Wednesday 16th September 2015Today we saw the Pound/Euro rate rise on positive jobs data from the UK. Average earnings and the claimant count were both much better than expected, and you can see from the chart below that this strengthened the Pound, pushing the GBP/EUR rate from €1.36 to €1.3750 before dropping back away. We also had worse than expected inflation numbers from the EU, which helped push the rate higher as the Euro weakened and became a little cheaper to buy. Will the Pound continue to go up against the Euro? This is the question I’m asked daily by my clients looking for the best exchange rates to buy Euros. It is of course impossible to predict what will happen, but I don’t think the rate will get higher in the short to medium term. Indeed the current strength of the Pound is a problem for the Bank of England as it makes our exports more expensive, so if the rate does continue to climb, then I would expect the BoE to make noises about an interest rate being a long way off, in order to weaken the Pound to stop it hindering the economic recovery. Yes, the rate has fallen from the 8 year highs of €1.40+ we were enjoying last month. Those that need to buy Euros however should consider that the rate is still significantly better than when it was at €1.25 at the start of this year, so in the grand scheme of things it’s still a good time to buy Euros. It’s important to remember the only reason rates were so high before was 1) due to weakness in the Euro due to the Greek debt crisis that has now been resolved and 2) speculation interest rates were going to rise in the UK, which is no longer the expectation. For these 2 reasons I don’t think the rate will get back to €1.40 until into 2016, so if you need to buy Euros then consider fixing a rate sooner rather than later. (Click here to get a quote on your exchange and see how much you could save using my currency exchange services). All eyes on the FED Tomorrow’s decision by the Federal Reserve on US interest rates is the most anticipated for a very long time. The consensus is still that rates will be left on hold however there is a small chance they will increase rates. If they do, expect GBP/USD rates to drop sharply. Do you need to convert currency? I don’t just provide commentary on the currency markets, I am also the Foreign Exchange Manager at one of the UK’s leading currency exchange companies. I can help you achieve exchange rates much better than bank and existing brokers may offer you. If you need to buy or sell any international currency then get in touch with me today for a free quotation on what I can offer you.
Tuesday 15th September 2015On Thursday, the US Federal Reserve will announce their decision on interest rates, and for the first time in many years, there is actually the chance of a change. It’s widely expected that the USA will be the first major western economy to start pushing interest rates up from the record lows they have been at for many years. It’s likely that they will keep them at their record low of 0.25% for another month, however there is a 20% chance that they will raise the benchmark rate to 0.5%.
What would be the effect on exchange rates if they raise interest rates? A hike in interest rates would make the US Dollar an attractive option for investors, due to the higher return they would get on their funds. Therefore, if the FED do indeed raise interest rates I would expect the US Dollar to gain strength and become more expensive to buy, and this would push GBP/USD exchange rates lower. The small chance of a hike will already be priced into the market, so if they leave rates on hold, then GBP/USD may rise slightly.
Looking further ahead, they are likely to raise rates at some point in the next few months, so I would not expect the GBP/USD rate to remain above the $1.50 mark for long. Most forecasts I’m reading at the moment suggest that the rate to buy Dollars will fall considerably in the medium term. Therefore if you have a requirement to buy US Dollars, click here to get in touch to discuss the ways I can help protect you against the rate moving against you.
Do you want the best exhcange rates?If you have a currency transaction to perform there are a number of ways I can be of help. Firstly, I can source rates of exchange that are very close to the published market level, and up to 5% better than banks or other currency brokers can offer. Secondly, with over 15 years’ experience in the FX Markets, I have a very good knowledge of what can affect exchange rates, and can help you to make an informed decision on when to lock in a rate of exchange. I would welcome the opportunity to speak to anyone that needs to get a quote on their exchange and explain how I can help you. Click here to send me your details and I will get in touch personally to discuss your requirements today.Send me an enquiry today by clicking here.
