Monthly Archives: June 2012
If you are interested in GBPEUR or GBPUSD you need to know about risk appetite
Exchange Rates move as demand for a currency increases or decreases. As investors increase their investment in certain currencies we see movement on exchange rates as the price increases and falls. One of the main dictators on investors attitudes to investment is their ‘risk appetite’, i.e appetite for risk. Investors don’t want to be caught out so they will often move in unison to avoid being caught out.
Risk Appetite is very important to understand on exchange rates because it helps us to undestand why rates move the way they do. If we are looking to buy or sell a currency being aware of the sentiments of investors will help you to make a more informed decision and should lead to a much better exchange rate.
The reason I am explaining this is because in my role as a specialist currency broker assisting private and commercial clients with their currency transfers, I am often asked why things have happened and the whole idea of this site is to help anyone making a transfer save money on their rate by getting a better deal and also to time their exchange correctly.
Risk Appetite is a major driver on exchange rates at present with a few key trends emerging according to the sentiments. The concerns are all to do with the Eurozone and the outlook for the global economy.
EURO – If risk appetite is low the Euro will probably weaken. This is why the Euro has weakened so much lately. But as the last 24 hrs shows us, good news can cause risk appetite and confidence to return. GBPEUR high this week 1.252, the low 1.2360. If you would like to trade at these kind of rates not the rates offered by banks we can help, contact me no jmw@currencies.co.uk for more information.
USD – The US dollar is a safe haven. When risk appetite is low investors will move to the dollar to keep their money ‘safe’. Due to the size of the US economy it is thought that whatever happens, dollars are always worth holding and as such the Dollar remains fairly strong. But when confidence returns and risk appetite is high investors look to other riskier assets and the dollar will weaken.
STERLING – Also a safe haven, but has weakened off massively in recent years reflected by the decline of economic and political influence the UK has over the world. We have seen the pound find favour lately but it could easily fall like it did last year. The UK is not the force it used to be but maintains an important platform on the international stage and the pound will always benefit from its history and status amongst the other currencies.
AUD, KIWI, ZAR (RAND) – These are the riskier assets that strengthen when risk appetite is high. They offer higher interest rates than the major currencies and as such investors pile in when they think there is a good chance they will appreciate in value (plus investors gain from the trade due to the higher interest rates). Even though these economies are arguably stronger and performing better than their Western partners, their currencies are deemed riskier and hence will fluctuate according to sentiment. Anyone tracking these will have noticed they have toughened up today due to the EU summit coming out positive for the Euro.
CAD, NOK – Also to an extent riskier but lately have weakened due to the falling price of Oil. If global demand (orders) pick up due to confidence in the Eurozone returning, the price of Oil could start to increase and hence these currencies will strengthen.
Next week is a really important week for the pound and I think we could well see the pound lose more ground. Please see my post earlier this week http://www.poundsterlingforecast.com/2012/06/26/why-i-think-the-pound-will-fall-soon-good-news-for-sterling-buyers-bad-news-for-sellers/
This site is set up to offer our clients and new clients informatoon on exchange rates with a view to saving them money. If you are unsure if you are getting the best rate or would like any information on what is driving your exchange rate, please conatct me personally as I would be very pleased to speak to you about your trade and why I am wholly confident we can offer you a much better proposition.
For further infiormation please speak to me Jonathan on 00 44 1494 787 478 oremail jmw@currencies.co.uk
Enjoy the weekend
Pound Sterling exchange rates drop against many majors however still stuck in a range against Euro – What will happen next?
Economic data releases out this week have not been particularly favorable for the U.K and indeed the Pound. We had Public Sector Net Borrowing which was not great, followed by mortgage approvals data yesterday and GDP figures this morning for the U.K neither of which were exactly positive.
We have dropped a little over the week against many of the majors such as the USD, AUD, NZD, CAD and ZAR however rates against the Euro have remained steady and have pretty much been trapped in a range of around 0.7% movement between high and
low all week.
Today and tomorrow we have a European summit (yes yet another one) which has once again been billed as the potential savior or end of the Euro, as major European ministers will be discussing how they plan to tackle this fine mess they have
found themselves in.
