Monthly Archives: December 2011
Pound hits highest point in the year against the Euro
I must say sorry for the lack of updates this week but quite frankly the phones on the trading floor have been extremely busy, all of my clients that have been waiting for 1.20! Have been put on red alert as a chance to buy at that level may be just around the corner!
In my opinion this is a key time to place a limit order, these orders are free and can be cancelled or amended at any time should you change your mind unless the order has been achieved.
Essentially a limit order is a tool for those that might not be available on the phone all day as if your rate becomes achievable your currency is bought out automatically for you and you just need to forward over your payment according to a normal contract.
Contact me directly today if you want to place a limit order or indeed save money over your bank or current broker… I’m more than happy to undercut your current prices to win your business, just email me on djw@currencies.co.uk with a contact number, let me know what rate you have been offered and I will save you money…. A nice way for me to give something back to my regular readers at Christmas!
This report will examine the dramatic swings in 2011 on Pound Sterling rates. Market uncertainty has created excellent opportunities, just look at the low-high movements on various traded currencies buying at highs and lows throughout 2011:
|
Currency Pair |
Year Movement |
Difference In Currency on £200k |
|
GBPEUR |
9.04% |
19,982 EUR |
|
GBPUSD |
8.78% |
26,980 USD |
|
GBPAUD |
11.32% |
33,544 AUD |
|
GBPZAR |
30.27% |
621,200 ZAR |
|
GBPNZD |
20.47% |
76,740 NZD |
|
GBPJPY |
18.84% |
4,410,000 JPY |
|
GBPCHF |
33.18% |
77,710 CHF |
The Currency Compass
There are four types of event that can cause market movements:
1-Economic Data (eg Gross Domestic Product –GDP)
2-Political Stability (eg Elections / Political Uncertainty)
3-Acts of God (eg Tsunamis),
4-Acts of Terror (eg Terrorist attacks)
Revolution, Floods and Debt
The world is a different place from a year ago, as are the currency markets. Weekend news that North Korean leader Kim Jong Il had passed away underlines a year that has seen many events to move the currency markets. The Arab Spring uprisings in the Middle East and Africa brought some welcome advances in democracy, but also created instability in regions which due to natural resources are key to the West. The high price of petrol in the UK is without doubt one example of the knock on effects of such instability.
The US Dollar strengthened and remains a safe haven choice for investors in such uncertain times, particularly as this year saw the Swiss National Bank intervene in the currency markets to artificially weaken the Franc when too strong. This caused the Franc to weaken by some 10 cents in seconds and shows the importance of keeping in touch with us here at PSF.
Australian floods, the New Zealand and Japanese earthquakes too all created turbulence on exchange rates. The high price of Gold helped the Rand to strengthen, but then as concern arose over global confidence and international demand for their resources the ZAR plummeted, touching a 5 year low and a 2 year high all within the space of a year. Who would have foreseen any of this in 2010?
If you have transactions planned for the end of 2011 and in 2012 it is well worth making us aware. We’ve won awards for our rates and customer service and can help secure the best rates from the market, also offering you an advantage by keeping you informed, for free of movements that will improve or threaten your exchange rate. Why not make an enquiry on the right hand side. Or even speak to me direct on jmw@currencies.co.uk
Pound Sterling Focus and Predictions
I have been very cautious of getting too excited for any major sterling improvements for some time now. It looks like more QE (Quantitative Easing – which typically weakens a currency) will be due in the New Year as a result of low growth, high unemployment and high inflation. Interest rates are a key driver on exchange rates and until rates increase in the UK (remember that rates have been on hold at their historic low of 0.5% since May 2009) I cannot see anything significant happening.
DataWatch – 09.30am Tomorrow: Bank of England Minutes: Will we see the first hint of more QE for 2012.
With yesterday’s news George Osborne will be implementing new banking rules, UK banks will face huge extra costs surely to be borne by their customers. The UK’s refusal to contribute further funds to the IMF packages could further isolate Britain from vital European trade. Both factors here could weaken our economy, putting further pressure on the pound.
