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Whats in store for the pound? (Mike Vaughan)

Sterling has had a slightly tougher week this week posting losses against the Euro and US dollar. The biggest losses have been against the greenback having shifted nearly 1 ½ cents with the big move coming yesterday following positive GDP figures stateside. Is this the start of a downturn for the pound?

Looking ahead and the next major data for the UK will be Wednesday’s construction and industrial production data at 09:30. Recent figures, although strong, have not been as good as forecast and should this trend continue then we could see further pressure on the pound next week.

Following this will be Thursday’s interest rate decision. Another key day for your diaries and one that can cause volatility for the pound.

Euro Zone Inflation figures

This mornings  inflation figures came out weaker than forecast at 0.4% rather than the expected 0.5%. This brings back into question the concerns regarding deflation..

Some of the major problems with deflation can be the lack of consumer spending as the general public expects prices to continue to fall and this in turn can increase the real value of money and the real value of debt. Deflation therefore makes it more difficult for debtors to pay off their debts. For this reason consumers and firms have to spend a bigger percentage of disposable income on meeting debt repayments.

Falling inflation will bring further concerns and will make the next Thursdays ECB interest rate meeting one to watch. One green shoot for the Euro Zone was the better unemployment data resulting in GBP/EUR briefly pushing below 1.26.

For me I believe this pairing will stay range bound between 1.2550 to 1.2650, in fact over the past week it has only moved 0.50 cent. With inflation still a major issue for the Euro Zone this is likely to hamper and short term gains.  However the UK is also starting to see much of its data begin to slow (housing market, retail sales for example) this is also set to keep the pound in check.

US Dollar

Earlier this year the FED hinted that they may consider raising interest rates 6 months after the end of their bond buying stimulus program. The end of the US tapering and the final reduction of £15bn is scheduled for October and following this it is likely the focus will turn to when the FED may decide to raise interest rates.

If you look at sterling a major factor contributing to the strength in the pound has been speculation that the Bank of England may raise the UK base rate ahead of initial market expectation.

Following the end of the FEDs tapering and particularly if data sets such as unemployment figures improve, then this very same scenario may occur across the pond. Indeed it is reported that one member of the FED (Charles Plosser) actually voted for a rate hike. Plosser is regarded as being notoriously hawkish so I would personally not read into this too much but should analysts start pricing in a rate hike in the early to mid part of next year then this could lend support to the dollar.

For this reason with cable trading just shy of a five year high I feel current buy levels should still be seen as an opportunity.

Looking at data for the end of the trading week this afternoon’s key non-farm payroll data should be closely viewed. Improving figures will likely cause a push in the dollars favour. Figures are released at 13:30.

To get more information on the currency service we provide then please contact the office on 01494 787474. The purpose of this site is to provide clients with as much information as possible to assist with the timing of your trade. As specialist currency brokers we are here to help so please email Mike  mgv@currencies.co.uk for more information.

Have sterling gains stalled? Three big reasons to think twice…

There is no shortage of the positive things for the pound at present. It is the only major currency genuinely on course to raise interest rates and the British economy is predicted to be one of the fastest growing in the next few months. Unemployment is falling and the economy is growing, the green shoots have for some finally sprouted…

A quick look up ahead however shows that the path to a stronger pound isn’t quite as clear as some forecasters seem to believe. There are three key elements to look out for.

 - Political Uncertainty - 

Usually ahead of an election a currency weakens. The Scottish Referendum in September still has many unanswered questions and it would be foolish to discount late swing votes. Markets can be fearful creatures and if sentiments turn negative the pound may lose value. Next year is the General Election which could provide plenty of opportunities for GBP weakness. Even though the Bank of England is independent from the Government will rising interest rates be an election topic? Already portrayed as the ‘mean’ party, the Tories may struggle to maintain their economic plan under a new coalition and Labour’s economic plans look very anti – business…

There is also the prospect of the UK leaving the EU, again it is the uncertainty these events present which could undermine GBP gains…

- Rising Interest Rates may derail the economy -

Rising Interest rates could do more harm than good! Property prices are principally rising in the South East, mainly London and this is skewing the market. Other areas of the country are actually seeing prices fall or remain stagnant. Rising Interest rates may serve to undermine recovery in the housing market across the housing market making it more difficult for purchasers to get a mortgage and reducing the disposable income (that is spent in the wider economy helping for example Retail sales) those with mortgages have.

Many commentators have pointed out we are in a new ‘low interest rate’ economy globally. There are drawbacks to this but perhaps the UK needs to be stronger on its feet before interest rates rise.

