Sterling at 6 month high vs the Euro

Tuesday 4th October 2011
Good morning. Why is Pound going up against Euro October 2011? Sterling fell against the US Dollar yesterday, but surges against the weak Euro as it seems Greece will miss it's deficit reduction target increasing the chance of default. This has pushed GBP/EUR exchange rates above 1.17 and we now have the best Euro exchange rates for 6 months. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1706
• GBP/USD 1.5431
• GBP/AUD 1.6278
• GBP/NZD 2.0462
• GBP/CHF 1.4202
• GBP/CAD 1.6285
• GBP/ZAR 12.719
• GBP/JPY 118.15
• GBP/DKK 8.7096
• GBP/NOK 9.1357
• EUR/USD 1.3182

Sterling at 6 month high vs the Euro

Yesterday Greece said it would not meet this year's deficit cutting target, sending shares and the single currency lower during trading yesterday. Athens announced that the 2011 deficit was projected to be 8.5% of GDP, down from 10.5% in 2010 but short of the 7.6% target set by the EU and IMF.

The government, which on Sunday adopted its 2012 draft austerity budget, blamed the shortfall on deepening recession. The Euro fell sharply as a result, weakening and becoming cheaper to purchase. We saw GBP/EUR hit a 6 month high, and the Euro was also down 1.4% against the dollar in late trading, and dropping 2% to a decade low of 101 yen against the safe-haven Japanese currency.

If you need to get the best exchange rates for Euros, then consider fixing the current level with a Forward contract. This allows you to fix the current rate for up to 2 years, and you can then be protected against a fall. Send me an enquiry now to find out more about these contract types.

Sterling down against US Dollar

Sterling fell against the dollar on Monday, brushing off better UK manufacturing data, as the pound sold off in line with stock markets and other higher-risk currencies due to mounting worries about a Greek debt default. The worries caused meant the US Dollar gained strength on it's safe haven status, becoming more expensive to purchase.

It's important to remember Sterling is not actually very strong. We expect Quantitative Easing from the Bank of England which could weaken the Pound further. It's only the Greek debt issue that's causing GBP/EUR rates to rise, and we expect these gains to be short lived.

US Senate backs debate on currency law amid yuan row

There's an interesting story about currency pegging and protectionism on the BBC site today. It's not directly related to the main currencies we trade, so rather than delve further into the story here on the blog, you can read about it on the BBC site.

Today's Data

House price data is the only UK release of note. In the EU we have another round of inflation data. There are also Factory order numbers from the USA.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

Weekly GBP/EUR & GBP/USD and the weeks data

Monday 3rd October 2011
Good morning. As always on a Monday, I have my weekly round up of GBP/EUR and GBP/USD. Let's find out why Sterling vs Euro rates are going up October 2011, and when to get the best exchange rates for purchasing property abroad.

In this week’s Report:

• Euro weakens on EU debt crisis, pushing GBP/EUR rates up
• Sterling vulnerable to fall due to possible QE this week
• Sterling dollar rates hit 1 week high
• Round up of the week’s data that may affect rates

(For currencies other then GBP, EUR and USD, contact us for a consultation)

Sterling vs. Euro;

Last week we saw GBP/EUR trade comfortably above the €1.16 level (Interbank), its strongest for the past two weeks. This was due to the continued trouble in the Eurozone with Greece and the continued talk of a rescue package dominating the news. On Friday afternoon rates climbed above €1.16 and are now quite close to the best in 6 months.













The reason for the weak Euro is the ongoing debt crisis. A Greek default "now seems unavoidable", according to analysts. Quarterly Eurozone Forecasts also show that the chance of recession in the euro bloc has increased sharply. The key question is when will Greece default and how it will be managed.

Authorities have been slow in trying to tackle the problems facing Greece, Ireland and Portugal. It was hoped that the rescue package for Greece announced in July would bring to an end the long period of indecision and uncertainty."

The Eurozone sovereign-debt crisis also shows no sign of improving. As well as a Greek default, it has been reported there is a 35% chance of the Eurozone economy slipping back into recession. Experts have predicted that gross domestic product in the euro area may rise by 1.6% this year, instead of 2% forecast previously, before slowing to 1.1% growth rate in 2012.

So with uncertainty continuing to cloud the Eurozone, the single currency has weakened and helped drag GBP/EUR rates up. However it’s important to note that the issues in the EU are now mostly priced into the market, so a continued upwards trend in the GBP/EUR rate seems unlikely, especially as analysts are warning that Sterling could weaken this coming week.

