Better UK data boost Pound, but not against Euro

Wednesday 31st October 2012
Good afternoon. Sterling rose against most currencies through trading today, but remained fairly flat against the Euro at around the €1.24 level. The reason for the gains is the fact we’ve had some decent and robust UK data releases recently, reducing the chances of further Quantitative Easing in the UK. This afternoon I’ll take a look at the better UK data and what the forecast is for Pound/Euro rates moving forwards.

Better UK data boosts the Pound. 

Following last week’s much better than expected UK GDP figures confirming we are no longer in recession, Sterling has performed quite well. In addition, we have also seen much higher than forecast numbers from other releases such as consumer credit, mortgage data and CBI retail sales data, all of which were much better than most had been expected, and mean the outlook for the UK economy is now looking much rosier.

All these better numbers mean there is now much less chance of further monetary easing from the BoE next month. It also means investors are much more confident about investing in the Pound, and that is what has caused Sterling to rise against most other currencies.

Why hasn’t the Pound risen much against the Euro? 

It’s mainly due to the fact it’s the end of the month. There was big demand for buying the Euro as global banks wind up their positions for month end, and the European Central bank also had huge demand for Euros today, which has kept the single currency strong and hindered any significant gains for the GBP/EUR cross.

Moving forwards, I believe that the Euro will actually weaken somewhat in the coming weeks. While the UK has returned to growth, in the Eurozone growth is in decline. In particular Germany which is the EU’s largest economy is starting to slow, and this combined with the on-going debt crisis could well cause Euro weakness and help push GBP/EUR rates back up as we head in to November.

Less chance of QE from Bank of England 

Due to the better data as highlighted above, many think there is now less chance of Quantitative Easing from the Bank of England next month. This could indeed be the case; however some BoE policymakers have flagged a weaker outlook for growth in the fourth-quarter.

Purchasing Manufacturers' Index data for manufacturing, construction and services are due this week and next week will be watched for an indication of UK economic health into the fourth quarter. Once these numbers are released, the likelihood of further stimulus or not will become much clearer.

If you need to buy or sell Euros, should you do so now or wait? 

This is what everyone wants to know, and of course it is impossible to predict which way rates will go. On the one hand, if the Euro does weaken and UK data continues to impress, rates are likely to recover back towards €1.25. If however the next raft of UK data is not as good as expected and more Quantitative Easing is announced by the BoE, the Pound would likely weaken significantly.

In the current climate, regardless whether you are buying or selling Euros, Stop Loss and Limit Orders are very useful tools. These allow you to place a lower level and if rates drop below this, your currency is automatically secured and your rate fixed. In this way you can continue holding out for any gains, however if the market drops you are not left exposed.

A limit order allows you to place a target level above the current price, and if rates go through this your currency is purchased. This allows you to take advantage of any spikes without having to continually monitor the market.


Get in touch now for a free consultation

I can discuss your currency requirements and the timescales you are working to, and then run over the options that are available to you to help protect you against adverse exchange rate movements. In this way you can take control of your currency requirement and not simply hope that the market will move in your direction. By employing a strategy and giving yourself a target rate, you can often save significant sums than just leaving things to chance. I look forward to hearing from you.   

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Pound/Euro rates climb after good GDP data

Monday 29th October 2012
Good morning. The Pound/Euro rates climbed nicely last week when UK GDP figures confirmed we are out of recession. Today I'll have a look back at the events of last week, look at what might happen with exchange rates going forwards, and as usual round up the weekly economic data that could affect exchange rates in the short term.

In this week’s Report: 

•  Pound/Euro rates hit 3-week high 
• UK finally out of recession – GDP grows 1% 
• A volatile week for the Pound/Dollar cross 
• Round up of the week’s other data that may affect rates 

Sterling vs. Euro; 

The pound surged last week on the back of a hugely better than expected GDP swing of 1.6% quarter on quarter, showing an initial estimate of a full 1% growth in the UK for Q3 2012. Though this figure is sure to change as the final figures are more accurately calculated, the realisation that the UK had exited recession was more than enough to send its currency on a rally.