At any point anything may be released over the next 48 hours, if it is another fantastic resolution then expect potential Euro strength and if it is bad news or news that the ministers are arguing and just not getting anywhere then the Euro may find life a little difficult in the coming days.
The key thing to remember is absolutely anything may happen at any time, and this won’t just effect the Euro but it will also affect all of the major currencies as it will effect investors attitude towards risk, so expect some volatile movements for the USD, AUD, NZD, CAD and ZAR too.
If you have a currency transfer to carry out it may be prudent to consider your options and ensure that you have a proactive currency broker on your side if you are not already using me. If you currently do not use a currency broker or you feel you could get a
better price or level of service than you are currently getting then by all means feel free to email me directly and I will be happy to personally help you for any currency transfer from smaller transfers of one thousand Pounds plus to
multi million Pound transactions. I can be reached on djw@currencies.co.uk and i look forward to hearing from you.
What will happen with the pound in the lead up to the Bank of England interest rate decision next week.
Good morning readers,
Over the last couple of days sterling exchange rates have been fairly flat with a spread of around half a cent against the Euro, 1 cent against the USD and a couple of cents against the Aussie & Kiwi Dollar. The inactive pound seems to have stabalised due to the fact that we have not had any significant changes in economic data over the course of this week.
Today sees a day that could potentially change this when UK GDP is due out at 9.30 this morning. This is the final figure for Q1 of this year and we are expected to see that the UK economy contracted by -0.3%. Now if this final figure should deteriorate further expect to see the pound get knocked off its perch. This morning we have already seen Nationwide housing prices showing that prices fell by 0.6% this month and prices are down by 1.5% from this time last year. Sterling has slightly reacted by weakening against the USD, CAD, AUD, NZD & ZAR.
Looking forward into next week the market will be eagerly anticipating what will come out of the Bank of England interest rate decision next Thursday. At the last meeting there was a 4/5 split on voting for more quantitative easing (QE). If other data comes out negative for the UK then this may swing the vote in favour of initiating more QE. We all know what this can potentially do to the state of the pound. If you are not aware you should be slightly concerned and you can email me at bma@currencies.co.uk and I will explain the full implications.
Over the last 2 years the interest rate decision has been a bit of an anti-climax for the UK. With rates being left on hold at 0.5% since the start of the financial crisis. This week the Govonor of the Bank of England Mervyn king stated that if things do not start to turn around with the economy soon they would not be scared to reduce interest rates further. In the past we have stated that a countries currency can significantly strengthen or weaken when their central bank raises or lowers the interest rate for the country. If Mervyn King does decide over the coming months that interest rates should be lowered by 0.25% then I would expect the pound to weaken against most of the major currencies. This should be a big concern for most of you that are holding out for the pound to rise up further against the Euro and a host of other majors.
Against the Euro in general I have had some clients who have stated that they feel the pound may go a little higher. Every day I am watching the rates and the pound is really finding it hard to push pass the 1.25 level and stay above it. If there is a movement by the Bank of England to reduce interest rates, or initiate further QE then the pound could really weaken. The worst that could happen would be for both to be done at the same time. If you have a requirement to buy or sell the pound then the outcome of these meetings could significantly weaken or strengthen your requirement. You are free to email me with your exact requirement at bma@currencies.co.uk and I will discuss all the options that are available to you to help you minimise your risk to volatile exchange rate fluctuations.
Pressure on the Single Currency Continues but Concerns Over Stability of UK Economy Resurfacing
I wanted to take a moment before embarking on my next blog to thank our vast and growing reader base for all their positive comments about the site and their continued interest in our currency views. Your feedback has been invaluable and we appreciate any comments, both positive and negative, that will continue to help us impove and taylor the website specifically towards our readers needs.
Moving on and Wednesday has seen Sterling fall off against both the EUR and USD by the close of European trading and has offered a welcome opportunity for all those clients selling euro or USD. We have been continually bombarded over recent months with negativity surrounding the global economy and the sceptics amongts us will require far more than just potive words from the powers that be, before any long-term market confidence is restored.
The on-going economic struggles of multiple EU countries, particularly Greece, Spain and Italy have severely hampered the single currency and its ability to break free from its current stranglehold. It’s as if a positive statement is quickly eradictaed by two neagtive ones and anyone who follows the markets closely, ’as this particular analyst does on a daily basis’, can be forgiven for being close to despair on more than one occassion.
