Monthly Archives: September 2011
Sterling Outlook for the week ahead and Dollar Strength
A fairly quiet week for data releases on the whole does not mean a lack of activity as we have a couple of key decisions for the pound, plus the ongoing developments for the US and Euro debt situations. The last week has seen the US dollar climb to an 8 week high against the pound and there has been over 4 cents of movement on GBPEUR in the same period.
This Wednesday we have the Bank Of England Minutes. This is where we learn of how the members of the UK’s Monetary Policy Committee (MPC) voted in the recent interest rate decision meeting at the start of the month. This release has the potential to move the market and investors will be looking for signs that the UK will be embarking on another round of Quantitiative Easing (QE) to provide the economy in the UK with a much needed boost. Current data suggests the UK is not growing at the rates previously expected for 2011 and as such the MPC may need to utilise QE to boost the economy. The general concensus is that it is probably still too early to determine whether or not QE is necessary. Nevertheless the minutes will show the split on how all of the members voted in the meeting earlier this month and if just one member thinks it is a good idea to embark on more QE, we will likely see sterling
This link to the Bank of England website is very useful in explaining QE http://www.bankofengland.co.uk/monetarypolicy/pdf/qe-pamphlet.pdf
We also have Public Sector Net Borrowing on Wednesday which will be useful in highlighting how the UK government is performing against it’s own targets and goals of reducing public sector debt. These figures combined with Bank of England Minutes will be key I believe in shaping GBP rates for the rest of the week. Last time QE was mentioned sterling lost significantly against a host of currencies. If you have a pending transfer and are concerned why not let us know by filling out the contact form. We can then keep you posted on developments so you don’t suffer at the hands of the markets. We can also as required offer a safe and secure method of transferring your funds at commercial exchange rates.
Dollar Strength
The Dollar has enjoyed a massive rally in the last couple of weeks breaking an 8 month high against the pound and a 6 month high against the Euro (which was touched last week too). Why is this and is the pound likley to make any gains back soon? Well in my opinion things will not be getting better anytime soon. The main reason for dollar strength is the return of it’s ‘safe haven’ status. After the Swiss National Bank confirmed they will provide unlimited liquidity to ensure the CHF does not become stronger than 1.20 against the Euro, many Swiss safe haven funds have been moved, and a major beneficiary is the US dollar. Combine this with the fears over a default by Greece and you have have all the ingredients causing investors to seek security. Whilst growth in the US, like the rest of the world, is slowing Obama recently announced a $450 bn package to provide jobs for Americans. There is also talk the US will be looking to more QE, the details of which may become apparent on Wednesday’s Federal Reserve Interest rate decision meeting. Talk of QE like for the pound may cause some dollar weakness so if you are buying dollars look out for this or speak to us to be kept informed.
All in all the last few weeks have been some of the most volatile in recent years. What got everyone through the last recession was a belief that things will get better. Well 3 years ago last Thursday was the Lehman Brothers collapse and can we really say things are better? It seems many of the problems are still there and an ever ballooning debt crisis in Europe looks likely to be the trigger this time.
If you have any currency exchanges to make now or in the future we can help move funds internationally at commercial exchange rates for both private and corporate clients. We can advise and explain to you all the movements being witnessed on the markets and how they affect your transfers. Feel free to contact the author directly at + 44 1494 787 458 or e-mail jmw@currencies.co.uk Please quote JMW and PSF when making your enquiries.
The Euro gained yesterday but what does the future hold for sterling/Euro rates
Yesterday was a prime example of how quickly the currency markets can get turned on their head. It had been looking like the Euro was in a steady decline against most major currencies but this week it has gained 3 cents against the pound.
The ECB came out with comments yesterday that themselves in coordination with the US FED, Bank of England, Bank of Japan and the Swiss National Bank, are to conduct three U.S. dollar liquidity (loans) providing operations with a maturity of approximately three months covering the end of the year. This helped the Euro gain against the Pound & USD and has eased some fears regarding the Euro Zone debt crisis.