With the Bank of England meeting this week to discuss Interest Rates it continues to be a volatile time for Sterling. If talk of more Quantitative Easing (QE) is seen at the meeting on Thursday this week, we could see the Pound lose ground against the Euro. QE would flood the market with Sterling and weaken the currency, pulling Sterling exchange rates back down.

So if you need to buy Euros now could potentially be a good time to fix a rate. Even if you don’t need your currency for some time, you can use a forward contract to secure your rate for up to two years in advance. This will allow you benefit from the six month high and protect you against adverse exchange rate movements, and only lodge 10% of the total you want to convert.

Do you need to buy Euros? Send me an enquiry now.


Sterling vs. US Dollar;

Weakness in the US dollar and a recovery in risk appetite aided sterling during the course of last Monday, as markets mulled over the results of the latest meeting in Washington, with another batch of poor economic data released from the world’s largest economy. The Sterling Dollar exchange rate climbed steadily throughout the day, ending the day at 1.55. This all came despite further dovish comments from MPC board member Broadbent, saying that the bank's previous tolerance of high inflation was justified, and that more asset purchases would, even now, help the banking system and boost nominal growth.













Tuesday saw the release of September’s CBI reported sales number, reporting a drop from -14 to -15. However, this did little to weaken the Pound and, for the second day running, Sterling closed higher against the Dollar, as the Greenback still faced strong headwinds after the release of poor economic data on Monday.

In converse to the previous days’ trend, Sterling fell slightly against the Dollar mid-week, the Dollar making a slight pull-back after three days of losses. This was despite very disappointing durable goods orders numbers for August, which showed a huge drop in the index reading. The US Dollar may have benefited from the lack of agreement to a decision for refinancing in Europe, to aid the debt woes in Greece and other struggling nations, its status as a safe-haven currency helping it in times of market panic.

The Pound ended Thursday practically unchanged against the Dollar in the foreign exchange market, before falling away through the night. There was some positive economic data released from the UK on Thursday, with August’s mortgage approvals showing a good increase. Net consumer credit figures also showed a positive increase, suggesting that borrowing conditions for consumers are more favourable, and should benefit economic growth with more money able to flow through the economy; albeit it borrowed.

Despite positive figures released in the UK on Thursday, the Pound ended Friday slightly down on the dollar. After opening at 1.5676. the Pound closed at around the 1.56 mark. However, sterling was up on last Friday’s closing figure, gaining nearly 1% against the Greenback over the course of the week.

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Weekly Economic Data that may affect exchange rates

Monday – Inflation data is released for the UK and Eurozone today, which can impact future interest rate movements and affect exchange rates. In the USA figures are released showing manufacturing and construction, and there is a speech by the Federal Reserve.

Tuesday – House price data is the only UK release of note. In the EU we have another round of inflation data. There are also Factory order numbers from the USA.

Wednesday – Yet another round of inflation data, this time for Germany and the UK. We also have UK GDP numbers, which will show how the economy is faring and is likely to affect Sterling exchange rates. In the Eurozone there are Retail Sales numbers. USA mortgage approvals and Employment numbers are released at lunchtime.

Thursday – Interest rate day for the EU and UK. We don’t expect any change to interest rates, but markets will be watching very closely indeed for any Quantitative Easing for the UK. If so expect a sharp decline in Sterling exchange rates. There are also some jobless numbers from the USA.

Friday – Another round of inflation numbers for the UK today, this time the Producer Price Index. We will also see the latest non-farm payrolls data from the USA. These numbers are usually quite different than forecast and so can cause volatility for GBP/USD.

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Sterling at risk of slide due to QE

Friday 30th September 2011
Good morning. Sterling was at a 1 week high against the dollar yesterday, and was up very slightly against the euro. This was due to the Swiss National Bank saying they would look to increase its foreign exchange reserves of sterling assets next year, creating some support for the Pound. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1512
• GBP/USD 1.5547
• GBP/AUD 1.5967
• GBP/NZD 2.0365
• GBP/CHF 1.4036
• GBP/CAD 1.6196
• GBP/ZAR 12.427
• GBP/JPY 119.16
• GBP/DKK 8.5662
• GBP/NOK 9.0841
• EUR/USD 1.3500

Sterling holding firm against USD and EUR, but gains likely to be limited

Despite the decent support we've seen for Sterling this week, we still think that any gains for the Pound are likely to be capped and limited, given concerns about a fragile UK economy and its vulnerability to any escalation of the euro zone debt crisis. Also, as we've been talking about all week, there are market expectations that the Bank of England will soon launch another round of quantitative easing. This would weaken the Pound and pull exchange rates down.

