Pound Sterling Forecast

My clients continue to ask me just what will happen to the Pound against the Euro and in truth, like major analysts worldwide and the majority of people if I am completely honest you just cannot be completely sure.

What you shoud be doing in this current market is looking at it from an investors point of view, why would you look to invest in either?

The Euro Zone has plenty of problems, and I am still of the opinion that at some point (could be weeks, months or even years the way things are going) something is really going to blow up within the European economies, we have seen signs of it and clearly that things are bad… but there is certainly room for them to get a whole lot worse.

Everything that the European Central Bank are throwing at the problem appears to be a short term fix, and when they run out of options I am sure we will see failures and the Euro weakening considerably as a result. This would stop me being that interested in the Euro as you never know quite when this will happen.

On the plus side for the Eurozone, they have raised interest rates twice this year, an interest rate rise is generally seen as positive for the currency concerned and a cut negative, so this has made the Euro more attractive to investors and in my opinion is the main reason it has kept strong, along with the Chinese and Swiss purchasing large amounts to up reserves and davalue their currency respectively

The U.K on the other hand has not even considered raising rates this year, and may not next year if inflation continues to naturally drop away- this will hold the Pound back in the short term I am sure of that.

What does not help is data releases in the U.K being fairly poor, our Misery Index (inflation times unemployment) being at the highest point in 17 years and our own people deciding to smash their own home towns and cities up just a few weeks ago… the cost for this further down the line will be huge and will surely effect the strength of future economic releases.

My overall opinion is that this pairing will continue to stay in this range as they battle to be best of a bad bunch with the Dollar, what you need to do if you are buying is wait for a small spike in the market and jump on it, before rates get a chance to go back down again.

I can help you save money either way when you do want to buy or sell currency, along with offering fantastic customer service, contact me today djw@currencies.co.uk or fill in the enquiry form on this page

Global Shares fall most notably the banks

The FTSE fell by the highest amount in 12 years yesterday, bank shares and indeed many others tumbled worldwide as investors continued to seem worried about the current worldwide situation. In cases like this you tend to see investors head for a ‘safe haven’. Currently gold (priced in Dollars) and the Swiss Franc are favourites, and both gained further ground yesterday. Interestingly, the Pound had a fairly good day too against the Euro and many other majors, it appears although the best of a bad bunch, heads are turning towards the pound leading to spikes in the market on days such as yesterday, I’m sure it will only take a few poor data releases for investors to shy away again, so in the current market taking advantage of a spike is key.

Overview and forecast for Sterling against the majors

With a reasonably quiet day ahead on the data front I thought I would give you a brief update on what is going on in the volatile markets and what we may see ahead.

GBP/EUR – The Sterling-Euro pairing has been relatively range bound of late, however this doesn’t mean this will be the case going forward. There are just so many factors affecting both sides at the moment that it is hard to know just where we will be in a few weeks time let alone the next hours trading. It appears that the ECB are willing to throw everything inclusive of the kitchen sink into helping the Euro survive and stay strong, whilst the BOE are in no rush to be raising interest rates for quite some time, Barclays in fact changed their rate hike expectations to August 2012 yesterday. In short, I don’t expect major movements for this pairing however there will no doubt be some great buying and selling opportunities in the coming weeks. In order to ensure you are in the best possible position you should make us aware of your requirements on 01494 787 462 so we can explain the various options available to you inclusive of limit and stop orders.

GBP/USD – The Pound came close to TWO YEAR HIGHS against the Dollar this week following some hawkish dissent from one of the Federal Reserve policy makers on Wednesday. He had mentioned that he felt the U.S would have to raise rates before mid 2013 and that growth forecasts should not be as high as they are. This led to a short term spike on Wednesday afternoon and a great chance for clients with an open trading facility with us to lock in to a fantastic level of exchange. America isn’t in great shape but as the saying goes when the U.S sneezes the U.K catches a cold so be aware we could have just as many problems around the corner too.

GBP/AUD/NZD/ZAR - The pound has seen great gains against all three of these more volatile currencies, as the risk appetite for investor’s decreases and they seek to unwind carry trades. Carry trades are where an investor borrows money in a currency with a very low interest rate (GBP,JPY) and shifts the funds to a currency with a very high interest rate (AUD,NZD,ZAR) making their return on the interest differential. When we see the unwinding of carry trades, you can see a snowball effect like we did in the past two weeks and very large movements over a period of days. Sterling is around 10 cents better now against the AUD and NZD and also roughly 7% better against ZAR than a few weeks back.. That is £14,000 difference on a £200,000 purchase!!

