Monthly Archives: September 2016
Article 50, Brexit, Deutsche Bank and UK GDP to impact the price to buy Euros with Sterling (Tom Holian)
We are now just over 3 months since the Brexit vote and we have seen huge losses for Sterling vs the Euro since the vote to leave the European Union. The uncertainty surrounding the UK economy has also caused the Pound’s exchange rate to really feel the pressure against both the Euro and the US Dollar which have hit 3 year lows and 31 year lows respectively.
More recently the Pound has again been rocked by the suggestions that Article 50 could get triggered early next year.
According to our very own Foreign Minister Boris Johnson he has suggested that the UK is gearing up to start the negotiations but as yet no official announcement has come from UK government. However, in my opinion there is no smoke without fire so I expect some form of announcement to come soon.
This week we have seen news that Deutsche Bank is feeling the pressure caused by a huge fine of US$14bn from the US Department of Justice for the mis-selling of mortgage backed securities. This has caused the share price in the German bank to plummet this morning but as yet this has had little effect on GBPEUR exchange rates.
The risks for the Eurozone is that the bank may have to approach the European Central Bank to ask for a bailout but if this is allowed to happen then I would not be surprised to see many of the other banks across Europe to ask the ECB for further funds themselves.
UK GDP just published this morning has seen the figures revised upwards which would typically result in Sterling strength but we have seen little movement since the announcement. Therefore, it is clearly the political landscape that is dominating the movement for Sterling.
If you’re concerned about what is happening to GBPEUR rates and need to transfer currency in the next few weeks it may be worth looking at a forward contract which allows you to fix an exchange rate for a future date and therefore guarantees you a fixed price regardless of what happens to exchange rates. This can be particularly useful if you’re in the process of purchasing a property in Europe.
If you have a currency transfer to make and want to save money on exchange rates compared to using your own bank then contact me directly for a free quote. Having worked in the industry since 2003 I am confident that I can offer you a saving as well as help with the timing of your transfer.
Email me directly or fill in your details below for a free quote. Tom Holian email@example.com
Tomorrow (Friday) at 9.30am the UK are set to release their latest Gross Domestic Product numbers. GDP is a measure of the total value of all goods and services produced by the country in question. The Office for National Statistics reported earlier this week that confidence has dropped in the service sector throughout the UK.
With the service sector making up 80% of GDP there is a strong argument the GDP numbers could fall tomorrow or in the near future, which would devalue sterling.
There’s also a strong argument that speculators could put pressure on the pound tomorrow. Since the Brexit vote, throughout most Friday trading sessions it seems like the pound devalues without strong reasoning. I put this down to speculators selling off their pounds to buy a currency with a safe haven status, such as the US dollar.
The reason why speculators will do this is because key figures in the UK such as Boris Johnson have made comments in regards to Brexit and Article50 which has in turn devalued sterling. If the speculator is out of the office they are not in the position to sell off the pound before the value falls.
If you are reading this website in order to find out information in regards to buying or selling the pound I can help you achieve the best exchange rates on the market whilst keeping you up to date with economic information. Its important to analyse both currencies that you will be trading therefore I would recommend emailing me with the currency pair (GBPUSD, GBPAUD, GBPCHF etc) the reason for your trade (company invoice, buying a property) and I will email you with my forecast and the process of using our company firstname.lastname@example.org.
** IF YOU ARE ALREADY USING A BROKERAGE TO BUY YOUR CURRENCY IT WILL TAKE TWO MINUTES TO EMAIL FOR A COMPARISON AND I AM CONFIDENT I WILL BEAT ANY PRICE YOU ARE CURRENTLY RECEIVING **
Sterling Exchange rates have been range bound as investors try to gauge the impact of the Brexit and balance their holdings of the pound. Whilst much of the movement on sterling is explained by Brexit there are other factors globally and as a result of the Brexit vote to consider. In this post I will try to identify some of the non-Brexit key issues I am discussing with my clients to help them make an informed choice about what is the best decision with their currency. With no key news due on the Brexit until perhaps early next year or in a years time when Article 50 is invoked it is these other factors which will become more important. Keen observers will notice I have already used the ‘B’ word 6 times in just this intro 7 if you count the title so forgive me if I struggle to avoid mentioning it!
