GBP/EUR and GBP/USD reverse the losses of yesterday thanks to strong UK spending review (Joshua Privett)
Yesterday’s losses, particularly on GBP/EUR and GBP/USD, were reversed this afternoon by George Osborne’s changes to his budget during the spending review.
GBP/EUR fell by over a cent during yesterday’s trading with confidence in the UK economy falling following the dodging of hard questions about the UK’s inflation problems during hearings held by the UK’s treasury committee.
Political dodging gave way to political sensationalism today with Osborne speaking to Parliament about his continued objectives for the budget. While the speech has only just finished GBP/EUR is already back up to the mid 1.42’s and GBP/USD is on the sunny side of 1.51 for USD buyers.
The speech dialed back from the pure focus on austerity over the past few years which showed greater confidence from the Government for the UK to continue on in its strong recovery relative to other countries. While cut-backs are still being announced, some areas such as the NHS will be receiving increased spending and tax credit cuts were now off the table all-together.
This shot-in the arm for those hoping to use Sterling as a purchasing currency is a welcome break following the strong moves in the favour of Euro or Dollar sellers yesterday.
These gains will likely continue into the afternoon as North American markets open and trade on the news. We may even reach 1.43 for GBP/EUR by the end of the day’s trading, but it will be a stretch for 1.52 on GBP/USD.
Those with Euros to buy must remember that 1.43 has been reached twice in the past 2 weeks and rates have continually been pushed back from this mark. It is difficult for those GBP/EUR rates to be sustained as the demand for Euros rises dramatically in the commercial sector once buying rates become so cheap.
A popular option this afternoon for Euro and Dollar buyers have been ‘limit orders’. These allow you to secure your currency automatically at no additional cost, before any sharp snap-backs against your favour are expected.
I strongly recommend those with Euros or Dollars to buy should contact me on email@example.com to discuss how to secure your target level automatically once it is achieved to maximise the value of the Sterling you hold. I have never had an issue beating the rates of exchange elsewhere, and by squeezing as much out of any positive movements you could save thousands on your transfer. 01494 787 478
The likelihood of further GBP weakness is strong as it becomes less and less likely the Bank of England will be raising interest rates any time soon! The raising and lowering of interest rates is directly attributable to the strength and weakness of a currency. Most certainly in the case of sterling investors will be buying the currency in the hope of the interest rate going up in the future and the currency then being worth much more. Just like a higher interest rate at a bank will encourage investors to put money into that account, so will investors buy a currency if they see that central bank are planning to increase their interest rate since it makes it more likely that that the currency will be worth more in the future.
The pound’s strength is therefore very closely linked to the state of the UK economy and to attitudes to when the Bank of England is likely to raise interest rates. The upshot for anyone who is looking to buy or sell the pound is a a clear pathway as to the intent and expectations for the currency. The difficult part is predicting just how the economic data will turn out! On balance it seems the pound will remain strong but with the latest Inflation news making very clear the Bank will not be raising interest rates any time soon if you are holding on hoping sterling will just keep rising in value you might end up disappointed.
I strongly expect that the pound will lose value in the run up to Christmas as UK economic data shows us that the UK economy is not performing as well as many had expected. The dangerous thing that we cannot really plan for is what happens elsewhere! There is a strong likelihood that the Eurozone will revisit their QE programme and the US will raise their base interest rate. Expect this to cause further Euro weakness and some strengthening of the pound as investors move funds from the Euro to the pound. The key dates are 2nd December (ECB Meeting) and the 18th December (Fed decision).
If you are planning any currency exchange buying or selling the pound for the rest of 2015 or early 2016 making some careful plans now is a very good idea as there is a strong likelihood the rates on offer today will change for the reasons above. To receive updates or learn more about all of your options when transferring money overseas or back to the UK please email me Jonathan on firstname.lastname@example.org, I am very sure I can offer some useful insight and an exchange rate that will save you money.
The event which has been delayed for two weeks and has been a worry for those looking to exchange their Sterling for an alternative currency is taking place as I type this article. GBP/EUR and GBP/USD rates have already moved in a downward trajectory over the first 15 minutes of the UK’s inflation report hearings held by the Treasury Committee.
However, not by as much as initially expected. The reason I have decided to type out my expectations now is that it is all too clear that these hearings are lacking any substance.