Once again this highlights the importance of letting us know your intentions, we can watch the markets for you and highlight movements like this meaning you do not need to have your own eye on these volatile markets all the time as I’m sure you have plenty to do all day yourself. make an enquiry  today and one of our friendly and experienced brokers will call you bac, more than likely me personally.

GBP/CHF - Without a doubt the most volatile currency against the Pound on the markets at present… I have many clients who have Swiss Franc mortgages and are finding each month increasingly harder as payments soar alongside the Swiss Franc. The last week or so has been a little better for you with the Swiss national Bank stepping in to devalue the currency however be aware this may not last too long… this is why. The Swiss lost CHF21 Billion last year trying to devalue their currency, and cannot afford to keep on throwing money down the drain like this, there comes a point where they have to realize that the only thing to save the Francs increasing strength is a better risk environment and investors being more prepared to take on riskier propositions. We should still see increasingly volatile movements as the ongoing attempt to devalue continues, and the momentum of the CHF keeps pushing it back.

Public sector net borrowing today

This morning sees the release of Net Borrowing figures in the U.K and this can indeed be a key release. It essentially confirms exactly how much new debt is held by the Government and predictions can be quite a way out. This morning expectations are for £0.2Billion compared to £11Billion last month, a lower figure may be seen as positive for the pound and a higher one negative, it would not surprise me to see slightly higher than expected and the Pound to lose a little ground in early morning trading so it may be prudent to contact me on djw@currencies.co.uk  first thing if you have an upcoming transaction to carry out.

If you have any questions or queries regarding anything in this report then please do feel free to email me djw@currencies.co.uk or call 01494 787462 

The U.K faces a flurry of extremely important data this week, we also see some key releases from other economies that could well effect other currencies against Sterling – the following releases are due:

Tonight 02:30am – Australian Meeting Minutes – Much like the Bank of England minutes this release will explain how the Reserve Bank of Australia came to their decision on how to combat their economic situation and what to do with interest rates. This may lead to major movements for GBP-AUD overnight so if you do have an upcoming transfer to do be it buying or selling it may be prudent to consider your options in advance. We saw a tricky few weeks for the RBA, at one point it looked like Australia may cut rates, then raise them and now i’m fairly sure that investors are quite unsure as to what may happen so tonights release is extremely important.

Tomorrow 07:00am – German GDP data - With Germany being the largest economy within the single currency this release has fair importance as to what we see happen to the Euro tomorrow, it is followed up later on at 09:00 by European Union GDP figures and EU Trade balance.  Predicted for Germany is a pretty solid growth, however for the EU a minor one, and weaker than predicted ans the Euro may suffer throughout the course of the day so keep your eyes peeled for this one!

Tomorrow 09:30am – U.K Inflation Data - Inflation is slowly rising in the U.K and already well above BOE Govenror Mervyn king’s 2% target, should inflation be creeping up further then it causes a little bit of a sticky situation for the BOE – In order to combat rising inflation generally central banks would look to raise interest rates, however with the current economic situation within the U.K the BOE can’t really take this as an option just yet, therefore they are stuck between a rock and a hard place as to what to do… Potentially the Quantitative Easing seen over the past couple of years is a large factor to the level of inflation along with rising global commodity prices however something will need to be done sooner rather than later to avoid this spiraling too much further and making life very difficult for the Pound and the people in the U.K.

Wednesday – Bank Of England minutes& Employment data 09:30am - Wednesday sees the turn of the Bank Of England to show their hand as to what they plan to do next, we see the result of the voting at the last interest rate decision and who was in favour of any further Quantitative  Easing (more votes in favour of it would be seen as very negative for the Pound.) Mervyn King seems to have a talent generally involving weakening the Pound by opening his mouth so be aware if you have a pending transaction to do this week.

 Thursday – U.K Retail Sales – 09:30am - Another busy morning for the Pound on Thursday as retail sales are released, a key indicator to economic performance and investors will be looking for a positive movement in the retail sector, expected is a mere increase of 0.3% so any change to this could lead to great volatility.

In short the start of this week sees a huge amount of economic data out, and this may well take the reigns again as to the main driver of the currency markets this week instead of ongoing debt issues, downgrades, devaluing and carry trading being at the forefront.