EURO NEWS – Whilst stressing the Euro’s ‘permanence’ Mario Draghi, President of the ECB (European Central Bank) yesterday said there was a danger at some European banks failing due to reliance on the ECB for funding, as well as criticising politicians response to the crisis. This story will surely continue to wreak havoc on exchange rates. If you are making transactions and are unsure as to how this will play out speak to our team via the contact page to find out how we can secure the best rates.
Anyone interested in GBPEUR gambling on seeing a 1.20 trading level should be careful they don’t miss the boat on current 11 month high trading levels. I of course couldn’t rule out 1.20 but feel in the New Year once the focus returns to economic data for the UK, trading levels could fall quite quickly.
If you would like more specific information on a currency pair affecting you please let me know jmw@currencies.co.uk
Economic Data ahead this week
Even though it is only a few days to Christmas, there is still plenty of data out this week to move the markets. Wednesday sees UK Public Sector Net Borrowing, Kiwi GDP figures and Thursday sees UK and US GDP data. If you have any transfers to consider in the early part of January it may make sense to look ahead now.
A well placed Stop / Loss or Limit order may be ideal over the Festive Period should you be looking to protect your rate. Also a forward contract means you can book current levels for the New Year today, without having to worry about adverse movements in the coming weeks.
Merry Christmas 
Pound weakness against Dollar and strength against Euro, Creeping up against the AUD, NZD and ZAR… U.K data of late is still poor so be aware!
Some great movements seen of late for those looking to buy Euros, however you must still be aware of the problems within the U.K that are managing to slither beneath the headlines currency wise and the Pound is still making great gains against the Euro.
Unemployment in the U.K has hit its highest point in 17 years and we just this mornnig had much worse than expected Retail Sales results, there are consistent mentions of strikes in the U.K in many different sectors and there is certainly a grey cloud emerging over us for 2012, yes it might blow over and we may see blue skies towards the summer, but also it could open up to create a real downpour on the U.K economy.
I have many clients at present waiting for the golden 1.20 mark against the Euro however all I can say is this needs to be thought out more…. Just like setting your alarm clock in the morning it is very easy to aim for an exact figure like 07:30am or 08:00am, this is the same with currency rates, everyone aims for 1.15 or 1.20 – The problem you get is that when rates approach these levels they find it very hard to break through as thousands and thousands of orders get filled at 1.20 pushing rates straight back down again. Remember, you need rates to go over and above 1.20 to be able to buy at 1.20 yourself so this makes it very hard to achieve.
The sensible option is to aim for 1.19 and be one step ahead of the rest in case rates just don’t break through 1.20 enough and you miss the boat… That would be my tactic in this minefield of currency movements.
Great news for USD or AED sellers as all this uncertainty is pushing your rates in the right direction again, also those looking for the Antipodean Currencies AUD,NZD and ZAR) however remember these trends are very much short term at the moment and rate movements are turning around quicker than I can say Quantitative Easing (Although that does take a while!)
The key to this market is being in a postiion to book out a rate of exchange and making sure you don’t get too greedy, should you have an upcoming transfer to make be it buying or selling Sterling then feel free to contact me directly, leaving a brief message and a contact number for me to give you a call on – I can be reached on djw@currencies.co.uk Or you can fill in the enquiry form on the right hand side of this page.
If you are a private or corporate client and need to buy Euros now may be a wise time with sterling at a 10 month high!!!
RATE ALERT GBP/EUR AT 10 MONTH HIGH
This morning sterling exchange rates have risen to a 10 month high against the Euro spiking up to 1.1915. We have seen some excellent gains over the last two trading days and these have been some of the busiest on the trading floor for a while. If you are looking at buying Euros I feel there will be some excellent buying opportunities as we head towards the Christmas period. Please email me at bma@currencies.co.uk to discuss your requirement and the options that are available to you.
The Euro at present is weakening at an alarming pace against a range of currencies mainly attributed to the poor reaction to last week’s EU summit. In the run up to Christmas we may see this trend continue but I firmly believe that 1.20 will be some sort of resistance level.