Recently Mark Carney, the Governor of the Bank of England, noted that the previous estimates of an interest rate hike in the UK economy for Spring 2016 were now likely to be postponed for a year – his reasoning was that the UK’s already record low inflation levels were expected to get worse before they got better. Sterling weakened heavily on the news with GBP/EUR dropping over 2 cents as an example.
These hearings were called to ascertian how the UK has got itself into this position and what can be done at this point. Yet they were delayed over two consecutive weeks, heightening market anticipation as to what poor news may be revealed from the hearings.
So far I have heard discussions of bank regulations and capital restrictions which, while important, have been beaten to death since the financial crisis and have little to do with combatting negative inflation.
They are avoiding the issue, likely because they have few answers. Inflation is a reflection of price change, and falling prices are a result of low oil prices and reduced demand overseas for our goods, which are difficult for the Bank of Engand itself to control.
Sterling is weakening at this lack of confidence in the Bank of England. But many, including myself, were expecting worse should the details and forecasts of how poor inflation could possibly reach were to be discussed in the open. GBP/EUR has moved down a full cent from the day high and low, and GBP/USD by half a cent.
North American markets will open soon and we will likely see similar falls on GBP/EUR and GBP/USD continuing into the afternoon.
Events today have softened the blow to Euro buyers who could not secure their currency yesterday when rates were above 1.42.
If you have Euros or US Dollars to buy I strongly suggest contacting me on 01494 787 478 and asking the reception for Joshua to discuss how these current buying rates can be fixed to avoid future falls this afternoon. I have never had an issue beating the rates of exchange offered elsewhere and a comparison could save you thousands depending on the volume of your transfer. email@example.com
Sterling exchange rates remain flat today – What is due out in the coming days that may impact the Pound (Daniel Wright)
The Pound has not really given us a huge amount to feed off of today however there are still a couple of important data releases due in the coming days that may impact your rate of exchange.
Tomorrow morning we have German growth figures which will no doubt impact the Euro in early trading and shortly after this we have a speech from the Governor of the RBA Glenn Stevens speaking over in Australia which is key for those with an interest in either buying or selling Australian Dollars.
Later in the afternoon we have a flurry of figures from the States which will keep tongues wagging about the interest rate hike and then after a fairly quiet morning for economic data on Wednesday we have lots more data from America including durable goods orders which are expected to show a slight improvement.
Personally I feel that this week we may remain fairly range bound against the Euro, we may lose a little ground against the Dollar if U.S data is good and I feel we may gain back a little of our recently lost ground against the Australian Dollar.
If you have a currency exchange to carry out in the next few days (or even in the coming weeks and months) then it will be well worth you getting in contact with me (Daniel Wright) directly.
I can help you both in terms of getting you a better exchange rate than you are able to achieve elsewhere along with helping you time when you buy the currency as this can make an even bigger difference.
All you would need to do to make an enquiry with me is to email firstname.lastname@example.org with a brief description of what sum you are looking to exchange and the timescales you are working to and I will be more than happy to assist you.
Euro weakness is the main determinant for why GBP/EUR rates of exchange have cannoned up to these recent highs.
The announcement that quantitative easing will be necessary to stimulate growth in the Eurozone economy beyond the original September 2016 deadline, as well a looming interest rate hike in the US are what reduced the attractiveness of the Euro against its counterparts on the currency markets.
The ongoing terrorist threat concentrated in France and Belgium is what is inhibiting the snap-backs you normally witness on the currency markets when GBP/EUR rises so starkly in such a short-period of time.
This seems set to change tomorrow, and GBP/EUR has already fallen down to 1.42 as UK and European markets opened this morning.
Inflation hearings are set to be held for the UK tomorrow morning, and with the event having been delayed for two consecutive weeks, markets are already beginning to price in the weak data expected to be released.
Mark Carney, the Governor of the Bank of England, shocked economists at the start of the month by stating an interest rate hike in the UK economy seems off the table for 2015. The reasoning for this is that the inflation crisis is set to get worse before any positive movements can be seen.
Levels are currently at their worst since records began. Inflation is kept healthy by strong spending habits, however, if interest rates rise then this increases the incentive to save rather than spend and invest.
Inflation hearings have been called as a result for the Bank of England to answer to the government’s Treasury Committee as to why the outlook has suddenly become so negative, or to ask why the public was not informed earlier.
GBP/EUR rates will come under significant pressure as the Pound weakens from the Bank of England’s dirty laundry being aired for the global markets to seen.
