Monday 13th July 2015It was quite an eventful weekend for Greece and the Eurozone, with late night negotiations resulting in an announcement this morning that a deal has been made. If that’s the case, then why hasn’t the Euro strengthened? As you can see from the chart below, when markets opened this morning and reacted to the news, rates actually rose from €1.39 to €1.4050. As is often the case in the currency markets, the devil is in the detail, and in a moment I’ll explain why all is not as it seems and look at why Pound/Euro rates are still high. Greece makes deal, but Euro remains weak for nowThe facts are as follows: Athens has been offered a third bailout, and this means the country will avoid bankruptcy. Greece will stay inside the euro and there will not be a 'Grexit'. However, it’s not quite yet a done deal. A proposal is on the table, however Greek Prime Minister Alexis Tsipras now has to rush through key measures on pension reforms, tax increases and a debt repayment, all of which needs to be approved by parliament by Wednesday, and only then will bridging loans be agreed to enable Greece to meet a payment to the European Central Bank in a weeks time. Eurozone finance ministers are due to meet later today to talk about some emergency lending to help Greece over the next few days. Some investors say even if a final deal is agreed, the lasting damage done to the Greek economy could still sour attitudes towards the currency union in the longer term. The tough conditions imposed by international lenders may also cause an outcry in Greece and bring down Tsipras' leftist government. Even before the final terms were known, his labour minister went on state television to denounce the terms. So it's not quite over yet, and while uncertainty remains, the Euro remains weak. Summary So a deal is done. Sort of. But we have to wait until Wednesday to see if it will actually be carried through. The Greek parliament still need to agree to the terms, and the EU still need to discuss emergency funding, and until then capital controls are still in place and the Greek banks are almost out of cash. This is the reason the Euro is still weak and GBP/EUR rates are still holding above €1.40, while the final hurdles are negotiated in Greece and Europe. I will post regular updates on the blog throughout the week with the latest developments and t he effect on Pound/Euro rates. Getting the best exchange rates If you want to get the best possible exchange rates, then contact me for a quote. I provide commercial rates of exchange to private and corporate clients looking to trade £5k+. You can send me a free enquiry using the link below, and I will get in touch personally to discuss your requirements, explain how the service works, and discuss the different options you can consider to help you get the best rate of exchange possible.
Friday 10th July 2015It looks like we’re edging closer to a deal over Greece, and the GBP/EUR has been edging lower ahead of a possible deal this weekend. (Take a look at my live currency charts, a snazzy new feature I've recently added to my blog that regular readers may have noticed!) Let's take stock of where everything stands...Yesterday the Greeks delivered their proposals to European creditors as promised. Today they are rallying support ahead of a vote by the Greek parliament at 10pm tonight. If they vote it through, which looks likely at the moment, then on Saturday EU finance ministers will have to all vote to agree to the proposals. On Monday morning, the parliaments of the EU will vote on whether to agree the deal. If all of this happens, then Greece will be given the €3.3bn they need to pay their outstanding debts. What affect could this have on the Pound/Euro exchange rate? It’s very hard to say and the currency markets are impossible to second guess, but logic would dictate that if all goes to plan, then the crisis is averted and the Euro could gain significant strength, and that would pull exchange rates lower as the single currency becomes more expensive to buy. This could be good news for clients that will need to move Euros to Pounds, however if you need to buy Euros then there is the potential for a sharp drop in rates. We'll see how things pan out when markets open on Monday morning. If you need to buy Euros, how can you protect yourself? If you have an upcoming Euro requirement then it would be wise to put a strategy in place rather than just sitting back and waiting to see what will happen to the GBP/EUR exchange rate. Some examples of the things you could consider are as follows: - Fix the rate now on a Forward Contract – This means locking in the exchange rate now for up to 2 years into the future. You lodge 10% of the total you want to convert, and the remaining 90% is due when you want the Euros to be transferred. This protects you against the rate going down, but leaves you unable to take advantage should the rate go higher. You fix the rate, and that’s what you get regardless of what the market does.
- Use a Stop Loss Order – This works by setting a target level, below which your order to buy Euros is executed. For example if you place a ‘Stop Loss’ at €1.35, then if the market drops to that level, your currency is purchased. It’s useful as it gives you a worst case scenario should the market fall. If however the rate climbs higher and the Stop isn’t filled, you can still take advantage of a higher rate of exchange.
