Tag Archives: euro strength
Where Next for the Pound? (Matthew Vassallo)
Good news for the UK economy has been sparse of late and despite the UK avoiding a further recession, it should be noted that our economy did only grow by a mere 0.3%. This is hardly an inspiring figure and not one that is going to breed investor confidence in the long-term. Many believe that this is merely papering over increasingly large cracks in the UK economy and the only reason we have seen GBP spike, is the on-going economic uncertainty that has engulfed the entire Eurozone region and sucked investor out of the single currency.
Personally I always felt that we would avoid recession by the skin of our teeth and whilst this has proved to be the case, predicting how GBP/EUR rates will fare over the coming months is becoming an increasingly difficult task. The recent volatility we have seen on GBP/EUR looks set to continue, as investors will be pulled between Sterling and the EUR depending on the latest set of economic figures, or the next doom and gloom speech by key political figures.
Despite the on-going negativity we should see the recent spike against the EUR and the USD as a major positive for all those looking to purchase those currencies. We have seen GBP/EUR rates spike over 2 cents in the past couple of weeks and we have seen GBP/USD move all the way through 1.55, when only a couple of months ago we were trading in the low 1.50′s. When you have an economy as weak and fragile as our own any positive movement should be valued and if I were buying either of those two currencies, I would be looking closely at my options based on the current market levels.
Here at Foreign Currency Direct plc we are able to provide our clients not only with award winning rates of exchange but a bespoke service designed to give you the client, as much insight into the markets as possible. If you would like to find out the type of rates or contracts we offer, or need to be kept up to date with all the latest market movements then please call us on 0044 1494 787 478 or email me directly at mtv@currencies.co.uk.
Will the UK Economy Fall Back Into Recession? (Matthew Vassallo)
The Pound has been on something of a roller-coaster since the start of 2013 and the recent volatility looks set to continue, regardless of whether the UK economy falls back into recession. We will not officially know this until the 25th of April, when the latest set of UK Gross Domestic Product figures are published but don’t be surprised however if the rumour mills go into overdrive in the lead up to this release. Investors are often one step ahead of the game and any major market spikes prior to the release, may well give us a key insight into the pending result.
Various reports indicate different outcomes but it does seem as if it is going to be a very tight call. My gut instinct tells me that due to the continued negativity surrounding the UK economy and our poor growth forecasts, the powers that be will do everything possible to ensure the official figures do not indicate a further recession.
Regardless of the outcome the UK economy will not fix itself overnight and I expect the Pound to continue to come under pressure over the coming months. Although we have seen GBP realign itself slightly against both the EUR and the USD over the past week, this positive movement had little to do with any investor confidence in the UK economy and more to do with a lack of faith in the Eurozone and the potential global fallout from this.
Anyone who has an upcoming GBP/EUR or GBP/USD transfer should consider their positions prior to the release of the GDP figures later this month, as there will certainly be an element of risk involved if waiting for a positive movement for Sterling off the back of this release.
Here at Foreign Currency Direct plc we are able to provide our clients not only with award winning rates of exchange but a bespoke service designed to give you the client, as much insight into the markets as possible. If you would like to find out the type of rates we can offer, or need to be kept up to date with all the latest market movements then please call us on 0044 1494 787 478.
Will the Pound Fall Further Against the Euro? (Matthew Vassallo)
The Pound has continued its unpredictable ride against the euro this week, losing another cent during Tuesday’s trading, with this volatile trend looking set to continue. Investors cannot make up their minds as to which direction the currency pair will take next, which has been highlighted by the large spikes we have seen during the past week. Following the initial drop of approximately 8 cents from 1.2250 down to 1.1470 in just over three weeks, GBP did start to recover and at one point looked as if it may start to put pressure back on 1.19.
Since then however we have seen rates fall back almost 2 cents, as the markets reacted negatively to a report that UK business confidence was at a 21 year low and further poor data on Tuesday has kept rates in the low 1.16′s. The EUR was also given a boost following Mario Draghi’s press conference, where once again he has been talking up the prospects of the eurozone and its chances of recovery in the last 2 quarters of 2013.
Personally I expect the recent volatility to continue whilst underlying economic factors in the UK and the eurozone continue to remain unresolved. The very real threat of a triple dip recession is looming over the UK economy and serious fiscal deficiencies continue to blight the recovery of the eurozone. I do not expect rates to fall through 1.15 or Sterling to break through 1.20 based on current market conditions, with rates continuing to fluctuate between 1.15-1.1850 over the coming weeks.
GBP/AUD rates have also dropped in line with the Pounds recent struggles and despite the recent interest rates cut by the Reserve Bank of Australia (RBA cut rates from 3.25% to 3% in December), the AUD has remained strong and has in fact defied the global financial crisis better than almost any other majorly traded currency, apart from perhaps the CAD. I expect rates to remain below 1.55 with pressure put on 1.50 before the end of Q1.