The reason for this was due to European banks have been struggling to obtain dollar funding in the last several months as lenders have become increasingly nervous about the euro zone debt crisis and the global economic slowdown. This new move is to prevent money markets from freezing up because of Europe’s sovereign debt crisis.
If you are looking at selling Euros then now may be a prime time as we have moved away from the 7 month highs which we saw at the weekend. (1.17) Now that we are down to 1.1430 you may be prudent to take control of the situation with a forward contract if you do not have all the funds available straight away. The issues in the Euro Zone are by far from over and we are seeing continuous peaks and troughs everyday.
The main concern if you need to buy Euro’s is that although I feel the Euro is very overvalued it was only a few weeks ago that we were trading at 1.10. Now 4 cents higher you must be cautious that we do not slip back to those levels with all the bad data that has come out of the UK economy.
To speak with me about your requirement please call 01494 787474 or email me at bma@currencies.co.uk I can then explain the service that we provide and talk you through how you can achieve our award winning rates.
Sterling at close to an 8 month low against the USD and a fresh week low against the Euro
It had been a turbulent week for sterling exchange rates with many data releases out and growing concerns about Euro debt concerns. We have seen the pound weaken by about 4% against the USD over the last 3 weeks now trading at a close to an 8 month low and we have recently dropped from the weekends high of 1.1720 down to 1.1460 since Monday which is a decrease of 2.21%.
Worries about growth in the UK economy intensified yesterday and this morning following unemployment and retail figures for the UK. Unemployment showed a further 80K people out of work which takes the total figure to 2.51 million and retail figures out this morning showed a decline to -0.2% for the month. Both have weighed heavily on the pound and shows that the UK economy is slowing again with fears of a double dip recession looming.
Stagflation (rising inflation and no growth) is a real concern for the UK and the Bank of England is really stuck between a rock and a hard place. There have been many rumors surfacing about another bout of quantitative easing taking place and when we have seen this occur in the past sterling has plummeted quite significantly.
For Euro buyers you may well think that all the issues surrounding the Euro zone may be positive for the pound with the downgrades of banks in France recently. Unfortunately the pound is suffering as UK banks are supposedly the most exposed country apart from Italy to the Euro zone debt crisis. With this in mind a Euro zone default could be catastrophic to an already weak UK economy and I believe that we could see rates weaken by as much as 3-4% (1.10/1.11) over the coming weeks.
Against the USD mounting worries over the Euro zone’s debt problems have kept investors wary of riskier currencies, hence turning away from the pound. The USD is benefiting from a flight to safety at present as whenever there is global turmoil you tend to see the USD strengthen which is exactly what we are seeing at present. My prediction is for the pound to weaken further to levels around 1.55.
If you are concerned about the pound’s recent decline we have numerous tools that can try and help assist you maximize your currency exchange. If you wish to speak with myself I can talk you through all the options that may be suitable for your requirement and we can help assist you make a saving on your exchange over the high street bank of up to 4%. Please feel free to call me on 01494 787 474 or email at bma@currencies.co.uk Please ask for Ben and quote the pound sterling forecast website.
‘Be fearful when others are greedy and greedy when others are fearful’
This well known quote from the ‘Sage of Omaha’, Mr Warren Buffett relates to investing attitudes. It is pretty self explanatory but basically states that by going against the current market you can make attractive gains. This is exactly what we have witnessed recently on pound sterling exchange rates. The recent panic caused by the Eurozone debt crisis has cooled slightly today from comments by Angela Merkel the German Chancellor that the Eurozone must stick together. This rhetoric is however not being reflected in other areas with many reports that the Germans are in fact planning for a Greek default. It looks like the uncertainty is going to continue to present volatility on exchange rates and this Euro crisis affects not just the Euro rate, but nearly all other major currencies. Hence why we have seen major movements recently on all the majors.