The markets have been focusing too heavily on events in Europe and we should not forget the underlying issues that surround the UK economy. With growth forecasts down, interest rates look like they will stay at 0.5% for the foreseeable future and unemployment rising, next year may be a rocky road for the UK economy. With retail figures due out this week, if the data release is not so positive then we may see a slight rebound for the Euro. If you are continuing to hold out for higher levels you do run the risk of missing this positive movement for sterling which could make a significant difference on your purchase.
Due to the uncertainty that is around at present you would be very brave to not capitalise on the current trading levels that are available. At the beginning of this year rates were at a similar level and the clients that held out for 1.20 have had to put their lives on hold for over a year now. Don’t let the same mistake happen to you.
Please feel free to contact me at bma@currencies.co.uk. I will be happy to help you with your conversion and we will give you our expert opinion on where we feel the rates of exchange may head in the future to help you minimise any potential losses. Once you have emailed me with your contact details and your exact requirement I will contact you to explain how you can benefit from our award winning rates.
I look forward to hearing from you.
European Agreement and how will it effect exchange rates?
“If you are in the process of a large currency
transaction in this current market then do be aware holding out is not for the
feint hearted – It is going to be a rocky ride out there so get belted up!”
Market Summary
|
Currency |
% change over FridH/L |
Difference in £200,000 |
|
GBPEUR |
0.68% |
EUR 1100 |
|
GBPUSD |
0.85 |
USD 2640 |
|
GBPCHF |
1.35% |
CHF 3880 |
European
Agreement takes shape
A historic agreement was finally put in place on Friday revolving
around deeper economic integration for EU countries. However, Britain (The
third largest economy In Europe) at present has refused to be involved, with
David Cameron feeling that concessions were just not there for the U.K
regarding financial regulations.
It could now take at least three months for these agreements to
fully take shape, as there are many loseable referendums along the way for the
26 countries involved.
This all leads to an interesting few weeks before Christmas,
reports in the Sunday papers yesterday suggested Nick Clegg is not happy with
the decision of Cameron, which indeed places further pressure on the coalition
– with political stability being a factor for currency strength, a break up or
even growing speculation of it may be very damaging for the Pound.
Also, over half of trade for the U.K goes through these countries,
and there is now the risk that the U.K could drift apart from the continental
mainland and relations both politically and in trade could slow down. Again,
whilst it is unquestionable that the Euro Zone has huge problems, the U.K has
many large ones of its own, and our while our Prime minister is busy at
countless meetings surrounding fixing the Euro – who is dealing with our
problems?
Usually, we put our predictions in our reports however with the
various complications that could be thrown into the hat this week in all
honesty I don’t know where GBP-EUR
will end up… David Cameron doesn’t know, Angela Merkel doesn’t know and with
something unprecedented like this I don’t believe anyone knows.
Instead, I will lay out the options available to you in order to
protect yourself should something really hit the fan in the next few days.
Option
1 – With the positive movement for
Sterling in the past week or so against the Euro, those looking to buy Euros could book out a forward contract, this is whereby you
can lock into a rate of exchange with us for up to two years with just a small
deposit. At the risk of sounding like a game show host, it could be a great
idea to lock in half of the currency you require and ‘bank’ the current rate if
current rates are above budget. For people due to receive Euros this contract
option could be the protection you have been longing for too, as we can take a
Sterling based deposit should you not have Euros in your coffers.
Option 2 – Should you not really wish to
jump in with two feet and lock in to a rate, yet wish to be protected if there
is a bug turn for the worse then a stop-loss
order may be ideal. You essentially can decide on a buying price you would not
be happy to go below, and if we see a sudden drop in rates, your currency is
automatically bought out at that level – even if it is at 4am on a Saturday…
This saves the busier of you from watching markets 24/7 yet keeps you
protected, we also offer a limit order which works the other way should there
be a rate you wish to achieve. Both of these orders can be cancelled or amended
at any time if not filled and do not cost you a penny to put in place. Contact
me by filling in the form on the right hand side of this page today to discuss
these in more detail.