Here at Foreign Currency Direct plc we have a team of specialist currency brokers experienced in ensuring client’s currency exchanges are handled in the most appropriate fashion. We can assist not just with unbeatable commercial rates but also a highly personal service, designed to give you as much insight into the market as possible, so that you may time your trade to perfection. As a UK plc that has been trading for almost 13 years and we have won awards from The Sunday Times and Telegraph for our rates and service. Ultimately we save our client’s money by offering superior rates of exchange compared to the banks and other currency outlets and also provide key market analysis in the build-up to any transfer.
If you would like to find out the type of rates we can offer, or need to be kept up to date with all the latest market movements then please feel free to contact me directly at mtv@currencies.co.uk or call me 0044 1494 787 478.
Where Next for GBP/EUR Exchange Rates? (Matthew Vassallo)
“I believe the dramatic fall in Sterling exchange rates can be attributed to a loss of market confidence in the UK economy, rather than any real belief in the recovery of the eurozone”
When a majorly traded currency loses approximately 7 cents in 3 weeks it is understandable that a state of confusion and even panic can set in. It is not an easy situation to manage and to all those who are feeling the pinch following Sterling’s recent slide, it is worth remembering that only 15 months ago GBP/EUR rates were floating around 1.10 and looked as if they would fall further. At that point it was only a matter of time until the currency pair reached parity but fast forward to the summer of 2012 and the same analysts were insisting it was not if but when we would see the pair breaks through 1.30. Now we find ourselves in a position where no one quite knows but I remain firm in my belief that whilst we continue to trade below 1.20 on GBP/EUR, EUR sellers are probably doing better than they should be.
The point I’m making is that exchange rates will always move and at points aggressively and without warning. This is the nature of the currency markets and there is nothing we can do to stop it. Here at Foreign Currency Direct plc we can protect you against any future volatility in the market, so to find out more please feel free to contact me directly at mtv@currencies.co.uk.
A closer look at the markets will tell us that Sterling has in fact started to claw back some of the ground it lost against the EUR, with a spike of over a cent back towards 1.16. Further movement this week is likely and key economic data to keep an eye on includes the release of this morning’s UK PMI data for the Market Services sector. Expectation is an improvement on the previous figure but it is likely to remain under 50, which signifies an economy is contracting rather than expanding and could fuel further stories of a triple dip recession. Personally I expect GBP/EUR rates to be range-bound between 1.15-1.18, until we receive confirmation of whether the UK economy indeed will enter another quarter of official recession.
With problems in the eurozone still abundant I believe the recent movement on GBP/EUR exchange rates can be attributed much more to the lose of market confidence in the UK economy, rather than belief amongst major investors that the eurozone is truly on the road to recovery. With Greece desperately struggling to keep its house in order and Spain battling further political unrest, it won’t be long before the spotlight is back on these struggling economies and the euro is likely to suffer because of it.
It was only a matter of time until the greenback made its move against Sterling and I would be surprised to see rates go back above 1.60 anytime soon, despite the US’s recent poor Gross Domestic Product data. With Sterling coming under increased pressure I believe a move back towards 1.55 is likely by the end of Q1.
The CAD has performed well against Sterling recently as the Canadian economy grew by 0.3%. This coupled with the well documented economic problems in the UK, have pushed levels down below 1.60. Personally I feel the CAD will continue to hold firm below 1.58, whilst fears of a triple dip recession in the UK continue to weigh heavily on investor’s minds.
Key data this week include Wednesday’s Purchasing Managers Index and Fridays Unemployment rate. Previous PMI data was poor (43.1), so Canadian officials will be hoping for a reading much closer to 50 and an unemployment rate that is an improvement on the previous figures of 7.1%. Any improvement could see levels move back towards 1.56 by the weekends trading.
Here at Foreign Currency Direct plc we have a team of specialist currency brokers experienced in ensuring client’s currency exchanges are handled in the most appropriate fashion. If you would like to find out the type of rates we can offer, or need to be kept up to date with all the latest market movements then please feel free to contact me at mtv@currencies.co.uk or call us on 0044 1494 725 353.
Euro Rises Ahead of Potential Deal Over Greek Funding (Matthew Vassallo)
“With Greece in line for further monetary assistance many will be feeling an unnerving case of déjà vu”
The euro strengthened during yesterday’s trading amid rumours that Greece will receive further funding, to meet its repayment targets. These targets were set by the International Monetary Fund (IMF) and were seen as a key to Greece’s long-term standing within the eurozone. Many will ask why so much weight is put on Greece’s stature within this circle and surely the money spent on its seemingly fruitless efforts of recovery could be better spent elsewhere?
The answer is because the precedent set by allowing Greece to default on their debt, made worse by the impossibility of combining ever harsher austerity measures with economic growth, is still very much an unknown and the knock on effect it may have on other peripheral nations could be catastrophic. There has been so much talk by European Central Bank president Mario Draghi and other key eurozone leaders about how they will not allow Greece to fail, that any decision that now goes against this could be political
suicide for those involved.