Higher inflation figures released this morning for the UK at 4.5% have caused some sterling weakness as it gives less credibility to the economic policy for the UK. I believe we have also seen lots of investors taking heed of Mr. Buffett’s advice and taking some of the profits they made last week and yesterday. The pound has lost over a cent from yesterday’s highs but gained slightly against the resurgent US dollar. The Aussie and Kiwi have clawed back some ground as investors again take profits and on the back of Merkel’s comments.
We still have quite a busy week ahead for the pound with Unemployment Data due tomorrow and Retail Sales Thursday. Following August’s riots and unexpected rise in Unemployment these figures will be watched carefully and we could see the pound lose some of the impressive recent gains, particularly those against the Euro. Exchange rates are moving every few seconds and can move for completely unexpected and unpredictable reasons. With over 4 cents gained on the Euro, 3 cents on the Aussie and nearly 5 cents lost on the US dollar (and all in the last few days!) we are looking at some very volatile trading conditions.
We are specialist currency traders who write this blog for the benefit of clients and members of the public. If you have any FX transactions to undertake why not speak to us to see if you could be getting a better deal? Feel free to contact the author direct on (+44) 1494 787 458 or alternatively e-mail jmw@currencies.co.uk Please quote PSF and JMW when making your enquiries.
Breaking News! Market Volaltility Persists
Today has seen significant developments on the currency markets. GBPEUR has moved up by 1.3%, GBPUSD down 0.8%, GBPAUD up 1.6%, GBPZAR up 1.9%, with many other significant movements and recent highs touched.
This is all down to the ongoing concerns over the global economy, in particular the slowing down in the rate of global growth. The G7 are meeting to discuss how another recession can be averted. The ongoing crisis in Europe is also weighing heavily on investors minds with all the major stock markets down.
Feel free to get in touch on jmw@currencies.co.uk or (+44) 01494 787 458 to discuss how these events are affecting your trades. Please quote JMW and PSF.
The UK as a safe haven?
When we mention ‘safe havens’ the UK is pretty low on the list of favoured options. A safe haven investment is something that is deemed to be very low risk and therefore a ’safe’ investment. In times of uncertainty favour for such investments increases as attitudes to risk change. As money pours into any investment it becomes more expensive to buy as the price goes up. Typcial safe havens would be Gold, the Swiss Franc and the US dollar. Gold and the Swiss Franc have appreciated in value massively in the last few years as investors seek safe havens amidst the doom and gloom surrounding financial markets. One of the reasons the US dollar has lost value is that when the financial crisis first hit in 2007/8, money poured into the dollar. Since then whilst major fears remain, the global economy has recovered and safe haven funds have been moved away from the dollar into other slightlier riskier assets like the Aussie dollar and even the Kiwi.
The pound is not really considered a safe haven in the same vein as Gold and the Franc, or even the dollar but that could be about to change. London has more FX transactions taking place than any other financial centre in the world and is therefore the largest foreign exchange centre in the world. The unique placing of the UK geographically means throughout the day we can deal with the Asian markets, European markets and the American markets. I also had read a report that the Chinese Yuan is to be developed more as a global currency and this is to be done with the assistance of the UK. George Osborne recently met with the Chinese Vice Premier to discuss this exact opportunity. As such a large financial centre London was majorly affected by the financial crisis but it does still retain a very strong international reputation for being a ‘good place to do business’. Such major moves as the work with China and the tough budget deficit reduction measures the coalition government has undertaken all have the goal of restoring Britain’s financial credibility in the long run. Yes we are experiencing some harsh times but we knew things would be tough. Only time will tell whether the measures taken to combat the UK’s debt problems are too tough. I feel the long term goals that are being pursued will give the pound strength but it will take time for this confidence to be restored.
If you have any currency requirements at present we can secure extremely sharp commercial rates of exchange. Even if your needs are in the future we can secure todays rates for a small deposit with no need for full settlement for two years. If you would like to discuss any of the issues surrounding your foreign currency transfers please get in touch on 00 44 1494 787458 or e-mail jmw@currencies.co.uk
Sterling spike!! Euro Weakness!!