I suppose the million pound question has to be, which direction will the GBP/EUR currency pair take next?
In total honesty if I had the answer to that question I would probably not be writing this blog (or if I was it would in the tranquil surroundings of somewhat sunnier climbs) and the honest answer is unfortunately no one does. What we can do however is make educated guess’s and provide facts to back up our argument and that is essentially what we try and provide our readers with. We also provide market analysis and updates for over 40,000 clients, as well as provding some of the most competitive exchange rates in the country.
The way I am viewing the current economic climate in Europe is with the glass half full, which may well surprise many of you. The fact is the EU could not lose much more market confidence and with the official bailout request coming from Spain and Cyprus over the past week (it should be noted that these were both expected) I do wonder if we have almost hit rock bottom. With the annoucnement of EU leaders ’10 year vision’ to save the eurozone and the recent formation of a new Greek government, which seems to have eased some market tension, I do feel the tide is starting to turn and whilst it would be foolish to suggest that Europe’s problems are over, I do feel better times for the euro may be on the horizon.
Shifting the focus back to the UK and we already know that growth forecasts have been cut for the remainder of 2012. Further Quantitative Easing is also extremely likely over the coming months and if Mervyn King is to be believed, there are many reasons to suggest the recent highs GBP has been enjoying won’t necessarily last.
Whatever happens next it is improtant to stay up to date with the latest market movments, particularly if you have a currency transfer to initiate before the end of the year. If you would like to receive my market alerts, or have an upcoming currency transfer that you would like to discuss then please feel free to contact me directly at mtv@currencies.co.uk or on 01494 787 478.
Euro rates breach 1.25, will it last? GBP/EUR and GBP/USD forecast
Sterling exchange rates crept through the 1.25 territory and closed in on a fresh four year high yesterday following the news that Cyprus is the next European country to seek assistance from the EU, bringing the total to five.
News emerged that Cyprus may need as much €10 billion, over half the size of its economy and equating to over €10,000 per Cypriot as European leaders will meet at a summit on Thursday and Friday, but they are not expected to come up with a lasting solution to the region’s problems that have also sent Italy and Spain’s borrowing costs soar.
Initial reactions have led to a fall in Euro exchange rates, creating what in my opinion are some very good buy opportunities, levels that I personally feel may not hang around for too long. Cyprus, although a problem, when put in context is Europe’s third smallest country and is unlikely to cause to many issues to the Euro zone and for this reason I feel the initial sell off we have seen may just be a knee jerk reaction. More pressing in my opinion, certainly for anyone with an interest in GBP/EUR, will be the outcome of the EU summit tomorrow and Friday (Angela Merkel has been quick to bury the idea of a common Euro Zone bond to share European debt) and also any short term moves from the Bank of England in relation to Quantitative Easing.
Bank of England shows concern
The outlook for Britain’s economy has worsened over the past few weeks due to turmoil in the Euro Zone and signs of deterioration in emerging markets, the Bank of England said on Tuesday.
The world was not half-way through a deep crisis and the euro zone turmoil was creating enormous uncertainty, leaving Britain at risk of a downward spiral if businesses postponed investment, Governor Mervyn King told a parliamentary committee.
“In the last six weeks… I am very struck by how much has changed since we produced our May Inflation Report,” he went on to say.
At the Bank’s latest interest rate meeting the monetary policy committee (MPC) was divided 5-4 in favour of not extending QE, however this to me clearly shows the first signs that QE is just around the corner and could be as soon as the Banks next meeting on the 5th July. The last time the Bank introduced QE the pound slipped against most major currencies and should this be the case next week I would expect a move back towards 1.23, therefore anyone buying Euros in the short term may wish to consider their options.
What next for cable? When best to buy the US dollar?
Recently the pound has gained ground against the US dollar clawing back from the lows at the beginning of the month (1.53) and creeping back towards the 1.5650 territory, but where now for cable? Personally I feel a move towards 1.58 will be seen should positive outcomes be seen from the EU summit; however should you have an interest in the dollar then watch out for UK and US GDP data on Thursday at 09:30 and 13:30 respectively. Figures from the UK are expected to remain at the revised -0.3% as seen in May, however across the pond figures are expected to drop from 2.2% to 1.9% and may lead to a fall in value for the dollar. However as with GBP/EUR the pound may well see gains curbed in the run up to next week’s interest rate decision, any announcement with regards to QE could wipe out any short term gains, possibly one to avoid.