This caused Pound/Euro rates to surge nicely at the end of last week. Forecasters still expect a Euro rally in the wake of any request by the Spanish Government for financial assistance from the EU, but as yet this still hasn’t happened. In the absence of serious support for the Euro as the Spanish continue to tap-dance around the bailout, the pound was free to strengthen nearly 2.5 cents unabated in a day and a half after the GDP report.

This quick movement shows how easily gains can be made and lost on the currency market; those who were holding off selling their Euros whilst waiting for the Spanish Bailout lost nearly £3000 on an average second home sale price of €180,000. Of course one man’s loss is another’s gain with those looking to buy in the Euro zone have benefited from this sharp spike. Experience teaches us that spikes are often just that, with correcting movements seeing rates move the opposite way very quickly.

One way of trying to make sure you catch a spike in your favour is by using our services. Unless you have the time and inclination to sit and watch a prices screen day in day out, the free services we provide mean you always have eyes and ears on the market that can inform you as soon as the rates move.

With the wide array of currency contracts available and state of the art trading facilities we can cover your bases for your currency needs when buying, selling or servicing overseas properties as well as any foreign invoices your company may need to pay. Consultations with us are free, as are trading facilities which carry no obligation.

Click here to send me a free enquiry now.

Weekly Economic Data that may affect exchange rates 

Monday – A relatively quiet day for data releases to start the week. We have Net Lending figures from the UK along with inflation figures from both Germany and the US. 

Tuesday – A quiet day for data releases in the UK today. In Europe, the president of the ECB Mario Draghi gives a speech. We also have a ten-year Italian bond auction. It may be an interesting day for the GBP/EUR cross. From the States we have consumer confidence measures. 

Wednesday –We have consumer confidence figures from the UK today and a raft of inconsequential data from the Eurozone, including the general unemployment rate and inflation measures, both of which should have little impact on exchange rates. 

Thursday –As was the case last week, Thursday will be an interesting day for data releases. We have manufacturing PMI from China, the States and the UK along with unemployment figures from the US and house price data from the UK. 

Friday – We end the week with Canadian and American unemployment figures along with Spanish and Italian PMI data.  

Getting the best exchange rates

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It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.  

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Pound/Euro at 1 week high, GDP figures tomorrow

Wednesday 24th October 2012
Good afternoon. In this afternoon's post I'm going to take a look at the EU numbers that have pushed GBP/EUR rates up, and also have a look at what effect tomorrow's UK GDP figures could have on exchange rates. Don't forget, if you're looking for the best exchange rates you can send me a free enquiry, and have a no obligation consultation on your requirements, find out more about our service and the options available to you.

Pound hits 1 week high against Euro, GDP figures tomorrow

After weeks of decline, there was some good news for GBP/EUR buyers this morning, as negative data from Europe weakened the single currency and pushed rates up by a point. The disappointing economic data from the euro zone included poor inflation numbers from Germany and the EU, along with a consumer confidence survey that was much worse than expected.

These numbers weakened the Euro, and helped push GBP/EUR rates up by over 1 cent. We now have the best buying levels we’ve seen in over a week; however it could be the case rates come back down again, depending on tomorrows UK GDP numbers.

What’s happening with the Pound? 

The poor numbers from Europe overshadowed some negative UK data this morning which the markets didn’t react to. There was a surprise fall in British factory orders, with the CBI industrial trend's survey showing that demand had fallen unexpectedly. The number was -23 against a forecast for -6, but the poor figures didn’t really weaken the Pound. This was because Sterling has been given a little boost by the speech yesterday evening from Bank of England Governor Mervyn King.

He said that policymakers would have to think long and hard about conducting further Quantitative Easing measures. This now casts doubt on whether or not they will decide to opt for more QE in November. Much will depend on tomorrows UK GDP figures. UK GDP data for the third is released tomorrow, and is expected to show the economy pulling back out of recession, according to forecasts.

