The Pound took a sudden and severe hit which continued as the morning wore on, as UK companies were already showing concerning results since the announcement of the Brexit.
Profit warnings came out from the likes of Shell, Rolls-Royce, BAT and the UK stock market took quite a serious hit as a result. With the UK’s dependence on its financial services this correlated into lower confidence in the Pound, seeing a sharp sting for anyone considering buying a foreign currency.
Even with higher profits for Lloyds the lowered confidence in the UK was apparent with their announcement today that they would be cutting a 3000 more jobs and 200 more branches on top of their previous commitment to cut 9000 jobs and another 200 branch closures.
Whilst some companies performed well, the overall tone was negative, as the first look at concrete performance figures since the announcement of the Brexit shows the UK economy is struggling. A survey was released last Friday showing business confidence down to similar levels seen during the financial crisis. But concrete figures such as what was seen today are inscrutable and is why we saw a more sustained fall on the likes of buying Euro and Dollar rates than last week.
Euro buyers however, may see a turnaround in the short-term before the more voluminous data sets from last month are released during the first few weeks of August.
Late on Friday the Eurozone will be releasing the results of their stress tests on European Banks. Normally this is not a big market mover but some of our regular readers will note the particular attention paid to Italian Banks since the beginning of the month.
They have alluded to their rapidly deteriorating debt crisis, with now 1 in 6 loans deemed ‘junk’. These stress tests, like the concrete figures for the UK economy today, will likely put an exact figure in front of markets to understand the sheer scale of the current problem.
With the spotlight back on the Euro we may see rates reach more attractive levels late on Friday and by early Monday. There is a reason why the news is being released so late – to mitigate market reaction.
I strongly recommend that anyone with a Euro or Dollar currency requirement, whether in the short or long-term should contact me overnight on email@example.com to discuss a strategy for you transfer in order to maximise your currency return.
In this current market there are many potential variables and ‘forks in the road’ to be wary of, and there are a number of options in using a currency exchange specialist to minimise the exposure of your transfer to these potentially violent currency movements.
I have never had an issue beating the rates of exchange offered elsewhere, and these current buying levels can be fixed in place for anyone buying a foreign currency in the future, and are worried where rates may journey to in the meantime. 01494 787 478
Sterling exchange rates continue to hang in the balance, ahead of this morning’s UK Gross Domestic Product (GDP) figures. With an improvement on the previous figure expected, we could see Sterling start to put pressure back on 1.20 against the EUR and 1.32 against the USD. However, there is also an argument to make that the improvement has now been factored into the current market and we are only likely to see an aggressive move if the official reading comes outside of the 0.5% growth expected.
It’s a strange time for those clients holding Sterling, with the initial fallout from the Brexit now digested by the markets. Whilst the Pound has gained some traction following some political stability in the UK and the Bank of England’s (BoE) decision not to cut interest rates this month but there is still a feeling that we see further slippage at any time. The Pound remains extremely fragile and I do not expect any sustained improvement, or increased investor confidence under current market conditions. It is far more likely that the Pound’s value will be boosted by other factors, most prominently any downturn in other economies, such as the Eurozone. If investor confidence wains over the coming months, which is highly likely due further economic problems on the horizon for Greece & Italy, the EUR will start to lose value. This in turn will benefit the Pound but I do not see any major advances against either the EUR or USD in the short-term.
It may be prudent for those clients holding GBP to protect themselves ahead of the BoE’s next interest rate decision on August 4th. With a rate cut highly likely in my opinion and a possible increase in monetary policy (QE), the recent gains seen for Sterling could be short-lived.
If you have an upcoming GBP 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 on 0044 1494 787 478 and ask one of the team for Matt. Alternatively, I can be emailed directly on firstname.lastname@example.org
Following on from a fairly turbulent few weeks Sterling has found itself reasonably stable against most major currencies over the last week or so but will that trend continue?
The key issue is what happens next with the Bank of England and whether or not we do see an interest rate cut at the next Bank of England interest rate decision a week on Thursday.
It does look more likely now that we will be seeing a cut which may lead to a further drop in the value of Sterling. An interest rate cut is generally seen as bad for a currency as it makes it less attractive to investors. We have indeed seen only this morning that a few banks have confirmed that they will potentially start to charge their business clients to hold money should the Bank of England end up entering into the realms of negative interest rates.
On top of this, as we enter August we will start to see the release of economic data for July (the first full month since we voted out) which will start to really show the initial signs of what the referendum vote meant for the economy.
A lot of businesses and the general public held back following the result of this vote so it would not be a great surprise to see economic data next month to be fairly poor and Sterling to feel the brunt of that so the next few weeks are a time to approach with caution.