The BoE holds a monetary policy committee meeting next Thursday, and the closer we get to the decision and the more likely QE seems, exchange rates could start to fall. Economists in a Reuters poll forecast the bank will resume quantitative easing in November, but it also revealed there was a 40% chance it could start next week.

"Sterling still looks in a downtrend," said Richard Wiltshire, chief FX broker at ETX Capital. He said market players were inclined to sell on rallies, keeping sterling capped below $1.57 against the dollar.

BoE chief economist Spencer Dale said in a newspaper interview yesterday that a weakening of the global economy looked more persistent than first thought and more monetary stimulus may be needed if the situation worsened further. As comments like this increase the chance of QE, we expect pressure on Sterling.

Today's Data

Today the UK sees the GFK survey which measures economic confidence. We also have GDP figures for the UK which is the most notable UK release of the week. EU unemployment figures are also released. Stateside we see Inflation Data and income figures.

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Sterling vs Euro Outlook Forecast October 2011

Thursday 29th September
Good morning. Sterling was range bound against the US Dollar yesterday, and down slightly on the Euro. This is because risk appetite has been boosted by optimism that policymakers could stave off a Greek default for the time being, however signs the Bank of England may adopt more stimulus measures is keeping the Pound in check. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1481
• GBP/USD 1.5634
• GBP/AUD 1.5920
• GBP/NZD 2.0063
• GBP/CHF 1.4012
• GBP/CAD 1.6112
• GBP/ZAR 12.278
• GBP/JPY 119.57
• GBP/DKK 8.5432
• GBP/NOK 9.0105
• EUR/USD 1.3611

Sterling down vs the Euro

The pound was down slightly versus the euro during trading yesterday. The single currency has been supported on news that leaders are resuming their mission to Greece today, and that euro zone finance ministers will meet again in October to discuss the release of more aid . This strengthened the Euro and made it more expensive to purchase.

Also hampering the Pound is the continued speculation that there will be more Quantitative Easing which is weakening the Pound and keeping exchange rates from rising.

Germany faces test in EU bailout vote

German Chancellor Angela Merkel faces a vote on whether to approve new powers for the EU's main bailout fund. The vote is on whether to endorse a eurozone commitment to boost bailout guarantees to €440bn. Chancellor Merkel has said she believes the vote is about Germany demonstrating its determination to save the euro.

However, as Greece seemingly nears default and the debt crisis increasingly threatens to envelop Italy, a consensus has emerged in the past days that the current deal being voted on by the Bundestag does not go far enough. G20 leaders met over the weekend to discuss the best way forward, but EU officials stressed that no grand plan of action had been agreed.

How might this affect exchange rates?

If a plan is agreed, then it could strengthen the Euro, making it more expensive and push GBP/EUR rates down. If however analysts think that the plan will not be enough to stop Greece from defaulting on it's debts, then the Euro could weaken and GBP/EUR rates could rise.

Behind all of this is the QE risk in the UK that will likely limit any gains. When times are so uncertain, you can use Stop Loss and Limit Orders. This allows you to place an upper limit where your currency will automatically be purchase if rates rise. At the same time, a Stop Loss places a lower limit so you have a worst case scenario. In this way you can still hope for a higher rate, but not leave yourself open to losses should rates indeed drop away.

Send us an enquiry now to find out more about these contract types.

Today's Data

From the UK today we have Money Supply data. From the EU there are business climate and consumer sentiment surveys. In the US there are various releases including Jobless Claims, Home Sales and GDP figures.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

Sterling up as IMF and ECB try to resolve debt crisis

Wednesday 28th September 2011
Good morning. Sterling rose against the Euro and US Dollar slightly. This was due to cautious optimism that policymakers were putting together measures to ease the euro zone debt crisis. This supported demand for riskier currencies such as the Pound, and this is why we're up slightly, however as we will see shortly it's not likely to continue. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1502
• GBP/USD 1.5656
• GBP/AUD 1.5783
• GBP/NZD 1.9875
• GBP/CHF 1.4036
• GBP/CAD 1.6000
• GBP/ZAR 12.242
• GBP/JPY 119.69
• GBP/DKK 8.5597
• GBP/NOK 8.9846
• EUR/USD 1.3603

Optimism over Greek debt boosts risky currencies

European Commission, European Central Bank (ECB) and International Monetary Fund (IMF) officials are expected to review progress today in cutting its debt levels. They will decide whether to release about 8bn euros from a 110bn bailout package agreed last summer.

