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Sterling Strength thanks to Mario Draghi (Tom Holian)

GBPEUR exchange rates took a massive lift on Friday following the comments made by ECB President Mario Draghi.

Sterling improved by over 1% during Friday’s trading session against the single currency as the news shocked the currency markets.

Mario Draghi gave his biggest hint yet that purchases of government debt could help the struggling Eurozone. The idea of purchasing the debt is aimed at increasing prices for riskier assets which would free up more money for capital purchases and ultimately get more people spending.

Falling inflation is the biggest risk to Eurozone growth and this could now come as early as next year. Indeed, Draghi went to say ‘the central bank would do what we must to raise inflation and inflation expectations as fast as possible.’

In my previous reports I have been concerned that Sterling has remained too high for too long as it’ll ultimately affect the British export market. However, my viewpoint has slightly changed, at least in the short term, as the comments from Draghi will undoubtedly weaken the Euro.

UK Retail Sales out last week were also much better then expected at 4.3% compared to the anticipated 3.8% which led to Sterling gains and since the middle part of last week Sterling has gained against the Euro.

If you have a currency transfer to make and want to save money on exchange rates compared to using your bank then contact me directly for a free quote. Tom Holian teh@currencies.co.uk

 

 

 

GBPEUR rates finally stop the negative trend – STEVE EAKINS

Sterling has generally been falling for the last two weeks but we have seen some light relief in its value against the single currency this week. The only good thing to take away from this week seems to be that we have finally seen the Pounds value establish a range and some barriers. Levels now seem to be set around the 1.245 – 1.255 a staggering 4 cent drop from the highs seen only 2 weeks away.  This hold came from UK Retail figures which exceeded expectation and European data that missed them on Thursday morning.

Regular readers will probably still recognise that current levels are still ok in comparison to the months gone by, ignoring the last 60 days levels are at a year and a half high which many over the last 18 months would happily have bought at. To be honest I think these levels are now established and unlikely to change in the coming weeks.

 

Mario Draghi, the head of the European Central Bank is also speaking this morning with a change expected in the market. Comments on QE and growth in the troubled states of France and Germany will be closely looked at

 

Next week economic data which generally drives the market is rather light as we enter the last week o the month, economic data is normally for the previous month so is published at the beginning of the month. Political drive has now started to show its effects on the currency market and eyes are on the Autumn budget on the 3rd December to see how this plays out. Plus the bi-election last night where the the out-right party UKIP won their second seat in government.

 

I see anything over 1.255 as a buy for the rest of November but am becoming increasingly wary that rates could fall further longer term before the end of the year.

 

For a chat about the above please feel free to get in contact. Call me on the normal number or email myself directly, Steve Eakins at hse@currencies.co.uk

How well do you really understand what is driving your exchange rate?

The pound looks likely to rise against most of the major currencies longer term as the UK appears likely to raise interest rates in the future. This is important because the raising and lowering of interest rates by a central bank greatly affects the strength or weakness of a currency. Understanding this fact – that the raising and lowering of interest rates greatly affects the strength and weakness of a currency – is key to predicting where exchange rates are headed.

One of the major reasons for GBP strength in 2014 is high expectations the UK would raise interest rates in 2014. This expectation has been pushed well back into 2015, if not 2016 and anyone holding on for this to happen to make an exchange had better have a long time to do so! I remember in 2012 we were almost in an identical position , with expectations high the UK would raise interest rates in the coming year or two. We then had the Eurozone crisis deteriorate (remember Greece on the brink of leaving the Eurozone) and the following Spring the UK entered a triple dip recession and the pound crashed from 1.24 to 1.14 in about 6 weeks!

I do not think we are likely to see such a sharp move but with the General Election and increased political uncertainty on the cards for 2015 a tough patch for the pound appears highly likely. Even though May 2015 seems many months away it is not actually that far in terms of exchange rates. Considering you have seen anywhere from 5-15 cents movement per year for the last few years on GBPEUR, making some plans now for currency in the new year is clearly sensible. 

We offer a range of contract options to fix exchange rates at currency levels and also to automatically purchase when a desired rate is hit (stop / loss and limit order). Speaking with or emailing us with a brief outline of your situation carries no obligation. We are currency specialists who are here to assist in the safe planning and execution of your transfers.

The real risk on exchange rates is doing nothing and leaving it all to chance so to learn more please contact me Jonathan on jmw@currencies.co.uk,

I look forward to hearing from you.