This week could well either lead to the pound being loved again, or people steering well and truely clear dependant on what we see come out, I would be wary of Wednesday’s minutes as the bigger release this week and personally I feel we may see Sterling have a bad (but not terrible) week.

Should you have a transfer to make and want the very best exchange rates email me directly djw@currencies.co.uk or fill in the enquiry form on the right hand side of this page.

The Telegraph have released a table of the best exchange rate providers and i’m pleased to say the company I work for has come out top… Please feel free to view the article I have placed the link below, it is also on Yahoo finance. Should you make an enquiry then by quoting POUND STERLING FORECAST  you will be put through to either myself or Ben (the authors of this site) and treated with the highest level of customer service whilst receiving commercial rates of exchange as I do for all of my regular readers.

http://www.telegraph.co.uk/expat/expatnews/8659209/Overseas-property-purchases-affected-by-poor-exchange-rates.html

Two important milestones for Pound Sterling Forecast this week, and a great big thank you to those of you regular readers who have told your friends about us.

Firstly, after just one year of creating the Blog we have today hit 100,000 unique visits, meaning 100,000 seperate people have been on the site, this is with no advertising and I am hoping it can only be down to the informative content pitched at a level everyone can understand, sometimes quite rare when talking finance as I am sure you are aware.

The second milestone is that the three main contributors to the site – Myself (Daniel Wright) Aidan and Ben have just reached 10,000 foreign exchange deals between the three of us, turning over hundreds of millions of Pounds for our company.

This should fill you with the peace of mind that if you have an upcoming transaction that you are looking to carry out, we are the guys to do it… We work for an FSA regulated company (Foreign Currency Direct) authorised as a payments institute and we specialise in saving you money over the banks like we have done for the past 10 years.

Please continue to promote Pound Sterling Forecast, any comments or suggestions for improvement are welcomed from you, the reader and if you need to send money overseas or bring money back, we deal in amounts from £500 to multi million pound transactions for private and corporate clients, just fill in the enquiry form on the right hand side of this page and one of us will be straight in touch providing this is within office hours, if not then at the next opportunity we get.

Minimal data out todayso I expect a quiet one for the Pound

Thanks and have a great day,.

TODAY’S CURRENCY FORECAST

 “Confidence in the U.K is close to an all time low again – can you really see the Pound rallying in the near future?”

Market Summary

This report will take a look at the cost of sending money overseas and factors that could affect your currency transfer, focusing on:

• Bank of England Minutes & Unemployment

• Euro News

• Federal Reserve Minutes (USD)

• Milk prices lead to NZD strength

• Today’s data

• Breaking news – Consumer Confidence

The table below shows the percentage movement of exchange rates over the yesterday along with the extra currency you could have bought if buying with £200,000.

Bank of England minutes and Unemployment

Yesterday morning saw the release of the Bank of England minutes from the latest interest rate decision, where rates were kept on hold at the start of this month. Members of the Monetary Policy committee remained unchanged in their votes for no rate hike at a level of 6-3.

This led to a little Sterling weakness as it pushes the likelihood of a rate hike in the U.K back a little further, for non-regular readers an increase in rates generally leads to strength for that particular currency, as it makes it more attractive to investors due to getting a higher return for their funds.

Adding to Sterling’s woes yesterday were particularly poor unemployment figures, coming out pretty much as expected but still showing a claimant count rate of 4.6%. This assisted with the losses seen over the trading day and once again shows how important it is to stay in close contact with a currency broker as movements on the market can be highly expensive.

Euro News

Many clients have been asking me of late just what is going on with the Euro with the well documented troubles with numerous European economies… personally I feel there is a lot more to come, however we have been thinking this for quite some time now.

Should things blow up and Spain for instance step up and require assistance, I would not be surprised to see rates head back towards 1.20. However, The ECB are extremely good at making the best of a bad situation in press conferences and announcements, and with a potential rate hike once again in the near future for Europe, rates could easily drop closer to 1.10 before they start their climb again.

To get a clear explanation of the factors affecting your rate going forward either email me at djw@currencies.co.uk or fill in the enquiry form on the right of this page.

Federal Reserve Minutes (FOMC)

Last night saw the release of the FOMC minutes, similar to the Bank of England minutes, along with a speech by Head of the Fed Ben Bernanke. It appears the U.S are also some way from a rate hike and many predictions now are that it will not happen until 2012, however should they continue to see rising oil and commodity prices they may need to rethink further down the line.