The delays have heightened the anticipation of the event, which explains the sudden weakness Sterling has had to endure at the outset this week.
I strongly recommend that those with a GBP/EUR requirement in the coming months should contact me on email@example.com to discuss a strategy for any single or multiple transfers you have in the coming months. You can avoid rates moving against your favour in the short-term and pegged these near multi-year highs as they are at no additional cost.
Those with Euros to sell can do the same, and we can discuss how to ride the expected moves in your favour to their completion at a later date. 01494 787 478
In recent weeks Mario Draghi’s (President of the European Central Bank) dovish tone has been significantly weakening the Euro. Repeatedly he has indicated the quantitative easing program could be extended and increased in December.
Further to this Janet Yellen (Head of the Federal Reserve) comments last week suggest that the US could hike interest rates in December. However economic data will dictate whether or not this materializes.
It’s clear the market has already priced in the extension of the Q.E programme and also a US interest rate hike in December. For the reason there has been a mass sell off of Euros to buy Dollars to make profit.
In one month, the Dollar has made 4 cents against the Euro and the Pound has made over 8 cents!
Those looking to purchase Euros and Dollars with the Pound should seriously consider their positions and look to trade before the announcements. My reasoning for this GBP/EUR is close to the best buying levels since the start of the UK recession and if the ECB and FED don’t do what they say (very likely), we could see rates drop back into the 1.30s.
As for buying Dollars, I don’t believe the FED will hike in December. However I believe they will indicate further that a US hike will occur early in 2016 possible quarter one, and progressively cable exchange rates will tick down week by week.
If you have an upcoming currency requirement and would like to be kept up to date with all the latest market movements, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact me directly on firstname.lastname@example.org.
A two-minute comparison could save you thousands!
Clearly as rumours increase of a rate hike for the US in December this had led to GBPUSD rates just about managing to remain above the 1.50 levels during the month of November.
However, with US non-farm payroll data showing 271,000 new jobs this month and with Jobless Claims data due out on Wednesday I think this could provide the catalyst for the rate hike next month.
Indeed, the FOMC minutes published last Wednesday suggested that the US economy is ready for a rate hike but when it does come it is likely to be gradual.
The impact for Sterling vs Euro exchange rates is that a rate hike in the US will likely cause Dollar strength, which in turn will see Euro weakness providing some excellent levels for those looking to buy Euros with Sterling in the near future.
As well as the persistent rumours of the European Central Bank adding to the current amount of QE standing at an amazing EUR1.1 trillion this has also cause huge Euro weakness.
German GDP is published on Tuesday morning and if we see signs of a struggle expect Sterling vs Euro to hit new highs on Tuesday.
If you have a currency transfer to make and want to save money on exchange rates compared to using your own bank then contact me directly for a free quote. Tom Holian email@example.com
The last few weeks have seen a real rollercoaster on exchange rates with lots of uncertainty principally from the Federal Reserve and the European Central Bank as to whether these bodies will raise interest rates (the Fed) or launch more QE (the ECB). The foreign exchange market is a very fickle beat and unfortunately for anyone trying to second guess the market to well time their buying or selling of currency, there are no quick answers or guarantees. Exchange rate movements are a response to investor demand for said currency, with moves hinging on many wide ranging factors. Currently the pound is enjoying strength since the UK economy has made improvements versus many of its counterparts like for example the Eurozone. After many years of low economic growth and high unemployment the UK is now creating jobs and growing at a slow but reasonably consistent level. This has led to sterling rising as it becomes more and more likely the UK will raise its base rate.
The UK economy is on the right track but the big barrier to the Bank of England raising interest rates (which would strengthen sterling) is Inflation. With prices having actually fallen in the last few months Inflation is a big worry for the UK economy. Any interest rate hike is highly unlikely given the uncertainty about Inflation, time will tell to what extent this situation improves but with Inflation Hearings next week the pound could easily come unstuck if the wrong data comes out. Other important information will the Chancellor’s Autumn Statement which could easily upset the rates and provide a less buoyant picture of the UK economy. Actual raw data comes in the form of the latest GDP figures on Friday which is probably the big highlight. All in all the UK and the pound are doing well but lately events elsewhere have created some very favourable levels which may not last. If buying Euros with pounds we are at close to an 8 year high, this could easily be a very good time to buy Euros that should really be taken advantage of.
If you are planning a transfer and wish to get an overview of your position and the market please feel free to email me Jonathan on firstname.lastname@example.org