Great news for those looking to buy Euros in the near term, head of the European Central Bank Jean Claude Trichet yesterday downgraded his forecasts for the Euro Zone in his speech yesterday and we have even heard the mention of a rate cut for the Euro Zone…
The phones are going crazy here so this post is short and sweet, contact me djw@currencies.co.uk if you have a transfer to carry out.
Bank of England and European Central Bank interest rate decisions due today
At 12:00 and 12:45 respectively we see the release of interest rate decisions for the BOE and indeed ECB and although no changes to rates are expected today, all eyes will be of Quantitative Easing for the U.K and a potential interest rate cut going forward for the European Central Bank.
Should we see signs of a rate cut mentioned for the future in head of the ECB Jean Claude Trichet’s speech following the decision in Europe then we could see the Euro lose significant ground against all major currencies, should we see QE introduced by the Bank of England we could see the Pound lose significant ground against all majors… I t all points towards a very interesting day ahead for those with Sterling and Euro interest.
If you want to be kept up to sdate with the latest market movements and want to achieve a great level of exchange when you come to make your transfer then feel free to email me directly.. djw@currencies.co.uk and I will inform you jsut how I can help.
What has happened to the Swiss Franc? What does this mean for the future? How does it work? Shall I pay off my Swiss Franc mortgage? Minimum level against the Euro – Australian GDP better than expected too…
Yesterday saw the largest movement for the Swiss Franc in its history as the Swiss National Bank decided to set a minimal level for the Franc against the Euro. Within ten minutes the CHF weakened by roughly 8% against everything as CHF was sold off rapidly by the SNB to get from 1.10 to 1.20 against the Euro, also against the Pound we saw similar movements as GBP-CHF went to 1.38 from 1.25!
Lets see what has actually happened here and what effect this may have gonig forward not just for EUR and CHF but for many other currencies too….
The Swiss are in effect saying they will buy unlimited quantities of of currency in order to keep the EUR-CHF rate at a minimum level of 1.20, personally if I had an investment in Swiss Francs and at some point I had to bring it back into Euros then why hold on now, I would sell it straight away as by all accounts the SNB say it will never get any better than this to sell…. This may lead to a large sell off of CHF in the coming weeks and months which may weaken the Swiss Franc and lead to investors looking for other places to store their funds.
On the other hand justhow much money have the SNB got to combat this??!! By decreasing the value in Swiss Francs it will increase demand, and many investors will no doubt see this as a buying opportunity which may mean that the SNB face an ongoing battle against investor appetite, the longer this goes on the more they have to draw on and do they really have a bottomless pit of money?? I don’t think so!
Yesterday saw the Pound lose ground against most majors following this, we slipped below the 1.60 mark against the Dollar as investors turned to gold (priced in Dollars) and also the Euro and antipdean currencies gained as it appears Sterling is still nowhere near the currency of choice.
Last night saw Australian GDP figures released and they came out 1% growth for their economy, much better than the 1% expected and leading to a good bit of AUD strength….. This goes to show Australiais still boxing on well in the global economic nightmare compared to the U.K showing a rather dismal 0.2%. Be aware this may lead to the AUD being fairly solid again in the near term so those of you with transactions to make may wish to think fast.
If you have a Swiss Franc mortgage, you are emigrating to Australia, you have business transactions to send overseas or any general need to transfer anything from £1000 to multi millions from one bank account to another involving a currency exchange then contact me directly djw@currencies.co.uk or by calling me during U.K office hours on +44 (0) 1494 787 462 and I will be happy to help you get the best rate along with a great level of customer service.
I look forward to hearing from you and heres to another busy day on the markets! 
Swiss National Bank sets minimum exchange rate limit at 1.20 against the Euro….. MAJOR STRENGTH AGAINST THE CHF 6 % in less than ten minutes…..
Those of you buying Swiss Francs might wish to get on the phone 01494 787 462 and take advantage of some amazing movements for the Swiss Franc:
The SNB have kind of pegged the Franc against the Euro leading to major CHF weakness, a great opportunity!