Wednesday 9th September After gradually rising this week, the Pound has fallen slightly against the Euro and US Dollar today due to worse than expected UK data. Figures released earlier today showed that UK Industrial and Manufacturing production fell at its sharpest pace in more than a year. I warned on Monday that if the figures were worse than forecast Sterling could fall, and while the expected numbers were predicted to show slight growth, the actual numbers showed a decline of -0.4% & -0.8% respectively. As you can see from today’s GBP/EUR chart below, Sterling fell by around 1 cent against the Euro, however has since started to claw back its losses. (Click here to see my live currency chart)Tomorrow key for whether Pound will rise or fall in the coming months At 12pm tomorrow, we will have a much clearer idea of whether Sterling is likely to rise or fall in the coming months, based on interest rate expectations. The Bank of England will announce its decision on interest rates, and they will almost certainly keep them on hold at 0.5%. Straight after the decision however, they will give a statement and release the minutes to the meeting. This will be key as it will show the views of the Monetary Policy Committee and what was discussed, and how many of the members if any voted for rates to rise. If these minutes give any hint that interest rates will rise early next year, then the Pound is likely to gain against other currencies. If they show that actually recent economic developments mean that rates will stay on hold for most of 2016, then expect the Pound to fall. How do I think the BoE decision could affect exchange rates? It’s impossible to predict currency movements of course, but I think that it’s quite likely the Pound could fall. I reach this conclusion because the current global economic downturn risks affecting the UK’s growth prospects, and raising interest rates too soon could hamper the steady recovery that Britain has been making relative to other major western economies. For this reason I think rates will stay on hold for around 12 months. This also means that investors are less likely to want to keep Sterling assets, and as a result Sterling exchange rates could fall. Of course, the BoE governor Mark Carney is highly unpredictable and it is impossible to second guess what effect his comments may have on the Pound. I’m quite sure however that tomorrow will see a change in the value of the Pound one way or the other. Are you worried about exchange rates moving against you? Regardless whether you are buying or selling foreign currency, the worst thing you can do is simply sit back and watch the market, hoping that the rate will move in a favourable way for you. The currency markets are highly unpredictable and this approach could cost you dearly. If you have a currency transaction to perform there are a number of ways I can be of help. Firstly, I can source rates of exchange that are very close to the published market level, and up to 5% better than banks or other currency brokers can offer. Secondly, with over 15 years’ experience in the FX Markets, I have a very good knowledge of what can affect exchange rates, and can help you to make an informed decision on when to lock in a rate of exchange. I would welcome the opportunity to speak to anyone that needs to get a quote on their exchange and explain how I can help you. Click here to send me your details and I will get in touch personally to discuss your requirements today.
Tuesday 8th September 2015 Sterling has continued to gain against both the Euro and Dollar today, and as you can see from the charts below, we’ve seen rates rise steadily since the lows of last week: GBP/EUR
GBP/USD
Why has the Pound gained against the Euro and Dollar? Only a week ago, a raft of quite poor data from the UK had poured cold water on the idea that the Bank of England (BoE) would be able to raise interest rates any time soon, and due to this the Pound had weakened against other currencies. The BoE’s governor Mark Carney also said that the slowdown in the Chinese economy could affect UK inflation, further denting the Pound. Despite this however, this week we have seen the Pound fighting back. According to Reuters, the main reason for today’s GBP gains was an agreement from a Japanese insurance firm to buy a British insurer in a cash deal for £3.5bn. This huge demand for the Pound is what drove it up against other currencies. Even against the Euro, we saw the Pound rise by 1.5 cents, despite strong EU GDP data and Trade Balance data from Germany that would normally have caused the Euro to gain strength and cause rates to drop. What next for Sterling exchange rates? Looking forwards, in my view the next 2 days will be very important indeed for Sterling. Tomorrow we have Industrial and Manufacturing production data for the UK along with a GDP estimate. If these are better than forecast then the Pound may gain further. Of more importance though will be Thursday’s Bank of England announcements where the BoE's 9 member Monetary Policy Committee will meet and release minutes from the meeting. Last month just one MPC member voted in favour of an immediate rate hike, and there may well be further clues as to when the UK may begin raising rates. If 1 or more of the members vote for higher rates, then expect the Pound to make further gains. However if the minutes suggest that a rate hike is a long way off, with all 9 members voting to keep the status quo, then the Pound is likely to drop back away wiping out the gains we’ve seen this week against the Euro. Remember that EU data was very strong today, if it wasn’t for the huge Sterling purchase by the Japanese earlier today as I mentioned above, then Pound/Euro would actually have fallen today. Do you need to buy or sell Euros at the best rate? A typical purchase of €250,000 to buy a property abroad has differed in cost by over £11,500.00 in the last month alone, which really illustrates how important it is to get your timing right when fixing your rate of exchange. If you need to convert currency and would like to discuss the market and ways to protect you against market fluctuations, I am happy to speak to any potential clients that would like a quotation to compare what I can offer with their bank or existing currency broker. On average the rates I can provide are 2 to 3% better than available elsewhere which can mean huge savings when converting a large sum.