- A strong pound can be bad for exports and growth prospects -

There have been some of the UK’s biggest companies this week highlighting the detrimental effect the strong pound is having on their profits. Rising interest rates may serve to strengthen the pound further making UK manufacturing and service less competitive in the global economy.

All in all the pound is at multi year highs against many currencies. Assuming rates will remain where they are is a foolish assumption and anyone considering moving larger volumes of currency should note the difference even 1 cent can make on a big volume of money.

If you need to buy or sell a foreign currency we can offer assistance  understanding the market and getting the best rates on your deals. We are a group of specialist currency brokers writing this blog for your help. Please feel free to contact me Jonathan directly to learn more.




Big 24 hours For USD And EUR Data- Be Ready To Move Quickly As Exchange Rate Likely To Be Very Volatile (Colm Gilhooly)

We have already seen US GDP for Q2 come in above expectations this afternoon and the Dollar has strengthened as a result.  However we still have the Fed interest rate decision this evening so there could be a lot more to come.  So far the Fed have taken a very dovish stance on monetary policy, with no clear indication on when they may start raising interest rates, and the only certainty seeming to be the Quantitative Easing program will finish in October.

However it is my view that the Dollar is probably slightly undervalued versus the pound, and that there will be some correction in exchange rates once the Fed signal they are getting closer to moving on interest rates.  Obviously this will be dependent on stronger economic data than we have seen for much of this year, but the GDP today was certainly a big step in the right direction.  Should the Fed sound slightly more hawkish tones, then we could see the Dollar come back slightly quicker than expected, so anyone looking to buy Dollars may want to get themselves ready to move quickly just in case.

The Dollar has also benefitted from the uncertainty in the Middle East and the problems between Russia and the Ukraine, as investors look for safer options.  Given the level of violence at present I don’t see quick fixes in any of those locations so the Dollar will likely benefit from this for a while.

Tomorrow we have the release of the latest European CPI data.  Inflation has been the main reason for the recent ECB interest rate cut which has weakened the Euro, and they have left the door open for further action if inflation were to remain stubbornly low, so expect GBP EUR exchange rates to be very volatile tomorrow.  Given EU unemployment figures are released at the same time, it could be another very busy day on the markets!

If you have a currency transfer to make and would like more information on our currency transfer service and how to get the best exchange rate then feel free to email me, Colm, at cmg@currencies.co.uk and I would be more than happy to explain things to you.

FED Interest Rate Decison & GDP Figures Key (Matthew Vassallo)

GBP/USD rates have dropped ahead of a busy day of data releases for the US economy. Cable rates dipped below 1.70 on the exchange yesterday, providing some much needed respite following a sustained period above this level. The USD’s struggles have continued for much of 2014 and it is very rare Cable rates trade above 1.65 for such a sustained period but could we finally be seeing the start of GBP/USD realignment?

Today’s data releases could hold the key, so all eyes will be on the release of the latest US Gross Domestic Product (GDP) figures and FED interest rate decision. With improved economic growth expected, it is possible the USD will build further momentum and any figures above expectation, or an indication that the US will consider a change in interest rates, could help drive GBP/USD back towards 1.68.

A word of caution however, this is not the first time the USD has threatened to realign itself and each time a similar move has occurred, the Pound has fought back almost as quickly. On-going economic difficulties, including high unemployment and relatively weak growth forecasts, are still likely to handicap any Greenback and the on-going positive UK recovery is also likely to support the Pound.

Longer-term I believe there is a lot of scope for the USD to improve against GBP but as yet we have not seen the catalyst required to shift the momentum and change market perception of the pair.

GBP/EUR rates have been fairly flat over the past few trading days, with the EUR finding plenty of support around 1.27. Rates have now been pushed back towards 1.26 and with key Eurozone data released this morning, including inflation and Consumer Confidence figures, we may find the Pound struggles to break through the recent highs. I still believe the current levels offer some excellent buying opportunities and it may be prudent to consider a forward contract around the current rates, for an longer-term EUR purchase.

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 exchange rates with your current provider, then please feel free to contact me directly on mtv@currencies.co.uk

GBPEUR forecast and breakdown

GBPEUR rates remain within touching ground of the highest levels seen for many years and a lot of my clients are asking now when to trade?