Thank you,

Jonathan

Sterling gets a Lift? (Tom Holian)

With inflation falling below the Bank of England’s target there was an outside chance that the minutes from yesterday’s BoE meeting could have been different from the previous month.

The minutes showed that 7-2 were in favour of keeping interest rates on hold which led the Pound to strengthen marginally against the Euro during yesterday’s trading session.

This morning German manufacturing data has come in a lot worse than expected which has sent GBPEUR rates above 1.25.

In a few minutes UK Retail Sales data is due out and the expectation is for growth of 3.8%. Anything higher could keep Sterling strong against the Euro.

French economic growth has been struggling recently and questions are being raised as to whether the French are taking their situation seriously enough. With growth on the continent struggling there is still a chance that the ECB may intervene with monetary policy at next month’s meeting which could result in Euro weakness in the longer term.

US Inflation data is published at 130pm today and as the world’s leading economy if the data is positive this could result in Dollar strength which often results in Euro weakness.

If you have a currency transfer to make and want to save money on exchange rates then contact me directly for a free quote. Tom Holian teh@currencies.co.uk

 

 

GBP/EUR Volatility Likely to Continue (Matthew Vassallo)

It’s been a volatile few days for Sterling exchange rates, with the Pound losing value against both the EUR & USD. This negative trend was created following last week’s UK quarterly inflation report and the suggestion that UK interest rates were unlikely to be raised until the last quarter of next year, news which immediately knocked investors’ confidence in the Pound, pushing it back below 1.25 against the EUR and below 1.57 against the USD.

This morning we had the latest Bank of England Minutes and it was interesting to note that despite last week’s indication that UK interest rates would not be raised anytime soon, two members of the BoE still voted in favour of one now. This news has helped to push GBP back up to 1.25 against the EUR and with Eurozone Construction data coming in worse than expected we could see further gains for the Pound during Wednesday’s trading.

There is likely to further movement on Cable rates this evening as we have the latest Federal Open Market Committee (FOMC) minutes, which are usually a key market mover. These minutes give us an insight into the economic and financial conditions of an economy and can be used as a benchmark for their recovery process.

It is another busy day on the markets tomorrow, with the latest UK Retail Sales figures and Eurozone Consumer Confidence figures. We also have a host of US data, including the latest inflation & employment figures, before ECB president Mario Draghi’s speech on Friday.

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 mtv@currencies.co.uk

GBPEUR worst week in 2 1/2 years

GBPEUR levels have been falling continually for almost a week. Last week GBPEUR had its worst week, the biggest fall, in over 2 ½ years.  This was started by commentary by the Bank of England in their Quarterly Inflation Report when they pushed back expectations of growth and any interest rate hike until the end of next year. Commentary from Europe and the fact the UK dependency on their overall performance and global growth at risk.  The reaction was swift and quick, investors raced out of the Pound and we saw its value fall greatly. This was seen against a basket of currencies as buying anything from AUD, EURO’s and USD fell to new lows.

It is a trend I had hoped would have stopped today with UK data this morning holding the negative trend however this has not been seen. GBPEUR levels are at 1.25 and have visited 1.24’s a number of times today already.  I am growing wary that levels could fall further still adding more pain to buyers that may have become compliance at the 1.26-1.28 range. This I think is now a long way away, if you have simply decided to wait for levels to recover you could be waiting a long time for these levels again.

In the near term all eyes are on Thursday with both European and UK data. I expect both to be better than previous months so we again will see rates rather changeable on Thursday morning with EURO sellers seeing the advantage first thing and GBP sellers late morning.

For a full break down on how we can help, the market forecasts or a live price please contact myself, Steve Eakins via email at hse@currencies.co.uk

Best Rates of Exchange – Sterling Spike – Buy Euros Now? Andrew Bromley

We saw a negative more for the Euro this afternoon, as Mario Draghi of the Eurozone Central Bank confirmed that the Eurozones economic growth weakened over the summer period. The market opened this morning at 1.2530, reduced to 1.25 and then spiked to the 1.2570 region. Euro buyers are still looking at strong exchange rates compared to this time last year, and following Carneys weakening of the Pound on Thursday 6th, it may be the best we see for some while.