The EUR strengthened by over half a cent against GBP during Monday’s trading and was starting to put pressure on the 1.24 level. Any decision to extend Greece’s funding could be met by differences of opinion on how much they should receive. The IMF is believed to be reluctant to extend Greece’s debt programme by much, if any at all, whilst eurozone leaders, in general, feel Greece need to be given what is needed, to pull them back into line.
UK Business Secretary Vince Cable stated that UK businesses are showing ‘reassuring’ signs of recovery and that there is clearly a ‘more upbeat mood’ amongst the business community. This bold statement follows a mixed set of economic data for the UK of late, with poor Service Sector, Construction and Manufacturing figures dampening the mood, despite the positive Gross Domestic
Product (GDP) figures that recently pulled the UK out of recession.
Key to this week could be tomorrow’s Bank of England minutes, which will indicate how many members, if any, felt another round of Quantitative Easing was necessary or likely to be needed over the coming months. Any sign that we will see further QE could see the Pound lose market value.
The USD has shown signs of recovery of late, particularly against GBP. The greenback has found life tough going against the Pound for much of the summer, so its move back below 1.60 will certainly be seen as a positive by investors as we head into the last
weeks of 2012.
I feel a move a move towards 1.55 over the coming months is the most likely scenario, as the US moves forward from the elections with new hope.
The Pound has rebounded somewhat against the AUD over the past week, with levels in the mid 1.53’s ahead of last night’s RBA minutes. Much of the focus of these minutes was on whether the RBA will cut interest rates further in December and the chance was greatly increased after the minutes indicated further room for monetary easing.
Here at FCD we have various contract types all tailored specifically towards our client’s needs, so for more information please contact me directly at mtv@currencies.co.uk or call us today on 0044 1494 787 478 or visit and sign up to your free, no obligation trading account.
Eurozone Re-enter’s Recession – So why has the Pound Lost Value? (Matthew Vassallo)
When you read the headline ‘Eurozone Recession’ it probably feels like a bad case of deja vu. This morning’s reports confirmed this was indeed the case and will have come as a further blow to EU leaders and any clients looking to sell EUR. The eurozone seems to be forever caught in a never ending cycle of debt, with little chance of growth across the region. In fact, if you take Germany out of the equation you can’t help but wonder how it would have survived in its current entity at all. The eurozone’s economy contracted by 0.1%, which meant a second successive quarter of negative growth and ultimately official recession.
Those looking to purchase a European property over the coming months could be forgiven for thinking that this news would mean further reductions to already undervalued properties, as surely a Eurozone recession would mean the EUR would lose value. So why then have we seen the Pound fall against the single currency today and not the other way around?
The first part to consider is that the UK economy and its growth prospects are continually being cut, as highlighted by Bank of England Governor Sir Mervyn King during his speech yesterday but also a realisation that the welfare of our own economy and ultimately the strength of our currency is inextricably linked to the welfare and long-term prosperity of the eurozone. Quite simply if the euro falters the Pound will not be far behind. Our trade deficit will only widen and our economy will stagnate and we could find ourselves stuck in a recession that could last ten times as long as the recent one.
We must also remember that the Pound itself has been on a turbulent ride for much of 2012 and it looks as if the remaining weeks of the year will follow a similar pattern. UK data, apart from the recent positive Gross Domestic Product figures, has been poor and this morning UK retail sales that were released for October, also showed a fall. I feel GBP/EUR rates will be range-bound between 1.23-1.25 until there is some shift in momentum and or a scenario such as Greece defaulting on its debt and leaving the eurozone.
The Pound has also lost ground against the USD following Obama’s reelection, with rates now sitting comfortably in the mid 1.58 region. I still believe a move down towards 1.55 is likely over the coming weeks, as the poor UK economic data mentioned above is sure to hamper the Pound’s chances of any significant strides forward. All those looking to purchase USD should consider their positions imminently and if you would like to discuss how one of our forward contracts can eliminate the chance of any future negative market movement, please feel free to contact me directly at mtv@currencies.co.uk.
Here at Foreign Currency Direct plc we have a team of specialists all working towards one aim and that is achieving the best rates of exchange possible for our clients. We have been in operation for almost 13 years and service almost 50,000 clients. We have been awarded the ‘UK’s best exchange rates’ for three years running in the Sunday Times and last year received an award as ‘the best UK currency provider’ in the Telegraph. We provide multiple contract types, including forwards and limit orders, all of which are specifically tailored towards our clients needs. We provide key market analysis in the build-up to any transfer, so not only will you get the best exchange rates around but also information which can help you to decide when the right time to move your money is. For more information please feel free to contact me directly at mtv@currencies.co.uk or on 00 44 1494 725 353 and open your free, no obligation trading account today.
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.
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.
