Tag Archives: euro weakness
Surprise Dip in UK Inflation Figures Hurts the Pound (Matthew Vassallo)
The Pound has lost ground against both the EUR and USD during Tuesday’s trading, following this morning’s announcement that UK inflation figures fell during April. This announcement was not widely anticipated and came as a shock to investors, who hastily pulled their funds away from GBP. The news has only added to already growing fears over the long-term growth prospects of the UK economy, despite the recent news that we managed to avoid a further recession.
Today’s data will also lead many to believe that the Bank of England (BoE) now have further leeway to implement another round of Quantitative Easing, which will generally be viewed by the markets as a negative for that particular economy and may ultimately effect the strength of its currency.
GBP/EUR rates had remained fairly flat over the past few trading days but today’s poor economic data caused the Pound to fall by a cent against its EUR counterpart and a cent and a half against the USD. I expect further volatility on GBP/EUR, although any move back towards 1.20 will be dependent on how events in key Eurozone economies fare over the coming weeks. Personally I do not expect rates to break through 1.19 based on the current economic climate, with a move back towards 1.16 a possibility as the UK economy stagnates again during Q3 of this year. Although the USD has moved back through 1.52 against GBP, I do feel the spike will be short lived and I anticipate GBP/USD rates to move back towards 1.53 over the coming days.
Here at www.poundsterlingforecast.co.uk 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.
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.
GBP Weakness Continues Ahead of Potential QE (Matthew Vassallo)
Sterling has continued to lose ground against the EUR at a rapid pace, with the markets potentially anticipating a further round of Quatitiative Easing here in the UK. Rates have dropped by a cent since yesterday and whilst many will expect this trend to continue should QE be confirmed, I feel as if it is already being priced in by investors. For this reason we may see the markets level out, even if the anticipated monetary easing programem is expanded and further QE is confirmed this afternoon.
Persoanally I expect to see them inject another £25 billion into our struggling economy but any more than this and we could see rates fall further and fall quickly. On the other hand if the markets have indeed priced in another round of QE and it does not materialize, we may well see Sterling realign itself towards 1.16.
The one thing we can be sure of is that whilst both the UK and eurozone economies continue to stagnate, it will be very difficult to forecast the pair, or identify any real market trends. I would expect the recent volatility to continue, with the only respite coming if the UK does in fact manage to avoid the now well documented triple-dip recession.
GBP is not just losing ground against the EUR but against most major currencies and the recent fall against the USD and AUD are no coincedence. The Pound is floating around 1.50 agaisnt the USD and is now near an all time low against the AUD. Whilst I don’t expect we will see a major turnaround in the short-term, I do feel we will see continue to see resistance at 1.50 against the USD and at 1.45 against the AUD and I would be surprised if we saw rates really push on through each of these barrirs.
Here at Foreign Currency Direct plc we have won multiple awards for our exchange rates and service. If you have an upcoming currency transfer and would like to be kept up to date with all the latest market movements, or would like to speak to us regarding the currency options available to you then please feel free to contact me directly at mtv@currencies.co.uk or call us on 0044 1494 787 478.
Is the Pound in For a Rough Ride Following Yesterday’s Autumn Statement? (Matthew Vassallo)
This morning’s headlines were dominated by reports of yesterday’s Autumn Statement and the negative reaction to much of its content. Chancellor George Osbourne has come under pressure this morning following announcements that the UK’s economy is likely to shrink by 0.1% in 2012 (compared to the initial prediction of 0.8% growth) and an admittance that current austerity measures are likely to continue until 2018.
A harsh reality maybe but one that is not completely unexpected, especially if you look deeper into the current state of the UK economy. It would only be the most optimistic or full hardy person that believed all would be well and good by the end of 2012 and personally I believe we are still at least year away from being in a position to accurately judge whether the current austerity measure have had the desired effect. I do however believe that the recovery process is under way and I certainly think that our economy is in a far better position than the that of the eurozone, even with our trade links being greatly affected by their current recession.
I believe that the overall picture for Sterling is not as bleak as many predict but due to the fragile nature of our economy don’t expect miracles overnight.