Dollar to
benefit from all of this? Swiss devalue again?
Many analysts believe the big winner from all of this may now be the USD. In times
of uncertainty historically investors have ran to the perceived ‘safer haven’
of the USD, with gold being seen as a safe bet also being priced in USD, demand
for the currency increases and therefore so does its value.
If political matters in the U.K continue to take the headlines
along with riots, static interest rates and ever decreasing growth forecasts
then as an investor, although the States has problems of its own I know where I
would put my money, it would not surprise me now to see GBP-USD dip below 1.50
in the early part of 2012.
For the past few years the Swiss Franc and Japanese Yen had taken
away some demand for the USD in uncertain times, with the Swiss Franc having
increased in value by over 50% during this global crisis at its peak. Since
then, both the Swiss and Japanese have moved to devalue their currency
artificially as the strength was starting to seriously impact their exports, in
fact there are growing rumours that the Swiss may devalue again and with their
interest rate decision due on Thursday, if you have Swiss francs to sell then I
would seriously consider the options mentioned earlier in this report, a second
devaluing could push GBP-CHF well above 1.55.
The Federal Reserve (US) Interest rate decision is also due on
Tuesday evening and the U.S have thrown a spanner into the works in the past so
for those with a pending Dollar interest make sure we are aware, fill in the form on the right hand side of this page and I will be happy to guide you throughout the process.
Data out today
A quiet day data wise today but I’m sure the markets will have plenty to react to
with the European announcements, which will probably be the talking point of
the week (yet again). Make sure your Christmas isn’t spent watching exchange
rates and get your protection in place, or at least let us be your eyes and
ears on the market for you – contact me directly djw@currencies.co.uk if you would like assistance or have any questions or queries
surrounding this report – Thanks for reading.
Major Sterling Exchange Rate Movements Due to Uncertainty
With no further Quantitative Easing announced the Pound is looking quite safe for the time being. The ECB (European Central Bank) cut rates as expected but most telling so far today was Mario Draghi playing down expectations the ECB will be coming to the rescue of the weaker Euro nations. What now for Italy?
Unfortunately the main thrust of the speech focused on improving liquidity to banks in Europe. Basically making it easier for them to acquire short term funding for their day to day operations. I think this reflects the fear that another major credit crisis could be brewing in Europe, and it is good the ECB are doing this. It is not however enough. I talked this morning about how (perceived) riskier assets and the Dollar will react to events in Europe and we have had a mixed bag, but definitely the main direction has been a market not happy with what they are seeing. What will tomorrow and the weekend bring?
GBPEUR dropped to within a whisker of the 9 mothh high at 1.1767, GBPUSD retraced steps back to 1.56 and GBPZAR ( the biggest mover today) saw 3% movement, nearly breaking the 13 mark (again). This is all due to investors fearing not enough is being done in Europe. Exact movements are difficult to predict and quantify, suffice to say it is presenting good opportunities for clients who are prepared. Events have as predicted today presented some great opportunities to buy and sell foreign exchange, the movements being very sudden and unpredictable. I expect tomorrow will be the same, I really can’t stress the importance enough of keeping in touch with a specialist broker such as myself.
If you would like me to keep an eye on things and provide the relevant updates specific to your trades, feel free to get in touch on jmw@currencies.co.uk quoting PSF. I look forward to hearing from you.
European Central Bank Cut Rates – Minor Euro weakness but generally expected… What to do with your funds????
Today the ECB cut rates by 0.25% to bring them back to being level with the U.K. This had been widely expected so it didn’t lead to a huge amount of Euro weakness however, in the last 48 hours GBP-EUR rates have indeed shifted up and are nearing a 10 month high for those looking to buy Euros.
The big question on all of my clients lips at the moment (especially those in the middle of a property purchase overseas) is – What shall I do with my money?
The ‘million Euro question’ has no right answer at the moment as I don’t believe anyone really knows what might be around the corner next…. My personal opinion is not to get too carried away and too greedy, over the last two years I have seen dozens of clients get greedy when rates are going the right way only to see them turn against them drastically and their purchase become more expensive than they even originally budgeted for.
