Monthly Archives: August 2010
GBP exchange rate forecast
The pound saw considerable gains against a host of currencies yesterday but this morning sterling exchange rates are trading over 0.5% down against most majors.
It seems the reason for the pounds losses is down to a member of the MPC Martin Weale stating that the central bank’s growth forecast for this year and next may be too optimistic and the UK economy could dip back into recession.
Whenever there are comments from within the Bank of England or think tanks that give their opinion on the economy the pound tends to suffer if the comments are negative. Is this the start of bad things to come. Some analysts have been stating that sterling will weaken significantly against a host of currencies and maybe most importantly by up to 8% against the Euro.
With a host of GDP data out this week for the US, Euro and UK sterling exchange rates could prove to be extremely volatile. As this data release is a measure of economic activity and will show weather the economy of each state has grown or subtracted.
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Sterling weakness following poor US data
The pound has lost ground across the board this morning following poor unemployment figures from the states. We appear to be seeing sterling weakness as investors move away from the pound due to it’s risky/volatile nature at the moment.
The unemployment data from the US showed that continuing jobless claims have risen by 13,ooo, to almost half a million. With most currencies you would expect to see the currency weaken as the high unemployment is costly for the government and has a negative effect on economic growth. However, as the US Dollar has Safe haven status, investors flood into the US Dollar to protect their funds and subsequently the currency increases in value. If this continues today I would expect to see the pound to close down for the day against the Dollar and Euro as well as most other major currencies.
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Sterling exchange rates suffer mixed fortunes
The pound looks set for a mixed day on the currency markets as in early morning trading we have seen losses v’s the US Dollar, Australian Dollar and NZ Dollar, as well as the Rand, Swiss Franc and Canadian Dollar.
We are currently holding ground against the Euro and Danish Krone.
The main information that could move the market today is Retail sales for the UK out at 09:30, and Public sector net borrowing out at the same time. With so much focus on the strength of the UK’s economic recovery retail sales are a good indicator. A strong figure could see some sterling strength, however with so much uncertainty a poor figure would probably see higher levels of losses, it wouldn’t surprise me if the pound fell back below the 1.19 interbank level v’s the Euro.
For public sector net borrowing, any increase could be really negative, however, if we do see some positive movement (with falling borrowing figures) we could well see a short term spike in the market.
If you do have any currency requirements and would like some further opinion on market movements specific to your currency pair, do fill in the form on the right and one f the PSF brokers will be in touch. We deal in all major currency pairs, predominantly ones including sterling but not exclusively, so if you have any currency requirements it’s more than likely that we will be able to help.
Sterling exchange rate overview
Sterling exchange rates are trading up this morning against a host of major currencies. The MPC voted 8-1 to keep the base rate of interest on hold at 0.5% This was not a surprise for the market but more importantly there was no increase in QE. This may be why the pound has strengthened as yesterday was a dire day for the pound on the bank of the inflation data that was released.
Aussie Dollar News
Aussie Dollar exchange rates strengthened over the course of yesterday on the back of the Irish Government selling bonds to around 1.5bn. Investors look for riskier currencies like the AUD and it was trading up against USD exchange rates.
This morning the pound is trading up against the Aussie Dollar by around 0.6% With the election down under looming this weekend we could see sterling-Aussie exchange rates be extremely volatile if there is a new government elected into power. If there is a hung parliament I would beleive that there could be some excellent buying opportunities in the short term.
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Sterling slips slightly ahead of key inflationary data
The Pound has lost a minor bit of ground against a basket of major currencies in early morning trading as investors anticipate Mervyn King to have to send a letter to the government for the 8th month running – He has to do this to explain himself when inflation is above 3%.
Although higher inflation generally leads to a higher chance of interest rate hikes in this case it may not always be seen as postiive as the higher inflation gets effectively the general public in the U.K are taking a pay cut as everything costs more yet wages are highly unlikely to be increased.
Unless there is a major change to the expected data then I do not forsee huge changes to the value of the Pound today however as regular readers will be aware absolutely anything can happen on the currency markets and surprises are no surprise these days!