If true, it will probably only show small growth anyway. The Quarterly forecast is for a 0.6% growth, and if the number is this or higher, we could see gains for Sterling. In my opinion there’s more chance of a fall in rates, as a poor GDP number report will put pressure on the BoE to conduct more QE. However as stated above, his comments yesterday cast doubt on when this will happen. He also said that QE was reaching its limits of effectiveness.

Summary 

So for the coming weeks, it’s the shadow of QE that will likely continue to drive exchange rates. As always things can go either way, but I think there’s more chance of the Pound weakening than it is to suddenly gain in value.

Any growth figures will only really show that we’re barely out of recession, hardly the huge upswing in productivity that the economy needs to return to sustainable growth.

If you need to buy or sell Euros or indeed any major international currency, send me a free enquiry today. I can discuss your requirements, explain the options you have to protect against rates moving away, and the rates we can provide are up to 5% better than available at banks and other financial institutions.

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Pound/Euro forecast outlook 2012 Best Exchange Rates

Monday 22nd October 2012
Good morning. It was a torrid weak for Pound/Euro rates last week, with levels dropping to their lowest in 4 months. In this mornings report I'm going to have a look back at the reasons why rates have fallen, and what the rest of 2012 may have on store for exchange rates. If you need the best possible rates, click the link at the bottom to send me a free enquiry today.

In this week’s Report:

• Pound/Euro rates hit 4 month low 
• More Quantitative Easing on the way? 
• Better UK data pushes other crosses higher 
• Round up of the week’s other data that may affect rates 

Sterling vs. Euro; 

The pound hit a four month low against the Euro last week dropping to the high 1.22 mark. Trading opened last Monday morning around at 1.2407 and steadily dropped throughout the week closing on Friday afternoon at around 1.2296 as the graph below shows. This report aims to analyse the reasons why the pound has stooped to a four month low against the Euro and what the coming weeks may have in store for the GBP/EUR rate.

 
So what has happened last week to drop the value of the pound? One large factor was the mid week announcement by the Bank of England, which hinted that there would be another round of quantitative easing. The minutes of the last policy meeting released on Wednesday showed the BoE's monetary policy committee agreed that no further stimulus was needed. However the BoE’s policy maker, David Miles, in a statement to the Guardian newspaper, revealed that the bank needed a more expansionary monetary policy to steady inflation and boost sub-par economic growth. More quantitative easing is considered bad for the currency as it increases the supply, thus decreasing its value.

Later in the week, the European Union Summit which convened in Brussels gave some confidence to the Euro zone when it was agreed by the European Union leaders' that they would introduce a single European banking supervisor giving the European Central Bank overall responsibility for banking supervision. This will help lend stronger unity to the Euro zone and give investors stronger confidence in the Euro, thus giving it strength and making it more expensive to buy.

In the UK this week’s GDP figures, if worse than expected could also have a negative effect on the pound and could see rates drop further.

There was some good news for the UK last Friday when figures regarding the borrowing levels of the UK public sector saw that the net borrowing was £12.8bn in September, down from £13.5bn in the same month last year. The figure is lower than analysts had been expecting, while previous months' figures for this financial year were revised down by a total of £6.7bn.

Alongside this, a strong jobs report which shows that UK unemployment figures have fallen by 50,000 to 2.53 million in the three months up to the end of August also offers some optimism for the British economy and Sterling. While this helped the pound against other currencies, it was not enough to halt the decline in GBP/EUR rates due to the renewed confidence in the Eurozone.

With the on-going volatility in the Europe and mixed feelings regarding the British economy, the market will likely remain volatile in the coming weeks. If you need to buy or sell Euros then send me a free enquiry today, in order to limit your exposure to fluctuating exchange rates and to ultimately make the most of your currency.