It is a difficult decision to make as no one has a crystal ball however you can be “guides” by the economic data releases and the expectation for each.  These certainly help when you are trying to time a trade within a short period of time.  If however you have the option to wait for a period over 3-4 weeks it makes it more difficult and really you should be 100% comfortable with the risk you carry by waiting. If you are not simply limit your exposure to a level that you are. My this I mean you can put rate alerts in the system of limit order, these allow you to either be notified or automatically secure a contract when rates reach a certain point.  For example if you have done your maths on 1.24 and you don’t want anything lower.  The other choice you can make it to whether or not it could help to split the transfers you need to make.  So if you have 3 months and £300,000 to transfer you may say well that’s do the first half now and ride the other, you may be very risk averse and say let’s buy all now or even 75%.  Move this amount until you get to a level that you are comfortable to risk.

Forecast wise this week I expect GBPEUR levels to remain fairly flat with little movement in the next 24 hours.  The close on the month on Thursday could shake markets temporally but eyes should really be on European inflation data.  Inflation has been keenly watched and is a very influential data set in the eyes of the European Central bank and could easily change forecasts on future policy change at the highest level.

Longer term we start the new month and the UK economic data release cycle starts again next week with a host of data release.  All of which will have a forecasted release which will be priced into the market beforehand giving assistance on better days than others. It is only when data miss or exceeds these forecasts that we see the market move quickly when they price in the new information, this is referred to a SPIKE in the market as these are shortly lived.  SPIKE NOTIFICATIONS are available here as one of the services we offer. This notifies you when these opportunities are available. To register email hse@curerncies.co.uk with your full details and situation to be accepted to this service.

If you would like any more information on anything talked about above, or simply wish to know our live prices for a comparison please contact the author STEVE EAKINS via hse@currencies.co.uk

Quiet Start to the Week for GBPEUR Exchange Rates (Tom Holian)

Sterling vs Euro exchange rates have been trading at just above 1.26 for the last few trading sessions as data has been thin on the ground recently.

UK Mortgage Approvals are due out at 930am and with the housing market showing signs of a disparity between the South East and the rest of the country this data will make interesting reading. Indeed, according to the Land Registry 7 out of 10 regions saw a fall in house prices in June.

If you have been reading some of my previous articles I think that the UK property market will be the biggest concern for the British economy and also Sterling exchange rates.

The Bank of England has already suggested that it may increase interest rates sooner than the markets currently expect which has helped the Pound but if the housing market naturally begins to slow down then interest rates may not go up as quickly as suggested.

Thursday will be a big day for the Eurozone as key inflation figures are due out in the form of the Consumer Price Index which measures inflation.

Following the recent interest rate cut by the ECB this was an attempt to combat falling inflation so the data could affect GBPEUR exchange rates immediately after the announcement. If the inflation figure is low then expect Sterling strength against the Euro.

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 teh@currencies.co.uk




Pound Sterling Forecast… The week ahead – A quiet week ahead for U.K economic data, Could this be the week the Dollar fights back? (Daniel Wright)

Today has so far been exceedingly quiet on the markets with very little economic data out for the major economies leading to minimal market volatility across the board.

There is still very little to come out for the U.K for the rest of the week however all eyes may start to look towards the States and a flurry of important data due to come out from the middle of the week onward.

One thing to note is that U.S data can actually affect all major currencies as it does tend to impact global attitude to risk, this can lead to volatility for currencies such as the Australian Dollar, New Zealand Dollar and South African Rand.

The action really starts to hot up on Wednesday afternoon, first and foremost we have U.S GDP (Gross Domestic Product) data out at 13:30pm. GDP basically shows how much an economy has grown over the course of a specific period and expectations are for some really solid growth, should these expectations be met or indeed exceeded then the Dollar may have a good afternoon against all major currencies.

A little later in the evening we have the Federal Reserve interest rate decision, which also will confirm any changes in the tapering of QE and will be followed by a monetary policy statement by Janet Yellen where investors and speculators shall be hanging off of her every word. Any mention of interest rate changes could give us a very lively evening.

Janet Yellen has mentioned recently that unemployment will be key for interest rates going forward and Friday we see two really key employment releases with Non-farm payroll data and the official unemployment rate for America both coming out at 13:30pm. Non-farm payroll measures the number of people in Non-agricultural employment during a specific period, Non agricultural because this can be majorly affected depending on the season.

Personally I am going to stick my neck out and say that this has the potential and could be time for the Dollar to start to make a come back after a fairly weak few months, of course if the data is poor for America we could easily see rates go the other way but I feel that things are due to pick up for the States and the Federal Reserve may start to echo this in their comments and actions.

All in all if you have any major currency exchange to carry out either this week or in the coming weeks and months then now may be a good time to get in contact with me personally. I have years of industry experience and work for a company that has won many awards not only for our rates of exchange but also customer service. Feel free to email me directly on  djw@currencies.co.uk with a description of what you are looking to do and a contact number and I will be more than happy to get in touch with you.