With the risk of sounding like a game show host – Why not at least consider banking half of your currency at a good rate while it is this high, then waiting to see what else happens for your other half. At least then all of your eggs are not in one basket and you have the chance still to take advantage if rates get better yet you do not kick yourself if they should drop away.
Feel free to get in touch with me directly djw@currencies.co.uk if you would like a chat surrounding a potential trade be it buying or selling Euros, or indeed any other currency and I shall be happy to help.
Crucial couple of days for anyone looking to make a currency exchange
With the global economy at practically standstill, I believe European events in the next few days will be key to shaping the short and medium term movements of exchange rates not just on the Euro, but also the Pound, the Dollar and all majors. Two key decisions today could more specifically also help move GBPEUR, GBPUSD and EURUSD. An exceptionally volatile few months have cooled slightly this week, but I feel things could be pushed one way or another depending on the outcome of the European summits. If you have any transfers to make it is well worth considering the impact of these events. As specialist currency brokers we can help with tools designed to protect your exchange rate. Read on to find out more about what I think will happen and how we can help limit your exposure in these uncertain times.
12.00 BoE Interest Rate Decision – The Bank of England will today announce the outcome of their latest policy meeting. Whilst no change in interest rates is expected we could well see a further round of QE announced which could cause sterling weakness. If not this month, then it is likely in the New Year. Anyone looking to sell the Pound in the New Year should really be aware of the impact this could have, it may mean your transfer is much more expensive in the New Year than now. We can book current levels forward with a forward contract. I have really seen a rise in this type of contract this week, particularly on GBPEUR as we are so close to the 9 month high. Speak to us to find out more.
12.45 ECB Interest Rate Decision – The European Central Bank will then announce their decision. It is likely we will see an interest rate cut today which could well lead to Euro weakness. This could provide the perfect buying Euros opportunity, particularly if the outcome of the summit is Euro strength (and no QE is announced in the UK!). The markets may however have already priced in a cut in rates so any movement may be fairly limited.
Movement around this time is likely to be quite volatile as investors try to second guess decisions. If you have a transfer to make and would like to be kept up to date at this time speak to me today on jmw@currencies.co.uk quoting PSF and I can keep you posted.
We also have the ongoing events in Europe with European leaders meeting for another ‘key’ summit. This session could well go on into the weekend and I think the general theme on the markets will be in one of two directions:
Signs the Euro crisis will be tackled – If the markets receive well what the leaders are discussing we should see the Euro strengthen. Signs that the crisis is being tackled should also give rise to US Dollar weakness as investors move out to other riskier assets. We should also see a strengthening of the Kiwi, Rand, Aussie and also the Canadian Dollar. Anyone looking to sell one of these currencies to buy sterling may well wish to take advantage of any spikes against the pound at this time.
Signs the Euro crisis is not being tackled – If the markets do not receive well events in Europe a reverse of the above will likely happen. We will probably see the Euro weaken and the US Dollar stregthen as investors fears over the global economy cause a flight to safety. There will also be a knock on effect on the currencies mentioned above which will weaken as investors move to other assests like the Dollar.
The last six months have been a very difficult time for anyone making currency exchanges. The pound has rallied and fallen against all the majors as global events cause shock and panic. One of the major drivers on all exchange rates has been the Euro crisis and the possibility this will be tackled or not should cause a move in one direction or the other as stated above.
Of course there are no hard fast rules on the currency markets and anything can happen! If you have an upcoming transfer, even months ahead it may be of interest to speak to us to find out all your options. As well as booking today’s rates forward for future purchase we can also put orders into the market to trade at certain levels so your exchange doesn’t become more expensive than you had bargained for. Lookout for further updates and analysis on the site today and if you would like any specific information relating to the content on the site or your personal transfers feel free to e-mail me directly on jmw@currencies.co.uk quoting PSF.
If you need to buy or sell Sterling, Euros or US Dollars then this week’s interest rate decisions may decide the trend in the lead up to the New Year.