Weekly Economic Data that may affect exchange rates 

Monday – A very quiet start to the week. In the UK we have the latest Nationwide Housing prices, which are a useful barometer for overall economic health. In the United States we see a FOMC member give a speech. There is no data from the Eurozone. 

Tuesday – Nothing from the UK today. In Europe we will see a business climate assessment from France. IN the United States there is some Manufacturing data, and Canada releases its latest retail sales. 

Wednesday – Again no data from the UK today. In Europe there is a raft of data releases from Germany: Manufacturing Data, Business Climate Assessment, and inflation data. The rest of today’s data is from the USA: New Home Sales, Mortgage Applications, Manufacturing Data and the latest Interest Rate decision from the Federal Reserve. 

Thursday – Probably the most important day for Sterling, as we have the latest GDP figures which will show if the economy is growing or shrinking. Europe has Retail Sales from Germany. In the United States we see Jobless Claims, Home Sales & Durable Goods Orders. 

 Friday – We end the week with Confidence measures from Germany and France, along with unemployment from Germany. In the United States we have the latest Gross Domestic Product numbers along with a consumer sentiment survey.  

Getting the best exchange rates

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you.

 It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.

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Pound at 4 month low vs Euro despite good UK data

Wednesday 17th October 2012
Good afternoon. It has been an interesting day for exchange rates, as we saw some much better UK data which helped lift Sterling against many currencies, however against the Euro we saw rates fall to a 4 month low due to a stronger Euro. This afternoon I’ll take a quick look at the data that has been released and the effect it has had on exchange rates.

Better UK Data lifts Sterling, but not against the Euro

The Pound made some gains this morning after some surprisingly good data was released. Firstly we had the latest jobless data. Unemployment fell by 50,000 to 2.53m in the three months to August, taking the jobless rate down to 7.9% from 8.1%.

A combination of more jobs being created and more people entering the workforce pushed the absolute number of people in employment to 29.6 million, the highest since these records began in 1971. The percentage of people in work rose to 71.3%, the best rate since April 2009. 

This was welcome news for the UK economy and surprised most analysts. The better outlook for employment in the UK raised the possibility that the economy may have staged a reasonable recovery in the third quarter after three consecutive quarters of contraction. The first estimate of third quarter gross domestic product is due next week and that will help us understand more.

The news gave Sterling a boost against most currencies, including the US Dollar that recovered back close to the $1.62 mark.

Despite the good data, Pound/Euro rates falls to 4 month low. 

Sterling fell to a 4 month low against the euro this morning after Moody's affirmed Spain's credit rating yesterday evening. The fact that they will keep their credit rating gave the Euro a boost, and coupled with the optimism surrounding the single currency after months of doubt, we saw the Euro gain significant strength.

This caused the GBP/EUR rate to fall, and despite the better UK jobs data, there was no significant recovery and the mid-market rate remains just above €1.23.

Bank of England minutes 

The latest BoE minutes were also released this morning. These showed policymakers were split on the need to buy more British government debt under their quantitative easing programme. Most economists had been expecting the central bank to opt for more QE in November. Although they voted 9-0 earlier this month for no more QE, the fact that the actual policy discussion showed that there is indecision amongst the MPC members means it’s not now clear if and when more QE will be announced.

It was widely expected more would follow in November, but now this is not as clear cut. With better jobs data, the market will await the GDP figures to determine the likelihood of more QE. If they do opt for more stimulus, Sterling could come under pressure as it is usually negative for the pound as it increases the supply of the currency.  

Getting the best exchange rates

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you. It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.

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Weekly Sterling/Euro FX rate forecast

Monday 12th October
Good morning everybody. As always for Monday mornings, today I'm going to take a detailed look at Pound/Euro rates, where they have moved and what the forecast is for the coming weeks. In a nutshell, rates have been falling and are expected to continue to do so.