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The pound has weakened but eyes will be on inflation data out tomorrow for the UK
Sterling exchange rates have weakened today from last weeks six week high on the back of some negative UK housing data. A survey released overnight by property website Rightmove showed asking prices for homes in England and Wales fell by 1.7% in August after an oversupply of property coincided with a seasonal dip in demand. Housing data is always a good indication of how an economy is performing and the dip in prices has meant that the pound lost 0.34% earlier today.
With a host of data due out this week from CPI & RPI Inflation data out tomorrow to wednesday’s minutes by the Bank of England MPC. Investors will be watching to see whether other policymakers joined Andrew Sentance in voting to raise interest rates. The pound fell around 2.5 percent against the dollar last week after the central bank cut its growth forecasts and predicted inflation would stay below target over the medium term. If their are any concerns about rising inflation then we could see some volatile movements for the pound.
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The Pound has had a mixed day against most major currencies, losing even further ground against the Dollar yet still holding up in the high 1.21s against the Euro.
No major data has been released today and it appears that the markets are moving very much off the back of risk appetite.
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Don’t delay – have a go today and feel free to tell everyone you work with and all of your friends!!!
Inflation report & unemployment data could damage the pound
Today could be an extremely important day for anyone with sterling requirements. Should you be selling or buying the pound, today we have the quarterly inflation report by the bank of England. Now when when Mervyn King normally speaks on matters of the economy, he has a tendency to talk the pound down. It is likely that the Bank will have to raise its inflation forecasts, and cut its growth forecasts for 2011 and 2012.
We also have some unemployment data out for the UK too. I am sure there will be movement on sterling exchange rates after the data is released to the market at 9.30 AM.
I feel that over the next few months the pound could slip away from its current spike against a host of currencies. I believe that we could see significant public sector unemployment. This could lead to a dip in consumer confidence and reduced spending in the economy which could have a knock on effect to the growth of the UK economy and weakening our GDP.
For these reasons I would not be surprised that if over the next few months the pound could could slip back down to the early teens against the Euro and back into the 1.40′s against the USD.
If you are buying a property abroad, have business transactions to carry out or need to get money overseas for any other reason and want the best exchange rates, just fill in the form on the right hand side and one of the experienced traders that write on this blog will be in touch shortly.
Sterling Weakness on poor housing data
Negative news from the Royal Institute of Chartered Surveyors (RICS), showing that house prices have started to fall in the UK has caused sterling weakness. This backs up surveys from Halifax and Nationwide, both showing the housing sector is starting to slow. It appears to be due to lower numbers of buyers and higher numbers of sellers in the UK.
As a result sterling has lost .25% against the Euro, dropping into the 1.19′s and 0.50% v’s the USD dropping into the 1.58′s (interbank levels). Looking ahead we have UK unemployment figures out tomorrow and the UK inflation report as well. Both will come under a great deal of scrutiny as with budget cuts coming up in the UK unemployment could rise in the next few months, and with VAT increasing to 20% next year, inflation could be a major issue for the UK economy. Both could cause sterling weakness. Whether this lead to sterling exchange rates falling significantly v’s the US and Euro, will depend on how the economies of the US and Eurozone fare going forward.
Reasons to buy foreign currency now and sell sterling
Making a clear forecast for sterling exchange rates id very difficult at the moment. There is a host of contradicting data in the market as the UK, US and EU are all showing sluggish economic recovery.
While there are some compelling arguments for why the pound could increase in value, for me there are more reasons why it is more likely to fall over the coming six months. Below I have outlined the main reason I feel that now is the right time to sell your sterling to buy foreign currency.
Reasons to buy foreign currency and sell sterling:
1.the Bank of England are highly unlikely to raise interest rates in the near term, despite one member voting for a hike
2. The debt reducing budget last month had a positive effect on sterling, but this is now priced into the market and unlikely to cause any further positive movement
3. Focus is likely to turn from the debt reducing aspect of the budget to the cuts and potential unemployment and reduced spending that this could lead to
4. Exports have been cited as an area of the economy that could pick up the slack, this is unlikely bearing in mind export performance over the last 2 years
5. If we do see a slow down in the economy, the MPC are willing to resume quantitative easing, in the past this caused significant sterling weakness
So if you are considering sending funds overseas, be it for personal or business reasons, please fill in the form on the right and one of the currency specialists from pound sterling forecast will be happy to run through the various options available, to safeguard your rate of exchange.