Monday 7th September 2015 Good morning. As usual for a Monday, today I will outline this weeks scheduled data releases that could affect exchange rates. If you’re reading my blog, the chances are that you have a currency transaction to perform and are looking at what is moving exchange rates. If that’s the case, then why not get in touch to discuss your requirement in more detail and get a quote? I can source exchange rates all major currency pairs that are up to 5% better than the banks can offer. We also have several different types of currency contracts that enable you to fix today’s rates for up to 2 years, and ways of booking currency should the exchange rate hit a particular level you may be targeting. Click here to send a free no obligation enquiry today and see how much you could save. This week’s data that could affect Sterling exchange rates Monday 7th September 2015 – It’s been relatively quiet today on the data front due to a market holiday in the United States. In Europe, the month on month German Industrial production was slightly worse than expected, weakening the single currency slightly and pushing GBP/EUR rates to around €1.37. Tuesday 8th September 2015 – There’s no UK data of note today, however GBP/EUR exchange rates could still be affected by some important releases in Europe. In Germany, the latest Trade Balance figures are released. This can be important because if this shows a demand for German exports, then the Euro could gain strength and become more expensive to buy. We also see the latest EU wide Gross Domestic Product (GDP) numbers today. I expect quarterly growth of 0.3%. Any less than this then expect GBP/EUR to rise, and vice versa. Wednesday 9th September 2015 – Some UK data for investors to chew on today, including Industrial & Manufacturing production, a GDP estimate (expected at 0.7%) and House Price data. If we see less growth than expected with any of these, the Sterling is likely to fall. Elsewhere, Canada and New Zealand releases their latest decision on interest rates which could affect GBP/CAD and GBP/NZD rates. Thursday 10th September 2015 – Today is the most important day of the week for Sterling, as we have the latest Bank of England interest rate decision. Rates are almost certainly going to be left on hold at 0.5%, however immediately after the decision, the governor will release the minutes which will show how the vote went, and what they discussed. If any of the members voted for a rate hike, expect the Pound to gain. Elsewhere, Australia releases lots of Jobs numbers. I think these are quite likely to be poor so expect the AUD to lose out if that’s the case. Friday 11th September 2015 – The only UK data of note today is the latest inflation expectations. This can impact future interest rate movements and so might affect Sterling. Elsewhere Germany releases inflation numbers, and the USA has its latest monthly budget statement. Do you need to buy or sell Euros at the best rate? If you need to convert currency and would like to discuss the market and ways to protect you against market fluctuations, I am happy to speak to any potential clients that would like a quotation to compare what I can offer with their bank or existing currency broker. On average the rates I can provide are 2 to 3% better than available elsewhere which can mean huge savings when converting a large sum.
Thursday 3rd September 2015After falling 9 cents in the last month, Sterling/Euro rates have staged a slight recovery today, pushing back above €1.37 as you can see from the chart below: ECB cuts inflation and growth forecasts The reason for the rise in rates wasn’t anything to do with the Pound, but rather the Euro weakening and becoming cheaper to buy. This was because the European Central Bank (ECB) has cut its inflation and growth forecasts for the next few years. They said that inflation in the Eurozone would probably be very low indeed for years to come and in turn this means that economic growth is unlikely to increase as much as had been thought. The banks president Mario Draghi said it expected inflation to be 0.1% for 2015, rising to 1.5% in 2016 and 1.7% in 2017, dampened by lower energy prices. They also hinted that further Quantitative Easing (QE) may be requried to shore up the economy. QE effectively creates new money to pump into an economy and usually weakens a currency as more of it is in circulation.