In this week’s Report:

• Sterling weakens on chance of more QE
• Pound/Euro falls to new lows in the €1.23’s
• Pound/Dollar remains in the $1.60’s
• Round up of the week’s other data that may affect rates

Sterling vs. Euro;

In an interesting week for the GBP/EUR cross the Pound broadly lost ground against the Euro as the frailties of the UK economy once again made headline news. Euro purchasers were on the back foot right from that start of the week as Sterling breached 3 week lows against the Euro following further expectation for more quantitative easing. This was triggered by the UK Chancellor George Osborne during his speech at the conservative party conference when he said that the bulk of savings in his budget would be through cutting government spending. This in turn would add pressure on the Bank of England to ease monetary policy perhaps as early as next month.












The week remained tough for the Pound following Christine Lagarde’s speech when she said that it was the IMF’s view that Britain's economy would contract 0.4% this year, before growing by just 1.1% in 2013. This is some way off previous predictions in July, when it suggested 0.2%t growth in 2012 and 1.4% growth the year after. This continued to put pressure on the Pound and also adds more fuel to the argument that the UK could lose its prized AAA credit rating.

Although the implications for the UK economy were ominous, the effect on the GBPEUR cross were somewhat limited as she discussed the on-going pressures on the rest of the Eurozone, and also looked at revised growth forecasts in the context of the rest of the world. In particular she warned that that austerity measure place on Greece need to be eased and they should be given an extra 2 years to repay their debts in the light of the fact that they very nearly defaulted recently.

World leaders warning over UK growth


There is an increasing call from financial leaders such as Legarde to restore growth to pull the world out of recession and not let Austerity curb this. This was touched on by the outgoing head of the FSA ‘Lord Turner’ in his speech on Thursday night at Mansion house when he commented that QE may not be working as well as perhaps it did when the program was first started and that there may need to be radical changes within the banking and finance system for these problems to be overcome.

Lord Turner’s speech was particularly scrutinised as he is widely expected to be named as the next Governor of the Bank of England when Mervin King steps down next year, and therefore anything he says now is analysed for clues on how he may approach the new role should he get the position. He called for "a willingness to employ more innovative and unconventional policies" and although he didn’t expand on this point it is understood that he believes the  Bank of England should considers telling the Treasury that it doesn’t have to repay the £375 Billion that it achieved through QE.

This type of policy is loosely termed as the creation of ‘helicopter’ money due to the imagery of just throwing money on everyone out of a helicopter. The idea being that the cash injection stimulates the economy without burdening it with painful austerity repayments.  As one of the leading candidates, his speech or ‘preliminary interview’ for the role caused a stir but also showed that he is open to perhaps more radical solutions for how to guide the British economy out of the lingering financial crisis.

All of this doesn’t bode well for the Pound, as more QE and further measures would likely weaken Sterling, while the Euro continues to pull the other way due to its well published problems.


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Weekly Economic Data that may affect exchange rates

Monday – The only UK data the markets will react to today is yesterday evenings RIghtmove House Prices. There are no EU releases either. In the USA we have Retail Sales, Manufacturing data and a speech by the FED. In New Zealand we have inflation numbers that could dictate interest rates. 

Tuesday – We get going with UK data today including Inflation data, Housing prices and Retail Sales. In the Eurozone we have inflation numbers and Trade balance figures at 10am. Also in Europe Germane releases an economic sentiment survey, of importance as Germany is the largest EU economy. Over in the USA we have more inflation numbers and industrial production figures.

Wednesday – An important day for the UK, as we have the latest Bank of England minutes, showing the vote and discussion of the recent MPC decision. In addition, UK Earnings and unemployment numbers are released. Some minor EU construction numbers are released, in addition to US Mortgage applications and building permits.

Thursday – An EU Extraordinary meeting starts today, which will see EU leaders meet and discuss the current problems in the Eurozone. This could throw up some surprises so expect Euro volatility today. In the UK the only data of note is retail sales, a good barometer of overall economic activity. Stateside we have jobless claims and the Philly Fed Survey.