- Hedge your bets – If you are unsure which way the rate will go and want to gamble on Greece failing to secure a deal and the rate going higher, then one strategy you can consider is fixing a rate on a portion of the funds you need to buy, 50% for example. In this way you reduce your exposure significantly, and have some level of protection regardless which way the rate goes. If it does drop, then at least you bought some of your funds beforehand. If the rate climbs, then great you can buy the remaining amount needed at a higher rate.
The above are some examples of the services I can offer, along with excellent rates of exchange. If you would like to receive a quote on the rate that I can offer you, or discuss your currency requirements in more detail,click below to get in touch.Get in touch to get a quote and find out more
Thursday 9th July 2015
Deadline day for Greece By midnight tonight, Greece has to submit its plans and new proposals to its creditors to try and secure a bailout and prevent a possible exit from the Eurozone. What they submit will then be looked at by EU Finance ministers at the weekend, and a decision is likely to be taken on whether to accept them at an EU Summit on Sunday. 
Greece needs to make a deal. At the moment the banks there are still closed, and a €60.00 limit on ATM withdrawals. At this rate, it’s likely the banks will run out of money by Monday, so it really is crunch time for the Greeks. With the referendum out of the way, I think it’s quite likely that Greece will now soften its demands. They really have taken the negotiations as far as then can, and they know it’s in their interests to now make a deal to restructure its debt. EU leaders are almost out of patience, Greece knows this, and so a deal could be struck this weekend. What could this mean for Sterling/Euro exchange rates? 
I am still of the view that a deal will be done and Greece will remain within the Eurozone. If a deal is indeed done to restructure Greece’s debts this weekend, then it will remove much of the uncertainty that has been weakening the Euro of late, and so in this eventuality I would expect Pound/Euro rates to fall. We’ve already seen it drop down to €1.39 as investors await news of a potential bail out deal, and I would expect a further fall should the saga finally be resolved. The other scenario is Greece rejecting whatever solutions the EU Summit present. If this were to happen, then the negotiations could break down entirely. There isn’t actually a mechanism in place for Greece to leave the Euro, so all parties know that the only real solution is a deal. Do you have a currency transaction to perform? For those that need to buy Euros and are worried about rates dropping from the current level, you can reserve the current rate now and only lodge a 10% deposit to guarantee that rate for up to 2 years into the future. In this way you can budget effectively and be protected against the rate falling away from the current level which is near to an 8 year high. Click here to find out more.
If you want to get the best possible exchange rates, then contact me for a quote. I provide commercial rates of exchange to private and corporate clients looking to trade £5k+. You can send me a free enquiry using the link below, and I will get in touch personally to discuss your requirements, explain how the service works, and discuss the different options you can consider to help you get the best rate of exchange possible. Click here to discuss your currency requirements today.
Wednesday 8th July 2015 In today’s report I’ll look at the latest developments in Greece, the effect of today’s Budget statement on Sterling, and also why the Pound/Euro rate has dropped to €1.39. Pound/Euro drops to €1.39
Since the start of the week, we’ve seen GBP/EUR exchange rates drop from €1.42 to €1.39 today. There are several factors affecting the Sterling/Euro cross at the moment, and after a quick look at the chart I’ll address each one in turn. What has caused Pound/Euro rates to fall?
Sterling had been performing very well recently, rising on the back of some better economic numbers in recent months and the returning of a majority Conservative administration in May's general elections. The Pound had strengthened as a result, however now seems to be on the back foot. Here is my take on why Sterling has weakened off today. Greek deal - The Greek situation seems to be coming to a head, with Greece set to submit fresh proposals on Thursday, EU ministers meeting on Saturday to discuss, and a decision on Sunday before a looming deadline for Greece to make a €3bn payment to the IMF. This could well be the last chance for Greece, and many sources are optimistic a deal will finally be done. The uncertainty of the last few months had largely already been priced into the Euro, and so the single currency is starting to regain some strength on the possibility of a resolution. UK Budget – today George Osborne delivered his first conservative majority budget. The Pound had weakened this morning, and while there were some very positive things announced, in general it was a budget of austerity, and the fact that they are looking to go harder on austerity and start reducing overall debt soon bodes ill for the immediate outlook for the Pound.UK growth figures have been revised down, House prices are rocketing due to low supply, and this means that while the UK economy is performing very well, it’s not as good as some had hoped several months ago. This has taken the steam out of the Pound. Flight to safety – there are real problems in China right now, with the stock markets there in free fall. Investors are wary of any uncertainty, and this combined with Greece and very low commodity prices means investors are placing their funds in ‘safe haven’ currencies like the US Dollar, Japanese Yen and Swiss Franc. The Pound has lost out as people move their funds to safer places riding out the global economic uncertainty. Do you need to convert currency at the best rates?