GBPEUR rates weakened this week with news of Deutsche Bank, Germany’s biggest lender on the ropes with a plummeting share price. With Germany having set a precedent by actively bailing out Greek, Cypriot or Italian banks news that Deutsche Bank will be looked after could upset things. There is still speculation the ECB (European Central Bank) might consider a fresh QE (Quantitative Easing) program extending the current operation that ends in March 2017. QE generally weakens the currency concerned and if the program is revised will halt the single currency’s advance on sterling.
There are also concerns over how the UK vote will impact the ‘union’ element of the EU. With far right (and left) anti immigration parties gaining support across the regions there are growing fears over just where such feelings are headed which could ultimately lead to Euro weakness. One of the major fears is longer term other countries vote to leave which would of course weigh on the Euro if this is looking likely!
One of the major banks has predictions of GBPEUR at 1.20 by year end. If you are selling Euros and waiting for better rates than the 5 year highs on offer at present these events could easily undermine your position. We offer a bespoke service to keep our clients up to date with the latest news and events on the market to try and help you proactively manage your exposure to the currency market. Of course this list is not exhaustive, more information can be obtained by emailing me directly email@example.com
On the US Dollar the rates are largely being driven by the prospect of the US Federal Reserve raising interest rates. Even before the UK vote GBPUSD rates were down at multi year lows because the Federal Reserve were mooting raising interest rates further. With speculation rife of a hike before Christmas the USD remains strong. However we also have the US Election to contend with which may easily weaken the USD if Trump looks likely to win or even wins. As the UK’s vote shows nothing should be taken for granted.
Of course sterling willl continue to react to the news regarding Brexit and we cannot get off that subject for too long. Comments by leaders in the UK and abroad will drive the rate in a similar fashion to before the vote. We will have periods where everything will be doom and gloom (GBP negative), we will have periods where things don’t seem so bad (GBP positive). Financial Markets are not rigid beasts which react 100% to the facts available. They respond to sentiment and impression as to what might or might not occur in the future.
I have only covered the US Dollar and Euro but of course there are lots of other interesting events happening on other currencies. The pound is at multi year lows against the Australian Dollar, Canadian Dollar, South African Rand and almost an all-time low against the Kiwi. These currencies have many factors driving their strength and weakness so if you wish to learn more and look at some plans to maximise your rate please contact me or fill in the forms. Any other currency inquiries are welcome too!
Understanding the market and all of your options is a vital component of securing the best possible exchange rate. This blog is designed to offer an outline of the practical assistance we offer. However more information on the various options and a more detailed forecast can be made available to you by filling in the forms or emailing the author direct.
The author Jonathan Watson works as Chief Analyst and Associate Director for one of the UK’s largest independent currency brokerages. He can be reached 01494 787 478 or by emailing firstname.lastname@example.org
The Pound has found life tough going for some time now and my opinion has been the same since the UK’s Brexit decision, and that is Sterling will struggle to make a sustained impact against the major currencies whilst so much uncertainty surrounds the UK economy. That doesn’t mean that we will see Sterling move in a straight line, or that the current trend will last forever but it is clear that the current market sentiment around the UK economy and ultimately the Pound, remains cautious at best.
The UK economy is fragile and as such any negative data or comments by key figureheads is causing the Pounds value to drop. We currently find ourselves in a unique position and therefore investors are having to factor in multiple different outcomes and scenarios, which include a possible recession in the UK and another interest rate cut by the Bank of England (BoE) to name but two.
In the short-term Sterling has gained value against its EUR counterpart following rumours yesterday that one of Germany’s biggest institutions, Deutsche Bank is on the rocks. Its share prices have hit an all-time low and this has sent shock waves through the market. German Chancellor Angela Merkel has already stated that the bank will not be bailed out and this has added to the drop in the EUR value. It is also a stark reminder that it is not just the UK economy, which remains fragile in investors’ minds.