To discuss my views and the outlook for any major currency pairing then please email Mike at mgv@currencies.co.uk
Having worked in the industry for a number of years and working for one of the largest independent currency brokers I am here to help you make the right decision for your exchange. There are a number of different contract types that can be tailored to each individual transfer, do not hesitate to contact me to discuss these in more detail.
Why I think the pound will fall soon… Good news for sterling buyers, bad news for sellers!
Despite the Euro crisis affecting confidence in the UK, sterling is still holding much of the value that saw it hit close to a 3 year high against all currencies only last month. And this morning despite some very alarming Public Sector Net Borrowing Figures, the pound is holding favour. I believe this is all to do with the fact sterling is a more attractive bet than the other majors because it is attempting to deal with its debt problems, however unsuccessful this is proving. It is perhaps a case of being the ‘best of a bad bunch’ rather than a stand alone favourite.
Great news for anyone buying a foreign currency with the pound but will it remain?
Anyone considering a trade involving the pound soon should beware of yet more Quantitative Easing…‘QE typically weakens the currency concerned by increasing the money supply’. This is likely to be unleashed as soon as next Thursday and it is sure to cause the pound to fall in value. Regular Traders may cast their minds back to the Summer of 2010 when GBPEUR was just like today, up above 1.20. At this time we actually saw 1.2350. The situation on GBPEUR was almost identical to now. Confidence in sterling was high (despite the UK economy suffering), and confidence in Europe was low as a result of Greece and the debt crisis. By October the rate had dropped 11 cents to 1.12. I will repeat that statistic because it is very powerful. By October the rate had dropped 11 cents to 1.12!
This was all due to the fact the economic recovery in the UK was felt to be insufficient to warrant an interest rate hike in 2011 and more QE was likely. The similarities with today’s market is clear and athough QE is not quite the nasty word it once was (It was the first round of QE that helped push the pound down to near parity) I feel that anyone with an interest in the pound should be aware things could quickly deteriorate. There is in my most humble opinion more chance of the pound losing value in the next ten days than gaining value. So let us look at what else is ahead besides next Thursday’s announcement…
DATAWATCH – UK GDP Final Estimate Q1- Thursday 09.30 am. The UK is technically recession but just how bad is it? This release on Thursday could set the pace for movements in the next week on sterling.
Don’t forget that we also have the all important PMI surveys early next week. These Purchasing Managers Index surveys are very important snapshots of the relevant sector in an economy. Please read Mike’s post earlier this year on PMI for more information on PMI http://www.poundsterlingforecast.com/2012/05/03/sterling-hits-a-33-month-high-against-a-basket-of-currencies-on-a-trade-weighted-basis-but-euro-buyeres-be-wary-of-the-ecb-interest-rate-decision-at-12-45/
Monday 2nd July we have Manufacturing PMI, followed by Construction Tuesday 3rd July and Services 4th July. All of these really have the propensity to move the market and are worth being aware of if looking to buy or sell the pound.
The pound could easily drop a cent or two against most majors because of bad news although last week the increase in Bank of England members voting for QE caused the pound to dip briefly before making a recovery. If the same happens again, anyone selling a currency to buy sterling should be poised ready to act quickly should the pound rebound, or if there is no QE, the pound may rally on the relief factor. We have not really seen Sterling break in either direction on all the majors in the last few weeks so it could well be due some movement. If this is true the next 10 days of data could be really important. If planning any transfers it would be a real shame for you to miss out on these levels, particularly against the Euro. We are trading on GBPEUR at the best rates in over three and a half years!
If you would like more information on anything contained in this post please let me know. I work as a Senior Dealer for the UK’s Largest Independent Currency Brokerage and would be pleased to offer my assistance to anyone who wishes to learn more. And if you would like any updates relating specificly to your personal exchange requirements please feel free to contact me personally on jmw@currencies.co.uk or even call me on + 44 1494 787 478.
I hope you have found this useful and look forward to any enquiries, comments or suggestions.