The Euro dropped like a stone on these comments and because all of this means that the EU recovery is not quite as on track as analysts and investors had thought, the result has been a sell-off in the single currency, causing it to weaken and push exchange rates back up to €1.37. Do you need to buy or sell Euros at the best rate? A typical purchase of €250,000 to buy a property abroad has differed in cost by over £11,500.00 in the last month alone, which really illustrates how important it is to get your timing right when fixing your rate of exchange. If you need to convert currency and would like to discuss the market and ways to protect you against market fluctuations, I am happy to speak to any potential clients that would like a quotation to compare what I can offer with their bank or existing currency broker. On average the rates I can provide are 2 to 3% better than available elsewhere which can mean huge savings when converting a large sum.
Tuesday 1st September 2015 Good morning and welcome back to my regular currency updates after the Bank Holiday weekend. While here in the UK it was dismal weather, heavy traffic and only the lack of a James Bond movie to complete the typical August Bank holiday hat-trick, over in Europe it was business as usual and markets were open. Numbers released yesterday and again this morning from Europe were better than expected, with both Strong German Retail Sales and a better than expected EU inflation numbers giving the Euro a boost. This has pushed exchange rates lower. This morning we saw the Euro gain further strength due to better than forecast EU jobs numbers. The Euro has been getting stronger and stronger recently, as those with an eye on the GBP/EUR rate will have noticed. In the last month the rate has plummeted by over 8 cents, seriously affecting those trying to budget for a Euro purchase. As I outlined in a recent post, the reason for the decline is two-fold. Firstly we have the Pound weakening off due to the expectation of a UK interest rate hike being pushed back. The second reason is a stronger Euro due to a resolution of the Greek debt crisis and a resurgent EU economy that now seems to be growing at a steady pace, with the help from the ECB Stimulus seemingly having the desired effect. I do think that rates will eventually recover to €1.40 again, but this is now a medium to long term forecast. In the coming weeks and months, if we continue to see strong economic figures from Europe then the single currency could continue to become more expensive. Below I’ve listed what I think could affect exchange rates for the coming months. If you have a currency transaction to perform and would like to discuss what rates I can offer you, then click here to send a free enquiry today. What could affect exchange rates in the first week of September? There are various things that change exchange rates, for example: Economic data, Political Uncertainty, Natural Disasters and acts of war. The first of these is the only one that is forecast in advance, and below are the main scheduled releases for the week ahead that I think could affect exchange rates. If you would like to have a more detailed chat about how the exchange rate you’re interested in could change in the coming weeks or months, then click here to send me a message and I will be happy to answer any questions you may have about timing your currency purchase. Monday 31st August 2015 – Yesterday we saw a raft of positive data from Europe, including strong German Retail Sales and higher than expected inflation data. This has pushed GBP/EUR exchange rates lower as the single currency gained in strength. Tuesday 1st September 2015 – More positive data was released from Europe this morning showing that German and Italian unemployment was better than expected. This pulled GBP/EUR down from €1.37 to €1.3560. UK data this morning included mortgage approvals that were better than expected, and credit and PMI numbers that were worse. Later today we will see Canadian GDP figures that could affect GBP/CAD rates, and US Manufacturing and Construction data that might change GBP/USD exchange rates. Wednesday 2nd September 2015 – We start the day with Australian GDP figure. Later in the morning we see UK Construction figures, and EU wide inflation numbers. Recent EU data has been good and if this continues to be the case, expect GBP/EUR to drop further. In the afternoon, US Employment data, Non-Farm Productivity and Factory orders could all affect cable. Thursday 3rd September 2015 – Lots from Europe today that could change GBP/EUR exchange rates, including Inflation data, and the latest ECB interest rate decision. While no change is expected, the press conference afterwards often contains hints about future policy and so could well affect the Euro. Later in the day, US manufacturing and Services PMI could affect GBP/USD. Friday 4th September 2015 – the G20 meeting starts today and so any surprises here could affect various currency pairs. Scheduled releases on the calendar other than this include EU GDP figures which I expect to show a monthly growth of 0.3%. In the USA it’s jobs day and the important Non-Farm Payroll numbers. Regular readers will know that this release is very difficult to forecast. The current expectation is for 220,000 new jobs to have been created. Any more than this, then expect GBP/USD to drop, and vice versa.