Fonterra Milk Auction helps NZD

The New Zealand Dollar made some good headway against the pound yesterday following milk auctions showing an increase in price of 16% since the end of last year.

This may surprise some of you but with milk being New Zealand’s main commodity this should mean that there is more money coming in and in essence the economy should perform slightly better as a whole therefore increasing the value of the New Zealand Dollar.

Today’s Data

Today we see two data releases of note, firstly for the Pound and then shortly after a speech that may affect the Euro.

At 09:30am we see retail sales for the U.K, an increase in sales is expected due to extra bank holidays and the royal wedding in April.

At 10:00am head of the European Central Bank Jean Claude Trichet speaks, giving his current stature on the economy in Europe as a whole and his plans on monetary policy going forward, usually Trichet is fairly positive about the Euro however last time he spoke he actually managed to weaken the Euro for the first time in a while.

Don’t take the risk if you have a pending transfer be it buying or selling the Pound as the current market is not one to gamble on unless you are a big risk taker. At least place a Stop loss or Limit order to protect yourself from adverse market movements, fill in the form on the right hand side of this pagewe will greatly explain how these tools can help you.

Breaking News – Consumer Confidence

Overnight Consumer Confidence came out for the U.K and had sank to a worrying low of just 43, merely 4 points above the record low seen in February. Consumer Confidence is measured on a mark of 50 and anything above suggests people are confident about the economy and its performance going forward, below means the opposite. It is thought that the lack of jobs is one of the key drivers to this.

IMF Chief Resigns

IMF Chief Mr Stauss Khan has also resigned over night, he still firmly stood his ground that he was totally innocent, however he could not continue his role under the current circumstances. This could lead to a little volatility this morning as speculation increases as to who will replace him and uncertainty remains.

Good morning readers and I hope you had a great weekend!

This week is due to be key for the Pound with some extremely important data releases due out over the next few days.

Tomorrow we see a busy morning with inflationary and public sector net borrowing data out at 09:30am. Should we see inflation continuing to increase then it opens the door slightly wider for a rate increase as this is one of the routes the Bank of England can take to tackle high inflation, along with this if the countryis now borrowing a huge amount this may knock the Pound back slightly.

Personally it wouldn’t surprise me to see reasonably high figures for inlation but along with this high borrowing too although I would expect the Pound to be up against most major currencies by close of play unless we have any other surprises pop up.

Wednesday is just as important as we have the Bank of England minutes due and all eyes will be on just how many members of the BOE voted in favour of a rate hike, should we see still 3 of the 9 members in favour the markets may not see too much movement howver any change to this figure (higher leading to strength and lower weakness) then I would expect an extremely volatile day.

A rate hike is generally seen as positive for the currency concerned and markets move on rumour as well as fact, the BOE appears to keep on pushing back the potential hike in the U.K and other economies are starting to look like they may be pushing up rates earlier which isn’t great for Sterling.

Finally, Thursday sees retail sales confirming how much was spent on the high street last month, with most of the adverse weather out of the way in the U.K now I expect these to be slightly better.

In short, I can see a better week for Sterling and indeed some better levels of exchange come the end of the week.

If you are buying a property abroad, have business transactions to carry out or need to get money overseas for any other reason and want the best exchange rates, just fill in the form on the right hand side and one of the experienced traders that write on this blog will be in touch shortly.

Today brings the BOE interest rate decision at 12:00pm and could be extremely important news for Sterling going forward, especially if we do see a surprise rate hike (which personally I think there is around a 25% chance of seeing)

The more likely outcome is that rates remain on hold once again and you may see minimal Sterlnig weakness following this due to a minority of investors taking a punt in advance that rates may go up, with the markets moving on rumour as well as fact this could well lead to Sterling weakness.

An interest rate decision is in general seen as positive for the currency concerned and a cut negative, however this is not always set in stone as a hike in the U.K could in the medium term cause major problems as many mortgage payments will rise and this could lead to further economic troubles further down the line.

In short, I think Sterling will actually have a reasonably positive day as early morning data was slightly better than expected, and even though it may cause probles later on, a hike in rate will cause some short term rapid Sterling strength.

Feel free to pop back on here later for the latest.

If you are buying or selling a property abroad, have business transactions to carry out or need to get money overseas for any other reason and want the best exchange rates, just fill in the form on the right hand side and one of the experienced traders that write on this blog will be in touch shortly.

Following last weeks reasonably poor week for the Pound it is difficult to say whether or not Sterling will bounce back throughout the course of this week as investors are still torn as to just what will happen with interest rates and when.