Exchange rates can move very quickly, and having an expert currency broker on your side can make a huge difference. From exchange rates up to 5% better than the banks, free consultations to discuss your currency requirement and strategy, to various contract types to help protect against adverse exchange rate movements, there are many positives to getting in touch to see how I can help you. The first step is to send across an enquiry, and I can then personally get in touch to discuss your requirements, explain how the service works, and provide you a quotation on your rate of exchange.
Tuesday 7th July 2015 In recent posts I’ve been focusing on Sterling/Euro exchange rates and the Greek crisis that is the reason for the current buying levels for the Euro being around the best in 8 years. Nothing has really changed for GBP/EUR and while a deal is yet to be made, the rate remains supported around the €1.41 level. For something a little different, in today’s report I’m going to take a look at Sterling/US Dollar, Sterling/Australian Dollar, and also some of the other commodity based currencies, including the forecast for where analysts think rates could go. Many readers are unaware that this site not only provides a market commentary on Euros, but also most major international currency pairs. (If there is a particular currency pair that you would like to chat about, then get in touch for a free consultation.) In addition to the market reports I provide for free, I can also provide you a quote on your currency exchange. I can access commercial rates of exchange for over 30 currency pairs that are up to 5% better than you can achieve at the bank. If you have a currency exchange to perform this year, then click here to find out what rates I can offer you. Sterling/US Dollar
GBP/USD was down in the $1.40’s a few months ago, however recently it had been climbing. In the last 3 months the rate climbed over 10 cents higher, as you can see from the chart below: In the Spring, markets expected the USA to raise interest rates at some point this year. This along with strong US economic data strengthened the US Dollar and made it more expensive to buy. However in the last few month's economic data was coming in worse than expected. Also, the expectation of an interest rate rise has now been pushed back, and this is what caused the USD to weaken and exchange rates to rise. Today however, we have seen the rate slide from $1.5625 to $1.5425. This is because interest rate differentials are starting to move in the Dollars favour. Also, while the crisis in Greece deepens, the US Dollar is seen as a ‘safe haven’ for investors in times of uncertainty. In my view I think this slide will continue, and we may well see rates down at or below the $1.50 mark again by the end of this year. GBP/AUD, and GBP/NZD, GBP/CAD, GBP/ZAR
Sterling/Australian Dollar rates are currently around their best in 6 years. Part of this is due to a robust UK economy, but mostly this is due to weakness in the Australian Dollar. The Aussie Dollar is a commodity based currency, which is a name given to currencies of countries which depend heavily on the export of certain raw materials for income*. Australia is just such a country as a large part of its economy relies on exports of raw materials to China. China's economy has been slowing down recently, and their stock market is falling.This has resulted in less demand for these raw materials, and commodity prices are low anyway due to the Greek crisis. The result is a weak Aussie Dollar, and at the moment £1.00 will buy you $2.08 AUD, which is around a 6 year high. To be honest, while commodity prices continue to suffer, we could see all commodity based currencies like the AUD, CAD, NZD, NOK and ZAR continue to weaken and exchange rates may rise further for those buying these currencies with Sterling. *Other Commodity based currencies are the Canadian Dollar, New Zealand Dollar, Norwegian Kroner, South African Rand. All of these currencies are currently weak and very cheap to buy due to low commodity prices. Click here for a free consultation, obtain a quote and find out more about the service and exchange rates I can offer you.