Jonathan
Sterling set for a tough week? Pound Sterling Forecast against a basket of currencies inclusive of Euro, Dollar, Canadian Dollar, Australian Dollar, New Zealand Dollar, Swiss Franc and South African Rand
The Pound may be set for a tough week this week with numerous data releases out including our Public Sector Net Borrowing figures, Mortgage Approval Data and GDP (Gross Domestic Product) figures.
Today is fairly quiet on the data front however don’t be surprised if the Europeans throw a spanner into the works as quite honestly they could release absolutely anything at absolutely any time and this could affect all major currencies as it will effect investors attitude to risk and as regular readers will be aware investor’s attitude to risk can lead to quite a bit of market volatility. Should we see more bad news from Europe then you would imagine attitude to risk will suffer and the Dollar will benefit being a safe haven whilst the riskier currencies may weaken.
Should all stay quiet on the European front then the Dollar may weaken back a little and the riskier currencies such as AUD, NZD and ZAR could continue their push back against Sterling. Of course any major economic releases that are much better or worse than expected may counter act this.
For the Pound this week the action starts Tomorrow morning with Public Sector Net Borrowing, this data is essentially an indication as to how much new debt the U.K Government has obtained over the course of the month, a negative figure suggests that the U.K holds surplus, which may be seen as positive for the U.K and indeed the Pound. Of course if borrowing figures are up then the Pound may well take a further hit.
Wednesday brings us the U.K mortgage approval data which suggests how well, or badly the U.K housing market is performing, a lower figure is once again seen as a negative yet a rise in mortgage approvals can be seen as a positive, especially in the current climate!
Thursday has the potential to be the most volatile of days as we see GDP (Gross Domestic Product) figures for the U.K which have been fairly poor of late and expectations are that the figure may not have changed by much. Personally I see a fairly flat week for the Pound with the potential to have a couple of fairly poor days should data releases be worse than expected.
If you have a currency transfer to carry out it may be prudent to consider your options and ensure that you have a proactive currency broker on your side. If you currently do not use a currency broker or you feel you could get a better price or level of service than you are currently getting then by all means feel free to email me directly and I will be happy to personally help you for any currency transfer from £1000 to multi million Pound transactions. I can be reached on djw@currencies.co.uk and i look forward to hearing from you.
UK Banks Downgraded as Euro Optimism Returns
Friday has witnessed a fairly static day on the markets following an otherwise volatile week. We have seen the uncertainty surrounding Greece subside, as the formation of a pro bailout, co-alition government has brought some much needed confidence back to a sceptical market. The single currency has struggled to make any inroads of late, as the high levels of debt and rising unemployment across the region have only added doubt to the long-term stability of the eurozone.
What is now becoming apparent is that leaders are now trying to provide long-term market confidence by easing fears that Greece, Spain and Italy are for want of a better phrase ‘beyond the point of no return’. It is clear that investors need to be convinced that one, the EU can find the necessary balance between austerity and growth and two, integral countires like Spain and Italy do not find themselves in a position where they default on their debts and ulitmately exit the eurozone. The major fear if this scenario were to materialise is that it will create a domino effect, that may ultimately cause the end of the EU as we know it.
Overnight news filtered out that three major UK banks had been downgraded. This announcement followed fears that further Quantitative Easing in the UK was on the cards, as falling inflation and shrinking growth forecasts were becoming too big a problem to ignore. The need for further QE has only highlighted the on-going exposue we have to the economic problems in Europe and once the news is digested I do feel we will see GBP fall off against the EUR.
If you have an upcoming currency requirement or would like to eb kept up to date with all the latest market movements, then please feel free to contact me directly at mtv@currencies.co.uk or on 01494 787 478.
How to Get the Best Exchange Rates!
Moving money internationally at the best exchange rates does not need to be complicated! Please read on to learn how I believe I can save you money on currency exchanges today. And despite the relative ‘ease’ and convenience of using your bank or existing broker, you may find that a quick call or email could end up saving you thousands. A client who recently contacted me via this site saved over £3500! He made one phone call to me last week ahead of this week’s property completion. I quickly explained how we worked and that I thought it was worth waiting on his Euro exchange until this week, following the Greek elections. By following this guidance he made about £1500 extra on the market rate and I beat the type of rates his other source was offering by £2000.