The Eurozone is likely to come under further pressure over the coming months, with key elections in France and Germany in 2017 likely to cause further uncertainty in the market. With far right parties across Europe gaining more support than ever we could see an extremely unstable few months, with the EUR likely to suffer as a result.
Whilst Sterling is unlikely to be driven forward by an overriding feeling of positivity, we could well see its value driven up inadvertently by the potential problems facing the EUR. Those clients holding the single currency may be wise to protect their positon ahead of what could be a rocky road ahead, as the current near 4 year highs could soon be a thing of the past.
If you are keen to discuss the current market trends ahead of an upcoming transfer, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 487 and ask one of the team for Matt. Alternatively, I can be emailed directly on email@example.com
The pound has finally found some support against most of the major currencies after a slide lower over these last couple of weeks. Overall Brexit concerns are still keeping the pressure on the pound and these are not going to clear up any time soon. Positive developments like this for sterling exchange rates are welcome all things considered.
GBP EUR is rising for the second day running although this is not so much of a sterling story but rather as a result of some negative news coming out of the Eurozone. European Central Bank President Mario Draghi is speaking later today and he may give some clues as to future monetary policy which may impact on the Euro.
The pressures are very much mounting on European politics at the moment and going forward the Euro is in my view likely to come under renewed strain. The Italian referendum on constitutional change as well as the French and German elections next year will almost certainly become a major driving force for the Euro in the coming months and could create a huge run of problems.
Whilst Britain must handle Brexit so too must the Europeans contend with it and the Euro could suffer as a result when everything is considered. It is interesting to see Presidential hopeful Nicolas Sarkozy has offered to give Britain better terms to the last deal that David Cameron negotiated if he was voted in as French president. The political battle in France is already well underway.
GBP USD is also trying to move higher from the near 31 year lows the pair is currently sitting at. There are a number of speeches from Federal Reserve members later today in the US including Fed chair Janet Yellen which could give some new direction for the dollar.
Friday sees UK GDP numbers released which could create some sizeable market movement for the pound. Any change in these numbers could see the pound react very quickly as this is hard economic data and what the markets are most interested in.
Clients who are holding sterling and looking to buy any other currency are feeling the pinch at the moment and the outlook is not set to get better in the short term. Until Article 50 is invoked the pound is likely to remain in a period of limbo although there will inevitably be some positive spikes in the coming weeks and months. If you have an upcoming currency requirement either buying or selling and would like to be kept up to date with all the latest market movements, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 478 and ask one of the team for James. Alternatively, I can be emailed directly on firstname.lastname@example.org
Theresa May suggests January trigger of Article 50, luckily Euro and Dollar buyers still see improvements today (Daniel Charles Johnson)
Theresa May has let the cat out of the bag in regards to invoking article 50 – An appraisal on buying Euro and Dollar rates
Northern Ireland’s deputy First Minister, Martin McGuinness has revealed that Theresa May told him Article 50 would be triggered in early 2017. This ties in with the President of the European Council, Donald Tusk’s statement that May had said the same thing to him earlier in the month.
I think Sterling has been stuck in limbo post -Brexit, GBP/EUR unable to break through the 1.20 barrier. I think without decisive action with regards to starting trade negotiations it will be difficult for Sterling to rally. There is uncertainty among investors and they are reluctant to make a move.
Many economists are predicting that once article 50 is invoked Sterling will plummet in value. Personally I am not so pessimistic, I think we may see a short term fall in the pound’s value but then a slow rally can begin against most major currencies. It is important to remember there are some serious worries for both the Euro and the Dollar.
Deutsche Bank – The share price has been halved. Merkel is against a bailout. There has been warning of a possible Lehman Brothers style collapse. Personally, I remember what Gecko said at the end of Wall Street, they are too big to fail, but this was enough to allow the Euro to slide and ground to be recovered significantly for Euro buyers today, with GBP/EUR rallying by over a cent.
Some other factors to consider:
Greece – Massive debt repayments to the IMF which will likely not be met.
Italian Bad Loans – Currently in excess of €360bn – many debts will have to be written off which will have serious connotations on the Italian economy.
Shockingly bad inflation – Draghi is throwing the kitchen sink at the problem and there has been no improvement.
