Tuesday 28th July 2015Sterling has fallen sharply against the Euro of late, and in the last week had slipped from €1.44 down to €1.40. As you can see from the chart below, the rate has recovered slightly this morning, getting back above €1.41: The main reason for the gradual slide in Sterling is partly due to renewed optimism surround Greece, but also the global economic picture. If you look at the global economy, you will see that the Chinese market is in turmoil, and there has also been a sharp drop in Commodity prices. This is giving investors serious doubts over the strength of economic growth worldwide, and in turn this casts some doubt over whether the Bank of England will actually raise interest rates at the turn of the year. The global picture means that the Bank of England may well have to tighten their monetary policy, and this has pulled Sterling lower against other currencies. This morning however, strong UK Growth figures have shown that the economy has grown by 0.7% in the last few months, which is an improvement over recent measures. This positive news has pushed the Sterling/Euro rate up by 1% comfortably over the €1.41 mark. Sterling/Dollar It is interest rates driving this currency pair too at the moment. Today, the US Federal Reserve starts a 2 day meeting, with an announcement due tomorrow. If they give further signals that interest rates are going to rise within the next few months, then expect the US Dollar to gain strength and pull rates lower. Currently GBP/USD is trading at around $1.56. I don’t expect the level to remain at these levels. As the US are widely expected to be the first western economy to start pushing up rates, this could mean the USD strengthens. I still expect rates to drop below the key $1.50 mark by the end of the year. Do you have a currency transaction to perform? You can get in touch with me using the link below to obtain a quotation on your exchange. I usually have no problem beating rates from bank and other brokers, and even a small improvement in the rate can save you a significant amount of money.
Thursday 23rd July 2015Sterling/Euro rates have been threatening to fall for a week now, and today the market took a plunge pushing GBP/EUR rates down into the €1.41’s. After a quick look at the chart, I’ll go into more detail regarding what caused the rate to fall, and whether the Pound will go back up against the Euro. Why has the Pound fallen against the Euro? The first reason was Greece, which is becoming a regular and tiresome topic in the currency world! However it looks like things are getting closed to being resolved. They have taken a crucial step towards a bailout after its parliament passed a second set of reforms today, and this has given confidence back to the Euro. This is why the market initially started dropping this morning. There had been fears of a rebellion by Greek MPs, but the Greek Prime Minister Alexis Tsipras got the required support. This means that negotiations can begin on approving the terms of a third bailout. It looks like a final deal will be sorted out within the next 3 weeks, and if so I’d expect the rate to drop even further. The second reason for the decline was some very poor UK Retail Sales numbers this morning. The number was expected to show a rise of 0.4%, but actually sales dropped by -0.2%. As retail sales are seen as a good overall barometer of economic activity, the news sent the Pound lower, pushing rates even further from the 8 year high of €1.44 we’ve recently seen. Will rates recover? Moving Forwards, longer term I think rates will continue to remain strong due to the UK economy performing well, despite today’s poor numbers. However in the short to medium term, if the ongoing Greek saga finally ends with a full €86bn bailout, expect the GBP/EUR rate to fall sharply as the Euro regains strength. Do you have a currency transaction to perform? You can get in touch with me using the link below to obtain a quotation on your exchange. I usually have no problem beating rates from bank and other brokers, and even a small improvement in the rate can save you a significant amount of money.