There has been renewed optimism this week that eurozone leaders may finally be ready to take decisive action to tackle the debt crisis. This has strengthened riskier currencies slightly such as the Pound, and as a result exchange rates for GBP/USD have risen slightly.

However, analysts said the brief rally was down to an absence of bad news rather than expectations of a concrete plan to sort out the bailout fund, and the gains are likely to be short-lived given the lukewarm German support.

G20 leaders met over the weekend to discuss the best way forward, but EU officials stressed that no grand plan of action had been agreed. However, markets remain highly volatile, with investors remaining sceptical of policymakers' ability to solve the crisis quickly.

So will the Pound go up or down?

Many analysts think Sterling could face more selling pressure on persistent speculation the Bank of England may implement more monetary stimulus before the end of the year, in order to boost the lagging UK economy. This would require the BoE to print more pounds and flood the market with the currency, swamping demand. This in turn will likely weaken Sterling and exchange rates could drop.

If however there is agreement in Europe, it could strengthen the Euro and pull rates upwards.

What do the analysts say?

"Every time the market gets its hopes up that a solution to the eurozone crisis is near, the rug gets pulled from under it," said Ben Potter at IG Markets. "Only when we see firm action being taken, rather than hollow promises, will confidence and sentiment begin to improve."

So there is still scepticism that there will be resolution today, and exchange rates are likely to remain volatile as a result.

Today's Data

The GFK survey from Germany is released today. This measures confidence in the EU’s largest economy, but is likely to be overshadowed by the continued EU debt crisis and the meetings today to try and resolve it. We also have French GDP figures, showing any growth or lack of growth in the economy.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

Pound rises against Euro and Dollar, but gains limited

Tuesday 27th September 2011
Good morning. Sterling rose against both the Euro and US Dollar yesterday, as a UK bank had to convert significant sums to Sterling, strengthening the currency. The Pound rose against the Euro on talk of further plans to help Greece with it's debts. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1502
• GBP/USD 1.5574
• GBP/AUD 1.5742
• GBP/NZD 1.9761
• GBP/CHF 1.4042
• GBP/CAD 1.5970
• GBP/ZAR 12.349
• GBP/JPY 118.92
• GBP/DKK 8.5560
• GBP/NOK 8.9574
• EUR/USD 1.3538

Sterling rises against Euro & US Dollar

The Euro weakened slightly yesterday, on the news that Greek Prime Minister George Papandreou will hold talks with Angela Merkel to discuss his country's progress in cutting its budget deficit. The meeting comes as policymakers decide whether to release the latest tranche of Greek bailout funds.

European leaders are trying to agree a comprehensive package to solve the eurozone debt crisis once and for all, however divisions remain between member states on how best to do so. Due to the continued uncertainty and lack of direction in the EU, this caused some weakness in the Euro and pushed rates up above €1.15.

Gains limited due to threat of further Quantitative Easing

Despite its gains yesterday, Sterling remained under pressure against both the Euro and US Dollar, on concerns a fragile UK economy could prompt the Bank of England to resort to more monetary easing.

Comments from BoE policymaker Ben Broadbent in an interview yesterday fueled the view the monetary policy committee will pursue another round of quantitative easing after he said the economy would not have to weaken much more to warrant more stimulus. This is likely to keep any gains for the Pound in check, and analysts are predicting further falls for Sterling.

What do the analysts say?

"He very much sums up the view of the BoE. He came in a hawk, when inflation was elevated, and when data was holding up fairly well. Today he said he was very close to calling for QE whereas that would have been impossible when he first came in," said Chris Walker, currency strategist at UBS.

"That's the same with other members, including Spencer Dale and Martin Weale, who were calling for hikes only a few months ago, but now are calling for QE themselves."

Today's Data

EU lending figures are released today, which investors watch as a sign of confidence in the economy. From the US we have Consumer Confidence figures which could affect GBP/USD rates.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

Weekly GBP/EUR & GBP/USD and weekly economic data

Good morning. As usual for Monday's, today we'll take a look at how the currency markets fared last week, with a detailed look at Sterling vs Euro and Sterling vs US Dollar exchange rates.

In this week’s Report:

• GBP/USD falls to 1 year low
• Eurozone crisis continues
• Safe Haven currencies gaining strength
• Round up of the week’s data that may affect rates

(For currencies other then GBP, EUR and USD, contact us for a consultation)

Sterling vs. Euro;
An all too familiar week for the Sterling Euro cross saw a high of 1.1526 and a low of 1.1373 as concerns about the Euro play off against a weak pound, currently governed by further talks of Quantitative Easing. Mediocre data releases continue to have less effect on a market currently driven heavily by investor movement and risk aversion.













