Euro rate near a 6 year high 

2014 has been a good year for the Pound/Euro exchange rate, and we are currently enjoying exchange rates within a few percent of the best they have been in 6 years. In real terms this means a €250,000.00 property overseas now costs a staggering £20,000.00 less than last summer, purely due to exchange rate movements. The Strong Pound is really driving the overseas property market and there has rarely been a better time in recent years to purchase a property abroad. 

Despite the good Pound/Euro exchange rate however, it has failed to go any higher in recent months. In light of this, it’s an opportune moment to look at the tools and contract types a specialist currency broker can provide, to help save you money when buying overseas. 

If you need the best exchange rates, click here to get a quote a find out more about the services we can offer. 

The tools available to help you take advantage of the best exchange rates 

Using a currency broker as opposed to your bank can save you thousands of Pounds simply by achieving better exchange rates. This is only part of the story however, as a specialist broker has various tools available that can help you take advantage of the current rates even if you don’t need your currency for some time. There are also ways to protect you against adverse exchange rate movements. 

Spot Contract - The Spot Contract is the most basic and commonly used 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 a Spot contract lets you buy or sell currency as you need it, exchange rate movements are highly unpredictable, even during a single trading day. Upon receipt of cleared funds currency is available for onward transmission. This type of contract is typically used for paying an initial deposit for a property, or to top up your account overseas to pay bills. 

Forward Contract - A Forward Contract lets you buy or sell one currency against another, for settlement up to 2 years into the future. 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. Most importantly it protects you from unfavourable movements in the market, however, be aware that it will not allow for gains to be made should the exchange rate move in your favour during the period between entering the contract and final settlement for the currency. 

This type of contract is very popular when buying overseas, as usually there is a time period of a few months between paying your deposit and completing your final balance. It allows you to budget as you will know the total GBP cost of your purchase, and protects you against rates falling. For example, you could fix an exchange rate today for £200,000.00 to Euros, and only lodge 10% of the total funds to be converted (£20,000.00) while the majority of your funds remain earning you interest. 

You wouldn’t buy a property in the UK without knowing the final price, and the same should hold true when buying overseas. 

Stop Loss Order - A Stop Loss order protects you against adverse exchange rate movements and secures your currency if it falls below a pre-agreed level. This gives you a safety net and ‘worst case scenario’ and doesn’t leave you exposed to a falling market. This is useful when the exchange rate is rising. For example, the current trading level is 1.25. You place a ‘Stop Loss’ to convert your funds should the rate drop below 1.22. In this way you to take advantage of any gains, without leaving yourself open to unnecessary loss should the market move against you, and you know the absolute minimum you will have to spend. 

Limit Order - A Limit order, which is placed at the top end of the market 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 type of contract can be using if you are targeting a specific rate, and can be used in conjunction with a Stop Loss order. 

This week’s Market Data 

Monday 29th December – The only data today is Retail Sales from Germany, which are a good overall barometer of the economic health of the EU’s largest economy, so could affect GBP/EUR rates. 

Tuesday 30th December - Very queit, with the only release US Consumer Confidence. 

Wednesday 31st December – Again all US based today, with Jobless Claims, Home Sales, and Inflation numbers. 

Thursday 1st January 2015 – Markets Closed. 

Friday 2nd January 2015 – The first round of economic figures for 2015 include UK Mortgage Approvals and Manufacturing PMI. The EU & US also releases Manufacturing PMI, and we also see construction data from the States.