Wednesday 22nd July 2015 Yesterday was not a good one for Sterling/Euro rates, with levels sliding all day from €1.44 to €1.42. The reason for the drop was renewed confidence about Greece, and in particular credit rating agencies increasing Greece’s rating as they felt there is now much less chance of them leaving the Eurozone. This morning, Sterling has fought back slightly after the release of the Bank of England (BoE) minutes from this morning’s Monetary Policy Committee (MPC) meeting. The full minutes can be read here. The key phrase I noticed was “the decision between holding Bank Rate at its current level versus a small increase was becoming more finely balanced”. This means that despite all 9 members voting to keep the interest rate at the record low of 0.5%, it shows that they are going to start leaning towards finally raising rates towards the end of this year. The next meeting is in 6 weeks’ time, and we may start to see some of the members voting for a hike in rates. This has given Sterling a boost, as the rumour of an interest rate rise usually does. The same effect has been seen on the US Dollar this week. View live currency graphs here Today’s Data All eyes were on the Bank of England and the inflation report this morning, and at 10am there is a parliamentary inflation report. For the remainder of today, the only data of note is an Interest Rate decision and policy statement by the Reserve Bank of New Zealand. Their inflation is very low at the moment, and the NZD is very weak due to the low commodity prices (See my post about commodity currencies to learn more). I think there is a chance they will cut interest rates to try and boost the economy. If they do, then expect GBP/NZD rates to go higher. 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.
Tuesday 21st July 2015 In today’s post I’ll take a look at what’s been happening with Sterling/Euro, Sterling/Australian Dollar & Sterling/US Dollar, including where rates may head in the coming months. (If you would like to discuss your currency requirement and obtain a quote on the best exchange rate I can provide, get in touch by clicking here.)Sterling/Euro GBP/EUR rates started the week at new highs of €1.44. This was due to comments from the Bank of England, hinting that interest rates may finally start to rise at the end of the year. This strengthened Sterling pushing it higher against other currencies. Today however we’ve seen the rate drop back steadily throughout the day by 1% at the time of writing, as you can see from the chart above. Renewed optimism due to Greece starting to repay it's debts, and the fact they may soon secure a proper bailout, is starting to strengthen the Euro and make it more expensive to buy. Tomorrow, we have the Bank of England (BoE) meeting and minutes on their discussions on rates. If these show that 2 or more of the BoE’s Monetary Policy Committee (MPC) vote for a hike (or even discussed the possibility of it) the Pound may gain further. Sterling/Australian Dollar GBP/AUD rates are very high at the moment, as you can see from the chart below: 
Current levels are at 2.11 which are around the best they’ve been in 8 years. The reason is that China, Australia’s largest trading partner is slowing down, and there is less demand for commodities. Commodity prices are very low at the moment, weakening currencies such as the CAD, NZD, ZAR as I touched on in a recent post. Late tonight, the Aussies release inflation data, and there is a speech by their central bank governor. If he hints that interest rates will be cut again, then we could see GBP/AUD go even higher. Sterling/US Dollar GBP/USD rates have been dropping of late. This is mainly due to the fact US interest rates are expected to rise in a few months’ time, the first major western economy likely to start pushing rates up. The higher return potential means USD is in demand and getting stronger. 
I expect the US Dollar to continue gaining strength in the coming months, and wouldn’t be surprised to see GBP/USD rates back at $1.50 or even below this by the latter part of 2015. 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.
Thursday 16th July 2015 The Euro remains incredibly weak today, with GBP/EUR rates settled around the €1.43 mark, a fresh 8 year high. In today’s post I’ll look at the developments over the last few days, what happens next with Greece, why the Euro remains weak, and what might happen to exchange rates in the coming weeks. First, let’s look at how exchange rates have moved so far this week:ECB agree €7bn loan to Greece Last night as expected, Greek MPs passed through the reforms that were part of the recent EU bailout deal. As a result, today the European Central Bank (ECB) agreed to provide a €7bn loan to Greece to help it until an actual bailout is approved. The ECB also said it would give more emergency funding to Greece, which could help the banks to open in the coming weeks after being closed all month so far. Why is the Euro still weak? Many thought once an agreement had been made that the Euro would strengthen and exchange rates would drop back away, however the single currency remains very weak indeed. I’ve seen €1.4350 on the markets today however at the time of writing, GBP/EUR sits around the €1.43 mark. The reason the Euro is still weak, is that when you pick apart the current agreement, it’s clear that it’s not actually