GBP/EUR
Sterling has made some impressive inroads against its euro counterpart today despite negative housing data this morning and the aforementioned negative reaction to yesterday’s Autumn statement. Rates have pushed up into the high 1.23′s, with pressure even being on the 1.24 level by close of European trading. Both the Bank of England (BOE) and European Central Bank (ECB) kept interest rates on hold and there were no announcements of further Quantitative Easing (QE) in the UK. However the markets moved following ECB president Mario Draghi’s press conference, where he cut growth forecasts for the rest of this year and the first 3 quarters of 2013. Quite frankly GBP/EUR rates are moving on rumour as much of fact, with the markets almost deciding at each juncture which is the lesser of two evils.
GBP/USD
Sterling lost ground against the Greenback during Thursday’s trading as the fallout from Mario Draghi’s press conference took hold. Investors have clearly seen this as euro negative and moved their funds away from the volatile EUR and into the relative ‘safe haven’ that is the USD. This often happens during times of global unrest as the USD will hold its value better than riskier currencies such as the EUR. We have also seen Sterling lose ground due to the reasons mentioned in my opening paragraphs.
GBP/AUD
Sterling has also lost ground against the AUD despite reports that the Australian mining boom has reached its peak. Their mining industry has been key to the AUD’s surge over the past year but with the highest labour costs in the world and China’s demand for their raw materials slowing, we had seen the AUD lose momentum against most of the major currencies in Q3 of this year. However the latest news regarding the UK economy will only fuel fears that we are still only at the start of our recovery and due to this I can see GBP/AUD rates creeping back towards 1.50.
Here at Foreign Currency Direct plc we provide multiple contract types, all tailored specifically towards our clients needs. These range from Forwards that can eliminate future market loses, to limits and stops that can be used as a best and worst case scenario for your transfer. If you would like to find out which of our contract types suit you best, or you just need to be kept up to date with the latest market movements then please feel free to contact me directly at mtv@currencies.co.uk or on 01494 787 478.
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.
Victory for Obama and the Removal of any Political Uncertainty Should Help the USD in the Long-term
After a tight presidential race, although not quite as tight as we were led to believe, we can now sit back and reflect on the positives and negatives of a second term for President Obama. The uncertainty created by not knowing the future leader of the free world can certainly have its pitfalls and I do believe the markets have reacted to this over recent weeks, by showing little or no support for the USD. This coupled with the recent run of poor economic data that has been streaming out of the US, has handicapped the greenback’s chances of recovery and it has found life difficult, particularly against GBP where it has lost ground consistently since the summer.
The USD has struggled to break back through 1.60 and when it has done, the spike has been quickly erased. At one point it did look like pressure was going to be put on the 1.62-1.63 level but I do believe a move back towards 1.55 is now more likely over the coming months. Yes today’s market reaction to last night’s annaouncement has been minimal but I did not believe that any result regardless of the outcome, was going to be an immediate antidote to the USD’s recent troubles. In the medium-term however, the removal of this political uncertainty and more importantly an improvement in economic data (this is expected over the next few weeks), should give the greenback the push it has needed for some time now.
Back to Europe and GBP/EUR rates have moved through 1.25 today, as the markets have reacted to the European’s Commission’s decision to cut growth forecasts for the eurozone. They have confirmed, incase it was necessary, that the region still has a long way to go before it finds ‘the right balance’ between austerity and growth. It has now realigned its forecasts and believes that the region will only narrowly avoid recession next year, by a mere 0.1%. This figure if accurate, means that eurozone leaders will feel far from secure as we head into 2013. The UK economy also received a reality check following the positivity created by the recent Gross Domestic Product figures, as Service Sector and Maufacturing data was poor, proving we still have a long road to recovery ourlseves.
This market uncertainty can be difficult to digest, especially if you have an upcoming property purchase or sale and are looking to transfer funds but are worried that market movements will ultimately leave you short changed. Here at Foreign Currency Direct plc we have multiple contract types all tailored specifically towards our client’s needs. One of our most popular types is our forward contract, which allows you to lock in an exchange rate even if you do not have the full funds available. This is perfect for anyone looking to eliminate risk from the market but still take advantage of our award winning rates. If you would like more information please contact me directly at mtv@currencies.co.uk or on 01494 787 478.