Sterling Forecast for next week (Tom Holian)

With Sterling Euro exchange rates having hit a 2 year high earlier this week it has proved an excellent buying opportunity with anyone needing to send Euros to the continent.

The Bank of England minutes showed a vote of 9-0 in favour of keeping interest rates on hold but BoE governor Carney has been recently quoted as saying ‘interest  rates could go up sooner than the markets currently expect.’ This has helped Sterling exchange rates.

UK Retail Sales which were predicted to be strong were slightly lower than expected which saw the Pound fall marginally against the Euro and US Dollar but the fall only lasted a short period as Italian consumer confidence fell.

The biggest news of the UK came on Friday with the UK GDP data coming in at 3.1% which is the best level since 2008. The UK also grew by 0.8% in the second quarter of this year.

Sterling kept stable against the Euro trading above 1.26 during Friday’s trading session.

Turning the focus to next week we start the Eurozone and UK data on Tuesday with UK Mortgage Approvals for June. With UK house prices at their highest level in history if the data is strong we could see Sterling Euro exchange rates on the rise.

Wednesday will be a key day for anyone with a GBPEUR requirement with the release of confidence surveys for Europe in the form of both Consumer Confidence and Industrial confidence data. If the figures are poor I think we could see Sterling vs Euro tip 1.27 during next week’s trading.

If you would like to save money on exchange rates compared to using your own bank to buy currency then contact me directly for a free quote Tom Holian teh@currencies.co.uk

Pound Sterling forecast – Positive week against the Euro and New Zealand Dollar – Negative against the Dollar and Australian Dollar (Daniel Wright)

The Pound has had a fairly mixed week against the majors, seeing a fresh two year high against the Euro and also gaining three cents against the New Zealand Dollar over the course of one night. On the flip side we saw exchange rates drop below 1.70 against the Dollar for the first time in a little while and also sub 1.80 against the AUD too.

Sterling data this week has not been too bad, however the Bank of England minutes still showed that members of the MPC (Monetary Policy Committee) had still voted 9-0 for no change in interest rates however this did not dent the Pound too badly. European data released on Tuesday and Wednesday led to Euro weakness and we did actually hit a 25 month high to buy Euros with the Pound during this period.

The Dollar made a fight back after a prolonged period above 1.70 mainly due to good solid economic data surrounding jobs in the States and coupled with investors and speculators alike becoming increasingly worried about on-going political relations and turmoil around the world. Gold is also seen as a safer haven and priced in Dollars so this also helps the Dollar gain strength.

The gains against the New Zealand Dollar came shortly after an expected interest rate hike over in New Zealand – Usually an interest rate hike should give strength to a currency however this rate rise was widely expected and comments from the RBNZ that they were actually unhappy with the current value of the NZD and that its strength was unjustified , unsustainable and had the potential for a significant fall led to investors dropping the currency like a stone.

Finally, governor of the RBA Glenn Stevens also commented this week and has seemingly once again decided he is not so worried about the strength of AUD which gave the Australian Dollar a lift overnight, making it more expensive to buy and at one stage pushing it back below the 1.79 mark.

If you have a curency transfer to carry out either next week or in the coming weeks and months then it would make sense to get in touch with me directly as I can help you both in terms of achieving a great rate of exchange and to ensure the transfer is smooth and efficient. Please do feel free to email me directly on djw@currencies.co.uk with a description of what you are looking to do and a contact number and I will be more than happy to call you personally.



UK Economy Grows by 0.8% (Matthew Vassallo)

The UK economy has grown by 0.8%, official figures for Q2 have confirmed. UK gross Domestic Product (GDP) figures were released this morning and confirmed that the UK economy had grown to pre-crisis levels. In fact the ONS figures showed that the UK economy is now 0.2% ahead of its pre-crisis peak, which was reached back in the first quarter of 2008.

Whilst the figure was released as expected, it reaffirms belief that the UK economic recovery continues to surpass that of other major economies, including the Eurozone’s and the US. However, this does not necessarily mean Sterling’s positive run will continue. If we look closer at GBP/EUR trends, although the Pound had pushed to a fresh 2 year high earlier this week it ran out of steam as the EUR found market support around this level. Similarly, GBP/USD rates hit a six year high recently only to fall away almost as quickly.

Personally I feel both currency pairs offer fantastic buying opportunities to those holding Sterling and it may be worth considering one of our forward contract options, which will protect you against future market losses.

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 exchange rates with your current provider, then please feel free to contact me directly on mtv@currencies.co.uk

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