likely to fix anything. Yes a loan has been granted, but all that means is there will now be a new round of talks on a full third bailout from the EU. Not a great deal has changed, the can has just been kicked further down the road, and what a long road it is! What happens next with Greece? The EU will likely provide the lending to Greece tomorrow. Germany now needs to agree to continue negotiating on the full €86bn bailout. Later this month Greece needs to pass further reforms, and if all that happens, then talks begin again to a full bailout using the European Stability Mechanism. So actually, we are still a long way off from a proper solution to help Greece, hence GBP/EUR exchange rates the best they have been in close to a decade. Which way will exchange rates move now? It’s impossible to predict of course, but with everyone now likely to have to go back to the negotiating table, and the IMF stating much more needs to be done, all the uncertainty that has been keeping the Euro weak remains. This could keep the Euro weak, and other developments may now push GBP/EUR higher. Perhaps they should start printing the Euro on Greece proof paper in the meantime!If we look at interest rates in the UK, USA and EU, then it’s clear that Britain and the United States will start to raise rates before our European partners. As I explained in a post earlier this week, the rumour of higher interest rates drives investment in a currency due to the higher return. With the EU still pursuing a Quantitative Easing programme, interest rates there are likely to remain low for a long time to come. This means investors will move funds away from the Euro into Sterling and the US Dollar, and this also means the Euro is likely to weaken, and GBP and USD will strengthen. This could mean that GBP/EUR goes higher, but we’ll have to wait and see. Do you need the best exchange rates? The currency markets are incredibly fickle and notoriously difficult to second guess, but with a sound knowledge of the options available to you and an understanding of what is moving exchange rates, you can make an informed decision on when to fix our rate. If you would like a quote on the rates I provide, a chat about the service I offer or simply want to talk about what is happening in the market, contact me for free by using the link below.
Click here to send an free enquiry
Wednesday 15th July 2015In a new twist to the ongoing Greek saga, last night the IMF released a statement saying that they don’t think the proposed bailout goes far enough. Effectively, this is a warning that the IMF will not take part in any rescue package for Greece unless the other EU creditors agree to much more debt relief than planned. This is a huge complication, and the amazing fact is everyone involved in the negotiations knew the IMF's position, but just ignored it.
Ignoring things doesn't make them go away, and the stunning developments means that the Euro has weakened even further, as nobody knows if this on-going issue is actually ever going to be resolved or not. The effect on the currency markets is a Euro that’s getting even weaker. The GBP/EUR reached €1.4240 this morning, before some poor UK employment numbers pulled it back down to the €1.42 mark as the graph below shows: What does all this mean for the Euro? It means that even if the Greeks agree to the plan today, it’s likely that the whole package agreed may now need to be re-negotiated, so in effect tomorrow morning we may well be back at square one. What an absolute mess this really is. The banks are still shut. They probably won’t open again for another month until an actual package is re-negotiated and ratified, so the ‘solution’ that came on Monday seems to be nothing of the sort. Result - GBP/EUR getting even higher. Getting the best exchange rates These are very uncertain times, and having a good currency broker on your side can save you a lot of money if you are converting a large sum. Therefore if you want to get the best possible exchange rates, contact me for a quote. I provide commercial rates of exchange to private and corporate clients looking to trade £5k+.
Tuesday 14th July 2015We have seen a sharp spike for Sterling this morning, after the Bank of England governor Mark Carney has said that the time for a UK interest rate rise is getting closer. This is despite figures this morning showing that inflation sits at 0%. This really shows how simple things like a few words from a central bank governor can affect exchange rates. Here's a look at how the Pound rose by over a cent against the Euro as soon as he made the comment at 09:53am:
Why did his comments cause the Pound to rise?It's due to the fact that he has hinted interest rates may go up in the UK this year. Higher interest rates make Sterling a more attractive investment for investors due to the higher return on offer, and so the Pound has strengthened, pushing exchange rates up against other currencies. In recent times it's been things like Greece and elections that has affected the rate, but years ago things like interest rate movements and economic data were the main things that caused exchange rates to move. I'm sure there will be further developments tomorrow from Greece, and once that issue is resolved, focus is likely to return to traditional economic stats and things like interest 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.