There are plenty of other issues to be aware of around the world inclusive of the Italian Banks, the U.S election and the horrendous acts of terror that keep on happening, so be aware that at any time the markets can move rapidly and in any direction.
On Friday evening we also have banking stress tests released on Friday night at 9pm which is one to really look out for. The fact that this data is being released outside of trading hours suggests to me that we may well have quite a lot of problems that have been discovered and that they do not want the market to over react upon the release, therefore they are giving the market the weekend to calm down before trading. All European banks are being tested so be aware that this may lead to big market swings when the Asian markets open on Sunday night.
Should you have a currency exchange coming up in the near future and you want to make the most of your money then feel free to get in touch with me at any time today or this week to discuss the options available to you, including a forward contract where you can lock in a rate for anything up to a year in advance for just a small deposit.
Should you be in the process of buying a property, sending money overseas for your business or exchanging currency for any other reason then it is well worth getting in contact with me (Daniel Wright) the creator of this site directly. You can email me on email@example.com with a brief description of your requirements and a contact number and I will be more than happy to deal with you personally.
Many economists pre referendum predicted if the UK were to leave the European Union the pounds exchange rates would plummet and economic data would deteriorate. One month later it seems the majority of economists were right.
Last week UK Prime Minister Theresa May started her talks with German Chancellor Angela Merkel and French President Francois Hollande. Talks seemed to ok with the German Chancellor however the French President made it clear, for the UK to trade for free in the single market, they would have to accept the free movement of people. This was the main reason the UK decided to leave the EU therefore one leader is going to have to back down and I believe it will be Theresa May.
The latest release of Markit’s purchasing Managers index has fallen to the lowest levels since April 2009. Manufacturing PMI fell to 49.1 from 52.1 and Markit’s Services PMI plummeted to 47.4 from 52.3. The data release suggests the UK are heading for another recession and therefore an interest rate cut and further stimulus (quantitative easing) is inevitable.
Looking ahead the UK have their next interest rate decision on the 4th August. With the PMI data release this week and the Monetary Policy Committee statement that they would loosen monetary policy if required, the pounds future for the remainder of the year is looking bleak. I expect sharp falls after August 4th.
Very simply if I were trading GBP into a foreign currency in the next 6 months and I had the sterling available there’s a good chance I would trade before August 4th. However the other currency you are buying might change my opinion.
If you have a currency exchange to make involving the pound it makes sense to explore all of your options. Here at Pound Sterling Forecast we understand every client’s situation is different, therefore we devise a strategy that meets your needs and requirements. As for exchange rates we can beat any UK brokerage or bank and I look forward to proving this to you. The clients I deal with are high net individuals, businesses and property buyers and sellers that are trading £10,000 to the multi millions.
Feel free to email me with the currency pair you are trading (GBPEUR. GBPUSD, GBPAUD) and the reason for the transfer (transfer of wages, property purchase) and I will respond with my forecast and the process of using our company. firstname.lastname@example.org
Enjoy the rest of your weekend and I look forward to speaking with you Monday morning.
The Purchasing Manager’s Index published yesterday morning showed the biggest fall in the UK’s economic activity since April 2009 and the rate to buy Euros has fallen.
The data from the PMI published by Markit showed a fall to 47.7 and manufacturing and service sectors both showed a big fall.
The figures can directly be attributed to the impact of the EU referendum vote and the Brexit has caused this big drop in activity.
UK business was clearly adopting the wait and see approach and this has been reflected in the data.
Chief economist at Markit Chris Williamson has suggested that the economy could even contract by 0.4% during the third quarter which if this is the case could cause huge problems for Sterling exchange rates in the future.
This negative data could prompt the Bank of England to make changes to monetary policy when their next meeting takes place on 4th August.
BoE governor Mark Carney has already spoken out on a number of times suggesting that the central bank will do what it needs to in order to settle the British economy in the wake of the Brexit vote and if we see a change when the meeting takes place then this could also cause problems for the Pound.
Later this week on Wednesday the UK releases GDP data for the second quarter. The data will include the Brexit period so again any signs of things slowing down could see the Pound fall vs the Euro.
One potential shining light next week for anyone buying Euros is that of the European banking stress tests which are due to take place on 29th July at 9pm.
Suspiciously the data is being published outside of business hours as I think the expectation is for some banks to fail.
A total of 51 banks across Europe will be put under test conditions and my expectation is that the banks in Italy in particular could struggle. They currently owe EUR550bn of which almost half of that is due to French banks. Therefore, any problems could see a reversal of fortune for the Euro.
If you have a currency transfer to make and are not sure what to do 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
I look forward to hearing from you.