Now that the Euro Zone have started to consider hiking too we have seen the Euro slowly claw back some ground against the Pound however pesonally I cannot see how they can afford to hike in the near future, with so many economies in Europe facing a rocky ride as it is.

Today over in Canada we see the release of GDP (Gross Domestic Product) figures released at 13:30pm which is of course important for those looking at buying or selling the Canadian Dollar in the near term.

Tomorrow is a very busy day for those with an interest in either the AUD, CHF, CAD, or EUR as we have a host of data due out.

Overnight we see the release of Australian retail sales data along with their latest interest rate decision, we will start to see just what kind of impact the recent natural disasters have had over there, this may lead to AUD weakness by tomorrow morning.

Very early tomorrow morning we see the Swiss GDP figures due at 06:45am with the Swiss Franc being one of the top performing currencies this year this will also be key to see how it will fare going forward.

08:55am brings the German unemployment figures, with Germany performing best in the Euro Zone it will be key for the Euros movements in morning trading so keep a close eye on that one.

The U.K takes its turn next at 09:30am with Mortgage approvals and money supply, with the housing market being one of the key factors for the U.K economy this data is important and will have an impact on Sterling volatility tomorrow morning.

Finally, to wrap up a busy few days Canada release their interest rate decsion at 14:00pm tomorrow, no change to rates is expected.

Personally, I see a better week ahead for the Pound as I think that confidence is rising, albeit very slowly, keep an eye on the site for further information as the week progresses.

If you are buying or selling a property abroad, have business transactions to carry out or need to get money overseas for any other reason and want the best exchange rates, just fill in the form on the right hand side and one of the experienced traders that write on this blog will be in touch shortly.

A controversial debate was reignited about the government’s step to cut off spending and boost taxes to reduce public debt and make the economy debt free as there was an unanticipated downturn in the British economy. The sudden flip in the British economy has astonished the investors anticipating a sharp drop in the value of the pound sterling. There was a fueled speculation about the chances of the British economy falling back into yet another recession in the last quarter of 2010 when the figures showed a 0.6% drop in the GDP. The economists proposed the reason to be two consecutive quarters of negative economic growth and reined in expectations of the Bank of England to start raising the interest rates to come to terms with the stubbornly-rising inflation level in England.

 What’s been happening to the pound sterling in 2010?

The pound sterling has endured an year full of turmoil throughout 2010. Worries over rising public debt level, rock-bottom interest rates and controversies on quantitative easing have weakened the value of the pound against most currencies. However, most of the aforementioned negative effects had a varying degree of impact on the Dollar and the Euro and therefore, pound sterling is not the only currency that was grieved in 2010.

Against the value of the dollar, it has been seen that the pound finished 2010 at $1.54 that was an average of 8 cents lower than where it started off at $1.62. The pound sterling had started 2010 surrounded by intense political uncertainty and only gained some amount of stability when the British markets approved the deficit busting plans of George Osborne.

What the financial outlook for the value of the pound in 2011?

The fortunes of the pound sterling will be strongly tied to the expectations of a first rate hike from the long lasting standard lows of 0.5% and this will be in turn tied to the economic growth of the UK. Most financial experts are of the option that the British market will see a small rate hike in the later part of 2011 but there are also subtle chances of an unexpectedly high growth or inflation before that.

A further breakdown of the Euro Zone would prove to be a double-edged sword for the UK pound sterling. With the sovereign euro zone debt crisis looking large, experts are expecting a dampening effect on the European demand for the UK exports which could in turn imperil the UK economic resurgence.

What the British economists think about the future of the economy

Some eminent economists look forward to a slight hike within the fourth quarter of 2011 that may have a positive effect on the UK economy. Since 2009, when the pound hit the lowest level, the value has been strengthening with some amount of volatility. They think that the monetary policy will be kept loose and there may be a return to QE (Quantitative Easing). They also see the value of the pound strengthening against the Euro and a faster economic growth may be in store for the UK in 2011.

The economists see the weakening pound sterling as heralding the need of the much awaited correction to the UK’s trade imbalances. However, the British decision makers seem to be concerned about the weakening value of the pound and its effect on the UK economy as the pound is deemed to be the barometer of the UK economy.

If you are buying a property abroad, have business transactions to carry out or need to get money overseas for any other reason and want the best exchange rates, just fill in the form on the right hand side and one of the experienced traders that write on this blog will be in touch shortly.