Those buying a currency with Sterling should pay attention to tomorrow mornings Consumer Price Index (CPI) data, released at 09:30. The expected figure is 1.6%, a slight increase month on month from 1.5%. We may see a small window of opportunity for a GBP spike which could be worth taking advantage of. Following CPI, the Germans release  ‘Zentrum für Europäische Wirtschaftsforschung‘ (or ZEW for short!) – a reading of economic sentiment. The previous figure was negative (-3.6), so the expected improvement to 0.5 could see the Euro re gain ground.

Feel free to drop me a line to discuss further…

AJB@currencies.co.uk

01494 787 478

 

Sterling falls against the Euro (Tom Holian)

Last week’s Sterling Euro exchange rates hit a very difficult patch following the Quarterly Inflation Report which came out on Wednesday. We saw a fall of almost 3 cents on GBPEUR rates during the course of last week as Bank of England governor Mark Carney suggested that inflation could fall below 1% and UK interest rates will not rise until towards the end of 2015.

For the last few weeks there have been rumours that UK interest rates would go up during the early-mid part of 2015 but the comments from Carney put paid to Sterling’s strength and I think the fall against the single currency could continue during next week providing some excellent opportunities to sell Euros to buy Sterling.

It was also announced last week that the Eurozone’s biggest economy Germany has avoided recession which also provided the Euro with strength.

If you have been reading some of my articles I have been saying for a while that the problem with Sterling trading as high against the Euro as it has for the last few weeks is that it can have a detrimental effect on British exports which ultimately gets reflected in UK growth.

Therefore, it can be argued that the recent fall for the Pound could be of benefit to the UK economy in the longer term.

If you have a currency transfer to make and want to save money on exchange rates compared to using your bank then contact me directly for a free quote. Tom Holian teh@currencies.co.uk

 

 

GBP Dips are worth capitalising on!

If you think recent drops on sterling were bad you should prepare for worse as these moves are likely to be extended in the future. Next year is a tremendous amount of uncertainty as to where the political situation in the UK will head.

If you are debating any currency transactions why not speak to one of our specialists regarding all of your options. Remember that you can forward buy your currency locking in current levels and rates. I would expect a recovery in  sterling down the line andI feel therefore current levels represent a very good opportunity to sell Euros for sterling.

If you wish to learn more about your situation why not email me Jonathan on jmw@currencies.co.uk

Best Rates of Exchange – When to Buy Euros? Andrew Bromley

Stirling Weakens on Carney Comments

The Pound had a rocky road yesterday as following good Unemployment data, GBP EUR spiked to provide short buying window whilst the market was over 1.28, close to the 2 1/2 year highs. However, GBP was bought back to earth with a bump following Bank of England Governor Mark Carneys speech on the associated inflation report. Carney indicated that as inflation is sitting at a near 5 year low (1.2%), an interest rate increase this side of summer is not going to happen. With the General Election next year, it is my opinion that if the economy warrants it, we will not see an increase until either November or December 2015. This address weakened Sterling to the early 1.27 mark, with today opening up even lower at the 1.2650 region. Those buying Euros may be wise to take advantage of the rates before we potentially see GBP EUR keep sliding down from its spike, potentially to the 1.24 region.

USD The Performing Economy?

USD sellers will be happy to see that we are at a 14 month low GBP USD. Selling below 1.60 was an unrealistic expectation until the Fed decided to finish its bond buying process (Quantitative Easing). The US economy seems to have gone from strength to strength in the last two weeks, and may continue to push GBP back to the 1.55 region and below. USD sellers may want to get their exchange done and take advantage of the low rates, with buyers scratching their heads as to whether or not the Pound will bounce back? My opinion is that Sterling will not push back over 1.60 for the short term, potentially not even until the new year.

Swiss Franc – Sell Now??

On 30th November the Swiss National Bank meets to agree on its next move to support its economy. It has been written on this site previously that there is a ‘peg’ linking EUR and CHF at 1.20. The market is only just above this level, which if breached (a drop below 1.20) would mean the SNB would have to act to support its economy. The SNB believe that CHF has been overvalued for an extended period of time, and it has affected Swiss Businesses ability to compete with potentially falsely expensive stock. There is a good chance that the SNB will weaken CHF substantially, with most currencies to make immediate gains. If you are selling CHF, I would be strongly inclined to get funds exchanged prior to 30th November to eliminate the chance of a substantial loss!

Please do feel free to drop me a line if you are looking to act on any of these currencies.

The direct line to the trading floor is 01494 787 478 or email me ajb@currencies.co.uk

 

 

 

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