GBP Touches 1.25 Against the EUR but Loses Ground on the USD (Matthew Vassallo)
Sterling continued to make inroads against the euro during Friday’s trading as the Interbank touched on 1.25 for the first time in weeks. Fears remain over the economic stability of many of the eurozone’s nations and their ability to pull themsleves out of recession. The markets have reacted negatively to the on-going saga and even European Central Bank (ECB) president Mario Draghi’s commitment to the future welfare of the region, has done little to alay investors concerns.
Economic problems within the eurozone are nothing new. How often do we turn on the evening news to hear of further unrest? With public protests in Spain, Greece or Italy almost a weekly occurrence, it is sometimes difficult to see any light at the end of a very long dark tunnel.
During times like this it is easy to forget that only twelve months ago the world’s top analysts were predicting parity between GBP and the EUR. Now we have the same analysts convinced that we will see 1.30 on GBP/EUR before 2013. These statistics to me are key as they prove long-term predictions are, in this current market, quite frankly useless. Yes they can provide investors with some type of strategy but when they are disproved more often than not, this strategy will inevitably become flawed. Personally I believe we will see GBP/EUR rates range-bound between 1.2370 – 1.2540 until we see either a consistent stream of positive UK data or a further fallout in the eurozone.
GBP/USD rates tubled today as the greenback made its first significant move againt the the Pound in almost 3 months. Rates moved from 1.6132 at the high to 1.6024 at the low following the release of US Non Farm Payroll data, which came in better than expected. I always felt Sterling was over-valued against the USD and I believe we will see a move back towards 1.55 over the coming months, as the politcal uncertainty created by the upcoming elections is removed along with an upturn in economic data.
What I am currently telling my clients is that we need to be reactive to the markets without having a knee jerk reaction. We need to be in tune with market trends and even potentially realign any targets because of this but what we do not want to do is decide to throw these targets out of the window because the markets move against us for a couple of days.
This market uncertainty can be difficult to digest, especially if you have an upcoming property purchase or sale and are looking to transfer funds but are worried that market movements will ultimately leave you short changed. Here at Foreign Currency Direct plc we have multiple contract types all tailored specifically towards our client’s needs. One of our most popular types is our forward contract, which allows you to lock in an exchange rate even if you do not have the full funds available. This is perfect for anyone looking to eliminate risk from the market but still take advantage of our award winning rates. If you would like more information please contact me directly at mtv@currencies.co.uk or on 01494 787 478.
Sterling Rises Across the Board
Thursday has seen Sterling continue its recent rise in the markets, as it posted gains across the board by close of European trading. GBP has performed particulalry well against the euro for the past couple of weeks, showing almost daily gains. With the currency pair closing in on the almost sacred 1.30 level, the question investors will be asking is how much further can GBP go?
Analysts are quickly revising their forecasts and even this particualr analyst is now start starting to turn with the tide of opinion that 1.30 could well be in range, based on the current economic climate. It has to be remembered however that we have still not hit this level and by no means is it a given. I still believe that Sterling is over-valued by at least a couple of cents against the single currency but the deep rooted economic and fiscal deficiencies in Europe, are hampering the euro’s chances of even a short-term recovery. It was in my opinion, the European central Banks decision to cut interest rates by 0.25% that was the catalyst for this recent spike and it has been compounded by the rising Spanish bonds, which remain above the critical 7% level. Add to this the revelation by Italian leaders that they to will most likely require some sort of EU funded financial bailout and you can start to see a bleak picture unfolding for the short to mid-term recovery of the euro.
Sterling has also seen gains against the USD, with almost half a cent added to Sterling’s value during Thursdays trading, rising above 1.57 on the Interbank. This may have been boosted today by the release of UK retail sales, which showed an increase in June. The US Federal reserve chairman Ben Bernanke also reiterated his stance that the FED is prepared to act if necessary to boost the US economy. This in turn may have boosted global market confidence, which could be another reason the USD has fallen off slightly, as investors will have started to move away from the ‘safe haven’ Dollar.
If you have any currency requirements and would like to be kept up to date with all the latest market movements, or be alerted when your target rate becomes available as a trading level, then please feel free to conatct me directly at mtv@currencies.co.uk or on 01494 787 478.
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.