Monday 6th July 2015This weekend the Greek people voted against the terms of their latest bailout proposal. 61% voted against it, and 39% voted to accept it. The reaction on the currency markets has been surprisingly muted. Greece's finance minister, who often clashed with creditors, has resigned. Varoufakis was seen as a major obstacle in negotiations and now that he has stepped down the possibility of a last minute deal to keep Athens in the Eurozone may have increased, and this could be a reason that the Euro hasn’t weakened more. What does all this mean for Pound/Euro exchange rates?
Over the weekend we saw some weakness in the Euro on the Asian markets, with GBP/EUR rising to nearly 1.42. However as soon as European markets opened this morning, prices had corrected to €1.4050, so little change from where we were last week. Actually nothing has really changes. Greece will now go back to the negotiating table to try to strike a deal to re-structure Greek debt. Something needs to be done as without emergency assistance from the European Central Bank, Greek banks are going to run out of money within a few days, so despite the Greek people voting against Austerity, if they want their economy to survive then they still need to make a deal with their creditors. With the referendum out of the way, talks can resume and things are back to where they were a week ago. However while the market seems stable at the moment, the Euro could be vulnerable to selling on the market, so as the saga continues, we could see the Euro weaken further. At the moment however it seems a deal could be still be done. If it is, expect GBP/EUR to drop. If it isn’t, expect rates to remain firmly above 1.40. So all in all nothing has really changed! Are you looking for the best exchange rates?
Those that have a currency transaction to perform should get in touch for a quote and find out more about the exchange rates and currency services I offer. I regret we don’t deal in cash or holiday money, but if you are looking to convert £5k to £1m and would like the very best commercial rates of exchange, then click below to send me a free enquiry today.
Friday 3rd July 2015 Regular readers of my blog will be well aware that most moves in Sterling/Euro of late have been due to the ongoing problems in Greece. The failure to meet their debt payments and the ongoing negotiations have weakened the Euro significantly in the last few months, resulting in a cheap single currency. In fact the current GBP/EUR is very close to the best it’s been in 8 years. Below is a chart showing the exchange rate over the last 3 months. As you can see, it's risen to €1.40 several times before dropping back away again: What’s happening this weekend?
The Greek people are voting on a referendum called by the Greek government, on whether they support the bailout offer, in terms of further international loans. This follows months of tough talks with creditors. Currently all support to Greece has been stopped, and the banks are likely to run out of cash on Monday. You can read more about this here on the BBC website. EU leaders have warned that a "No" vote could see Greece leave the Eurozone. What if Greece votes ‘No’?
This would mean them rejecting the bailout plans, and the Euro could well weaken pushing Pound/Euro rates higher. Some say this would mean Greece leaving the Euro. Actually, there is currently no mechanism for them to do so, as it simply wasn’t envisaged when the Euro was created! Even if they decided to leave the Euro tomorrow, it would take months for the EU to work out how to do this in practice. A no vote though would mean back to square one, and negotiations would start again. I do think however that a No vote will keep Pound/Euro firmly above 1.40 and we could possibly see rates climb even higher. What if Greece votes ‘Yes’?
This would be a blow to the Greek government. It would in no way resolve the problems, as all it would mean is that negotiations would start again. However, I think a Yes vote would strengthen the Euro, and pull GBP/EUR rates back below the 1.40 mark again. What does all this mean for Pound/Euro rates?
This afternoon GBP/EUR has fallen as the latest polls suggest the Yes vote has a slight lead. This indicates that rates could tumble if the vote goes this way on Sunday. Personally, whichever way the vote goes on Sunday, I still firmly believe a deal will be done between Greece and its creditors, and when it does I would expect Sterling/Euro to drop sharply. It’s in everyone’s interest to do a deal especially Greece’s. If I needed Euros in 2015, I would give serious consideration to fixing a rate while it’s close to the best in 8 years. Do you need to get the best exchange rates?
Regardless which currency you need to buy or sell, why not get in touch with me for a quotation, and to discuss the different tools I provide to protect you against adverse exchange rate movements. The rates I source are up to 5% better than banks and other brokers may offer, and it costs nothing to contact me for a free consultation and quote. I can also discuss your particular requirements, explain what may happen to exchange rates in the coming months, and explain the options you can consider so you can make an informed choice on how to proceed.
Have a great weekend.