Greece continues to play a leading role in Eurozone developments, despite its inferior percentage share of the Eurozone economy as a whole. With the French and Germans in particular heavily invested in the Greek recovery, European stocks tumbled early Friday on fears the region's banks would take more write downs on their Greek debt exposure.

Greek Finance Minister Evangelos Venizelos was quoted by two newspapers as saying “an orderly default with a 50 percent haircut for bondholders was one of three scenarios for resolving the country's fiscal woes”. In layman's terms, the prospect of Greece defaulting on further payments is still a very real possibility.

With this in mind, you would think the Euro would start to slacken off against the pound in the same way it is slowly being grappled into submission by the revitalised and strengthening Greenback… many in the know claim that the Euro is still overvalued by 15% and be that as it may, the single currency is showing to be 6% stronger against the pound than it was this time last year…

Talking up of the Euro by the ECB and an unfounded in-house optimism seems to keep the Euro fighting against the pound for the time being. Forecasts are changing from week to week as to where we will be heading in terms of sterling strength over the next few months as the market shows signs of potentially making a break one way or the other .

Do you need to buy or sell Euros? Send us an enquiry now.

Sterling vs. US Dollar;

The start of the week saw the GBP/USD trading around the 1.57 level (interbank). With the continued uncertainty in the Euro Zone and increased demand for the USD, GBP/USD rates kept on falling as the dollar strengthened against the pound. The end of the week saw the GBP/USD fall to a 12 month low of 1.5326 (interbank) not seen since September 2010.












One of the contributing factors to the USD’s recent surge was gold shedding 8% over the past two weeks, with about a quarter of that decline coming on Monday. Investors poured into the dollar even though the Federal Reserve has all but promised to keep short-term interest rates near zero until at least mid-2013. This further shows how investors are moving towards the safe haven of the USD.

In order for the USA to increase borrowing and accelerate spending to boost the economy, ‘Operation Twist’ was implemented and involved the Federal Reserve purchasing $400 billion worth of long-term bonds whilst selling an equal amount of shorter-dated securities. Through this decision it seems as if the world’s most powerful central bank will not be restarting Quantitative Easing (QE) whilst the Bank of England is currently mulling over whether to fire up the printing presses.

With the Bank of England (BoE) expected to move towards QE, and with the Federal Reserve not bothering to step into the markets, this pair fell hard as the USD gained value. A fresh round of asset purchasing by the BoE would be negative for the pound as such a programme requires authorities to boost supply by flooding the market with the currency.

Some in the market believe the need for the BoE to restart its asset-purchasing programme has increased given growing signs that the economic recovery is lagging, as highlighted by data on Thursday showing a sharp fall in UK factory orders and a rise in public borrowing.

Sterling rose against the dollar on Friday as investors booked profits on the U.S. currency's rally the previous day, but gains were capped by concerns the global economic outlook is worsening, which kept the pound near a one-year low.

"We've ended up with a flight to safety, which hasn't been favourable to sterling, along with an increasing possibility of QE coming possibly earlier rather than later, and the economic data has been pretty grim too," said Jeremy Stretch, currency analyst at CIBC.

The continued volatility in the foreign exchange markets provides a greater case for keeping in close contact with your FCG account manager to put last week’s market movements into perspective, a typical transfer of £200K would have seen you receive $8000 less than at the end of the previous week.

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Weekly Economic Data that may affect exchange rates

Monday – Business Climate Assessment and Economic Sentiment figures are released from Germany today, the EU’s largest economy. From the USA there are new home figures, which are seen as a barometer of the economy as a whole.

Tuesday – EU lending figures are released today, which investors watch as a sign of confidence in the economy. From the US we have Consumer Confidence figures which could affect GBP/USD rates.

Wednesday – The GFK survey from Germany is released today. This measures confidence in the EU’s largest economy, but is likely to be overshadowed by the continued EU debt crisis. We also have French GDP figures, showing any growth or lack of growth in the economy.

Thursday – From the UK today we have Money Supply data. From the EU there are business climate and consumer sentiment surveys. In the US there are various releases including Jobless Claims, Home Sales and GDP figures.

Friday – Today the UK sees the GFK survey which measures economic confidence. We also have GDP figures for the UK which is the most notable UK release of the week. EU unemployment figures are also released. Stateside we see Inflation Data and income figures.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.