So how does it work?
As specialist currency brokers working for one of the UK’s top brokers we buy and sell very large volumes of currency. Trading about half a billion pounds a year we can source an extremely sharp commercial rate of exchange which means we can then sell on the currency to you at a preferential rate. As market analysts we can also provide forecasts and predictions on your rate and keep a close eye on things so that your transfer does not become too expensive as things can quickly change and take a turn for the worse. Opening a trading account with us is 100% free and there is no obligaiton to use us. Because we buy the currency at source direct in the live market, we can pretty much guarantee we will get you the very best deal. So here is what you can do today to start saving and getting the best deal…
1 – Speak to us! Either use the contact form or send me, jmw@currencies.co.uk or any of our team an email or give us a call on 01494 787 478. If outside of the UK please use 00 44 1494 787 478. We have clients all over the world including Australia and Asia, so please don’t think this service applies solely to UK or European based clients 
2 – Quickly let us know what you are looking to do including volumes, timescales, targets and any other important information.
3 – We can then quickly explain all of your options and you can decide whether it is for you. Opening a free account takes two minutes and you then have access to live rates instantly. We can offer same day payments too, so don’t worry if your need is imminent!
For your security we also operate ‘Segregated’ Client Accounts. This means your money is protected and held in a similar fashion to lawyers and accountants. We are authorised by the FSA (Financial Services Authority), all transactions are covered by the Financial Ombudsman Service and we also have obligations under HMRC (Her Majesty’s Revenue & Customs). We are a UK plc that has been trading for 12 years and have won awards for our rates and service, including from The Sunday Times.
If you are interested in what we say we can do for you, but have any doubts about the security or the authenticity of our business, please feel free to speak to us. This free site was setup to provide information for anyone with a currency transfer and to highlight to people that they do not have to settle for the extortionate rates and terrible service offered by the banks. We will always go that extra mile for readers of this blog and one phone call or email could literally save you thosuands!
Following on from the financial crisis the pound had dipped to some of the worst levels against the major currencies, it has recovered to some extent but there are still huge uncertainties ahead for the pound. If considering any transfers involving sterling or any other currency we would be really interested to speak to you and personally assist with any transfers you need to make.
If you have any specific questions I would be more than happy to speak directly to you today. My name is Jonathan and you can either call me on 01494 787 478 or email jmw@currencies.co.uk
Thank you
UK Retail Sales on the Rise as Eurozone Ministers Meet to Discuss Spain & Greece
Eurozone finance ministers were meeting today, to discuss a bailout for Spains banks and the future of Greece’s two rescue packages. The resolution of these issues is, in my opinioin, key to the long-term stability of the EU and the single currency. The markets have been dogged by uncertainty over recent months, as the economic stranglehold tightened around Europe and investors ran for cover as first Greece, then Portugal, Ireland, Italy and Spain were plunged into debt and their economies contracted, as unemployment rose and growth forecasts were cut.
What investors now need to see is a real fiscal startegy put in place, that will assist with long-term economic growth in the region, whilst finding the right balance with the necessary austerity measures. If this resolution can be found, then I do believe we could see the start of a euro fight back against both GBP and the USD. What to me has become very aparent is that all those waiting for 1.3o on GBP/EUR, should be prepared to be dissapointed.
GBP/EUR rates have pushed back through 1.24 this afternoon and at time of writing were sitting at 1.2427, up over a quater of a cent since the start of this mornings trading. This spike could well have had something to do with the release of todays UK retail sales, which showed an unexpexted rise of 1.4% in May. This increase has led to optimism here on our own shores that the retail sector may finally be ready to show some consistent improvement, which will ultimately be a huge boost to our economy and to sterling.
GBP has fallen off against the USD this afternoon, as the positive sentiment surroundiong Greece and Europe is seemingly having a knock on effect. Investors may well of seen the news as a reason to be hopeful that the global economy is picking up and that will entice them to be slightly riskier with their assets and move money away from the ‘safe haven’ dollar and into riskier currencies, that may provide the opportunity for higher yields.
If you have an upcoming currency requirement or would like to be kept up to date with all the latest market movements and key economic data, then please feel free to contact me directly at mtv@currencies.co.uk or on 01494 787 478.