Good morning readers,
With two huge rate decisions for the UK and Eurozone this Thursday there could be quite a lot of volatility for sterling exchange rates over the course of this week. I have had many clients recently asking me what is going to happen with the pound against a range of currencies. The truthful answer is that with all the uncertainty surrounding the global economy and notably Europe it is very hard to exactly pinpoint where sterling exchange rates will be trading early next year.
Firstly we have to look at this week. With France and Germany recently meeting and another summit due on Friday week many analysts are stating that it is crunch time for Europe and if no resolution is found then the unthinkable could be around the corner. The pound has gained against the single currency today after Standard & Poor the credit rating agency has put 15 euro-area nations on watch for potential rating downgrades. The news of this is nothing new but we could be asking S&P if they could time there comments better. Every time EU leaders are trying to resolve things the credit rating agencies come out with major doom and gloom comments and markets across the globe falter again. This morning’s GDP figures for the Eurozone has shown signs of slight growth for the region but as the data came out exactly as expected we have not seen any major movements from this.
I feel the interest rate decisions on Thursday will be key to how things develop for the rest of December. There are different outcomes that could affect the pound and Euro against a range of major currencies. There is a possibility that the European central bank (ECB) could cut rates as they did last month. If this were to happen then I think the Euro could seriously weaken. If you are worried about this outcome and you have Euros to sell you may be prudent to act well before this decision. Email me at bma@currencies.co.uk with your details and I will call you to discuss the options that are available to you. If the ECB keep rates on hold then I cannot see the Euro gaining and will more than likely be fairly stable.
In the UK we are expecting the base rate of interest to stay on hold as it has for some time now. The biggest concern with those that need to sell the pound will be if the Bank of England’s Monetary policy committee issue another round of Quantitative easing. There have been rumours that this may be the case as it is the only way that they have had of trying to stimulate the economy. I feel that this could hamper the pound further against currencies like the USD, AUD, CAD, NZD, CHF & ZAR. We have already seen a big decline in the value of sterling against these currencies recently and if you need to buy these currencies before the New Year then I will be happy to speak with you to discuss timing and the options that are available to you. Email me at bma@currencies.co.uk to discuss your requirement and how we can make ultimately make you a saving on your exchange over the high street bank.
My biggest concern for the pound going forward though is all the doom and gloom surrounding the UK economy. It has all been highlighted recently with weak UK retail sales by the BRC and housing market survey by Halifax has highlighted the fragile state of the UK economy. There is a lot of pessimism surrounding the UK and the pound and let’s hope that the start of 2012 does not begin the way this year did with losses for sterling.
I would love to hear your opinion on what you feel will happen with the pound, euro and events in Europe. Please email me bma@currencies.co.uk and I will come back to you with how we can help you make significant savings on your currency exchange.
Currency news from over the weekend – Swiss Franc to be devalued again and Icap open their Drachma dealing desk again!!
Good morning to all regular readers and indeed if you are here for the first time!
Not a mad weekend for news as I feel much depends on the European meeting towards the end of this week, however there were a couple of points of note that you may wish to be aware of.
Swiss Franc followers – especially if selling Swiss Francs should be aware that I saw an article over the weekend saying that the SNB (Swiss National Bank) may look to devalue the CHF once again this week, last time we saw this happen the CHF lost around 10 cents against GBP in a matter of minutes, not good news at all if you are looking to bring money back for a property sale, wages or business transactions.
Along with this, Euro followers – Especially those involved with Greece may wish to know that Icap ( one of if not the largest Bank trading company) have made steps to reopen their Drachma desk…… Now there is no smoke without fire and this particular rumour seems to be smouldering consistantly, as mentioned in py previous post on selling euros I don’t think this presents a time for huge panic although you do certainly need to start putting some protection plans in place should things suddenly take a turn for the worst.
If you have Euros to sell yet have not yet completed on a currency transaction then do feel free to contact me regarding a range of different contracts we can offer to protect you from adverse market movements – email me directly djw@currencies.co.uk and I shall be happy to help.