Friday – The EU Extraordinary summit continues today. Staying in Europe we have inflation number and industrial production figures. In the UK we have the latest Public Sector borrowing numbers. We then end the week with Home Sales from the United States.

Getting the best exchange rates

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you.

It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.  

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Pound/Euro forecast and Best Exchange Rates

Thursday 11th October 2012
Good morning everybody. In today’s post I’m going to have a look at how exchange rates have fared so far this week against the Euro and the US Dollar, in addition to the types of contract that are available to help you make the most of your currency if you are looking for the best exchange rates.   

Sterling falls against Euro, before making modest recovery

During the first part of this week, the Pound/Euro rate steadily slipped away, at one point dropping to the low €1.23’s. The main reason for the drop was a very IMF forecast that predicted the UK economy would remain in recession for the rest of the year. This caused investors to shun the Pound and this caused it to steadily weaken, pulling exchange rates down.

The decline halted on Wednesday however, and rates started to recover and climbed back into the low €1.24’s. There was no specific data that caused the gains; it was simply the fact that after several days of losses, investors started to buy back into Sterling, causing a modest gain in the exchange rate.

So what’s the forecast, will rates recover or start to drop again?

As always this is impossible to answer, however the recent gains are not likely to last in my opinion, die to the weak UK economy and the prospect of more Quantitative Easing next month from the Bank of England. The poor numbers coming out of the UK at the moment really put pressure on the Bank of England to print more cash under its quantitative easing programme, and I expect this to happen in November. There is also talk that they may move the Interest down to new record lows, and if these things happen then it will undermine the pound in the near term and may cause a drop in rates.

Economists' forecasts for the UK have worsened steadily this year and the third quarter is expected to show only very modest growth. The weak data will increase concerns that the government will fail to deliver on its plans for cutting the deficit. This would raise the risk of the UK losing its prized AAA credit rating which could also weigh heavily on Sterling.

In a speech on Tuesday, BoE Governor Mervyn King talked about the pros and cons of inflation targeting, suggested policymakers were focusing on QE as the main policy tool for providing further easing. To me this suggests he is setting the scene for more stimulus. We will see.

So that’s that then, rates are going to fall?

They may do if we only look at UK data, however other events globally are also moving the exchange rates. Focus is back on Greece as rioters tried to disrupt Angela Merkels recent visits.

The debt crisis there is far from over, and if investors globally become uncertain over what will happen with regards to further bailouts, then the Euro could weaken and rates could start to rise again. So it’s still the case that rates are being pulled in 2 directions, and there is no way to know which way the trend will go.

If you need to buy or sell foreign currency, what should you do?

There are various options you can look at, but what you shouldn’t do is leave things to chance and just hope rates will move your way.

There are many options which you can use to protect yourself against rates moving against you, for example Forward contracts, Stop Loss and Limit orders.

Forward Contracts

A ‘Forward Contract’ allows you to eliminate the risk of fluctuating exchange rates by locking in an exchange rate today for a transaction that will take place up to 2 years in the future. Forwards are very popular when buying overseas, as it allows you to fix a rate on the balance due at the same time as securing your deposit, thus protecting you from unfavourable movements in the market. A 10% deposit is required to secure the contract.

Stop Loss and Limit Orders

For those less risk averse that are happy to gamble on the rate moving up in their given time frame, 2 other contracts are available: Stop Loss and Limit orders. A Stop Loss order will protect you against adverse exchange rate movements and secure your currency if it falls below a pre-agreed level, giving you a worst case scenario while still allowing you to take advantage of any gains in the rate should the market move in your favour.

A Limit order is the opposite; it is placed 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. If you have a target rate you are aiming for, you can place a Limit order to buy should it get there, while having a Stop Loss order in place to protect against adverse movements.

Get in touch today


Regardless of whether you are buying or selling currency, you should take the opportunity to have a free consultation on the options available.

Click below to send me a free enquiry now, and I can get in touch to discuss your requirements, run through your options, and explain how we can help you get the best possible exchanger rates I look forward to hearing from you.


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