Trump – If he gets in, expect USD to drop quickly in value. His words alone have been enough to wipe 10% off the value of the Mexican Peso and he has threatened to limit trade with China which could be catastrophic for the US economy. Trillion was a figure I thought we used in the playground for something unbelievably large, something beyond belief. But, these are the terms we are using at the potential loss to US GDP.
With polls suggestively closing following a still ill-tempered but largely mild-mannered approach by Trump to the debate, a close race could create further problems for anyone holding USD. In an evolving climate it is imperative that you are in a position to move quickly should the currency markets begin to reflect this.
If you have a buying or selling Euros or Dollars I am particularly proficient at putting together individual trading strategies to suit my clients’ needs.
For example, booking a long forward for a client who wishes to take advantage of 31yr record highs on USD/GBP or using a Stop/Loss combined with a Limit order for client on a short time sale who wants to minimise cost on a property purchase and the potential risk involved.
I treat a client’s money as if it were my own and I will do my utmost to get the client the highest possible return on their trade. If you would like assistance with your trading requirements please do get in touch by e-mailing me at email@example.com and I will respond to you as soon as I am able.
Anyone with a Euro and Dollar buying requirement are now entering a phase where a new ongoing narrative will be continuing to influence the currency markets, the US election cycle.
Anyone with a GBP/EUR requirement may question why their situation would be affected by the US election? Simply put it heavily influences global attitude to risk. With the current climate in the leave-vote atmosphere, risk is everything.
The Pound’s value has been hit repeatedly in recent months precisely because of its instability and the risk involved in holding Sterling whilst the UK’s economic future has come into question.
We are now entering the heavy campaign season in the US. The election is only a month away, and Trump is closing on Clinton. She can no longer be comfortably deemed the front-runner, and therefore we may be seeing the surprise result in the US election as we had in the EU Referendum. We have little understanding about what Trump’s cryptic plan is for the social and economic fabric for the world’s largest economy, and with the expected Republican majority in their Congress, he could have largely free reign. As such the same anticipation is becoming heavily visible in the market place as it was in the lead up to the June vote.
Heightened global risk means that the Pound no-longer appears as the black sheep among its global currency counterparts who are enjoying greater stability.
In reality the UK’s recent ability to weather the storm of the Brexit vote is being viewed with a more positive tone from investors. With China leaking noises of further crisis and the US economy entering a heavily uncertain period (which was so strong they decided not to raise interest rates there this month despite their recent economic performance suggesting the economy could handle the move), the Pound should enjoy having some pressure relieved with the spotlight being pointed elsewhere.
So those with a buying Euro and Dollar requirement have breathed a sigh of relief with GBP/EUR and GBP/USD both recording marginal gains to begin the day.
Further revelations on business confidence in the US will come with an assessment of attitude in the financial services sector of the US economy at 4pm today, which could see this rally for the Pound continue.
In this current hypersensitive market a premium is put on being in a position to move quickly should any tempting opportunities emerge in the time period you have to complete your transfer.
With so much of the current market governed by politics (US Election, Brexit) rather than economics, the landscape can also change much more quickly. I offer a very proactive service to keep my customers informed of any potential changes in the currency landscape to assist you in planning for an upcoming transfer in the short or medium turn.
I recommend that if you have a Euro or Dollar buying requirement in particular to contact me today on firstname.lastname@example.org to discuss the options open to you to make sure any attractive levels that you are aiming for are seized immediately should they become available, and that you are not ‘last to the party’. There is also the potential to safeguard your transfer from any adverse movements.
As a point of note I have never had an issue beating the rates of exchange offered elsewhere to my current customers, and if you are not a regular reader, you should also be aware that current buying levels available can be fixed in place for a future transfer – essentially allowing you to ‘pre-book’ your currency and avoid the risk entirely from the current market. Given this I can confidently say that a brief conversation could save you thousands on a prospective transfer.
Euro and Dollar sellers can also get in contact for an immediate quote now that we have touch back to these fresh lows on GBP/EUR and GBP/USD only a few days ago.
Please feel free to fill out the form below and I will be in contact as soon as I am able.
What will happen to Sterling exchange rates this week? The Great British Brokerage – Don’t settle for second best….(Daniel Wright)
The Pound has yet again had a torrid start to the week and appears to be finding that it has very few supporters out there at present.
Sterling exchange rates have dropped off against every major currency and with very little economic data out this week until Friday it is hard to see where the catalyst for the fight back will come from.
The markets are kicking the Pound whilst it is down and you can see why… if you were a big investor due to put money into a business, would you proceed with that investment not knowing what the actual plans for the business were over the next few years? More than likely not unless you have a high appetite for risk.
With this in mind big investors and speculators are at present leaving the U.K and indeed the Pound alone, settling for safer options. In the world of supply and demand, the demand for Sterling has dropped off and so therefore the value of the Pound has followed suit.
There are plenty of reasons why other currencies may start to weaken off but none seem to be impacting matters as much as the referendum has hit the Pound. You have lots of problems politically and with the European economy, the U.S election is about to get into full swing and both Australia and New Zealand are suffering a little due to their currency being too strong.
As we move into October anyone looking to buy foreign currency with the Pound will need to hope for economic data to continue to be solid post referendum and this will give the Pound a chance of coming back a little, although I hate to write negative posts about Sterling performance unless this data is good then the Pound may suffer as we approach the Christmas period.
If you have a large currency exchange to carry out involving buying or selling the Pound then you need not worry as I can help you every step of the way. The brokerage I work for is one of the longest standing and one of the few privately owned currency brokerages left in the U.K.
We can cater for clients all over the world and have access to the very top rates of exchange due to our large buying power and we also try to ensure that we keep clients fully up to date with market movements, along with explaining to them in simple terms the various options that they have in front of them.
If you feel that I (Daniel Wright) may be of use to you then you are more than welcome to contact me personally. You can email me on email@example.com and I will be more than happy to get in touch as soon as I can.
At the end of trading last week the pound plummeted against all of the major currencies. Foreign Minister and former Mayor of London Boris Johnson claimed that the UK are getting ready to trigger article 50. However Martin Schulz was in London Friday and had a meeting with UK Prime Minister Theresa May, he stated that he felt that the UK Government is undecided about how and when to trigger article 50.
I am in doubt the dip in sterling exchange rates is due to the Brexit news on Friday. Rumour has it that Article50 will be triggered early next year, however until then I believe the uncertainty will continue to put pressure on the pound and investor confidence, therefore a contraction in the UK economy is just around the corner.
The Office for National Statistics reported last week that they feel confidence in the Service sector has dropped, however last months figure certainly didn’t support this, as they showed a record rise. The Service sector figures are so important as they make up 80% of GDP, therefore if the ONS are correct we should expect further falls for the pound in the future.
With the pound falling approximately 1% against all major currencies Friday, I wouldn’t actually be surprised to see the market level out Monday morning and the pound therefore make back some of the losses. If this is the case this could be the best levels we are going to see this week.
Looking ahead for the week the two data releases to look out for are Mortgage approvals Thursday morning and Gross Domestic Product numbers Friday morning.
The mortgage approvals data gives a good indication to the health of the housing market and therefore investment into the UK and GDP measures the total value of goods and services produced by the UK.
Both data releases could hurt the pounds value as its been reported people are holding off buying property in the UK until they know the impact Brexit will have on the housing market. Furthermore if the ONS are correct and are expecting falls in the service sector this will have a detrimental impact to GDP numbers.
If you are reading this website in order to find out information in regards to buying or selling the pound I can help you get the best exchange rates on the market whilst keeping you up to date with economic information. Its important to analyse both currencies you will be trading therefore I would recommend emailing me with the(GBPUSD, GBPAUD, GBPCHF etc) the reason for your trade (company invoice, buying a property) and I will email you with my forecast and the process of using our company firstname.lastname@example.org.
** IF YOU ARE ALREADY USING A BROKERAGE TO BUY YOUR CURRENCY IT WILL TAKE TWO MINUTES TO EMAIL FOR A COMPARISON AND I AM CONFIDENT I WILL BEAT ANY PRICE YOU ARE CURRENTLY RECEIVING **