Tag Archives: GBP strength
Anticipation Builds Ahead of Key Date for UK Economy (Matthew Vassallo)
Thursday should be a key fixture in the diary of anyone with an upcoming currency requirement, as this is when the latest set of Gross Domestic Product (GDP) figures will be released. These will determine whether the UK economy has fallen back into official recession and whilst these figures could well be revised in the coming months, the initial market reaction will most likely mirror the result.
Personally I cannot see GBP gaining much momentum even if we do avoid recession, although there will be an element of market confidence returning to the Pound and it should stabilize. If we do in fact find ourselves back in a recession then the Pound will struggle to make any serious inroads against the major currencies and provided the Eurozone doesn’t throw up any nasty surprises (something which sounds unlikely given the recent history), then we are likely to see Sterling move back towards 1.14.
The EUR has tried to strengthen recently amid this on-going negativity but is constantly hampered by its own economic problems, which are prevalent and deep rooted throughout the Eurozone economy. It is almost a guarantee that we will hear of further unrest, whether it be in Cyprus or one of the larger nations such as Spain, France or Italy (just take note of the on-going political debacle and lack of a cohesive government). All of these nations have the ability to spark a further financial crisis should their economies collapse and unfortunately at times the Eurozone seems as if it is held together by nothing more than empty promises and increasingly harsh austerity measures.
GBP/USD rates have levelled out slightly recently although the USD continues to hold firm against the Pound, despite a small fight back from GBP recently. Despite the recent worse than expected non farms payroll data, the US economy does seem to be moving in the right direction and it is likely that we will see continued USD strength throughout Q2 of this year. I feel GBP will struggle to break back through 1.55 anytime soon, although a move back under 1.50 is now unlikely based on historical data.
The NZD continues to look strong against GBP with rates hovering around 1.80 for some time now. Many clients looking to purchase NZD will more than likely have been holding out for a move back towards 1.90, or maybe even 2 but personally I feel even 1.90 may be an unrealistic target, especially in the short to medium-term.
With the UK on the verge of a further recession and the NZD buoyed by a strong AUD and strong exports, it is likely we will see GBP/NZD range bound between 1.78-1.85 over the coming weeks.
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.
Where Next for GBP Exchange Rates? (Matthew Vassallo)
GBP/EUR rates have been extremely volatile since the turn of the year and I expect more of the same as we move through Q2. If we look individually, both the UK and Eurozone economies remain stagnant, with little hope of any serious economic growth in the short to medium-term. For this reason I expect both the Pound and the Euro to struggle against most of the major currencies for the foreseeable future. However, this also means trying to forecast the pair becomes increasingly difficult but I do believe the recent Sterling strength, whilst unexpected, is a key factor.
Prior to this positive move for GBP all forecasts had previously indicated EUR strength, with a move down through 1.10 on GBP/EUR widely mooted. Fast forward and suddenly the talk becomes of a move back towards 1.20 again and to me this highlights just how fragile the Eurozone economy is and how quickly the landscape can change. Until the now well documented recent events in Cyprus started to unfold, the EUR was benefiting from a more bullish outlook, with positive comments from Mario Draghi amongst others pushing it higher against the Pound. Whilst the UK still faces economic difficulties, I do believe there is a wider range of fiscal problems deep rooted across the entire Eurozone region. Recent events in Cyprus just highlight the fact that it seems to be only a matter of time until the next Eurozone crisis raises its head and erodes any market confidence that has started to be rebuilt.
A key date for anyone with a GBP/EUR requirement will be the 25/4/13, when the latest set of UK Gross Domestic Product (GDP) figures will be released. These figures will determine whether the UK economy has gone back into recession and the outcome is sure to affect GBP/EUR exchange rates.
Key economic data this week includes tomorrows Bank of England (BoE) minutes and UK unemployment figures. These minutes will give us an insight into the BoE’s recent decision not to change interest rates or initiate another round of Quantitative Easing (QE). We also have Retail Sales figures out Thursday morning, which are expected to show a significant drop.
GBP has started to realign itself against the USD following weeks spent hovering either below, or around the 1.50 level. Historically GBP/USD rates very rarely stay below 1.50 for long and those who did not sell at that time may be waiting quite a while before we see those levels again. Whilst the US economy has performed better than expected in 2013, the UK economy has done quite the opposite and that is the key reason rates struggled to break 1.50 for such a sustained period of time. The reason for the recent shift back in Sterling’s favour to around the 1.53 mark, can be attributed to the recent poor Nonfarm payroll data. This indicated far fewer jobs had been created in the US economy than initially predicted and the USD lost value
because of this.
Whilst this news should be enough to keep levels above 1.50 for the foreseeable future, it is hard to envisage GBP breaking through 1.55 anytime soon. I think we may see GBP/USD rates move back towards 1.51-1.52, if UK economic data does not improve and or the UK finds itself back in a recession come the end of the month.
The AUD has continued to outperform most of the major currencies so far this year, despite the threat of interest rate cuts and a slowdown in China’s demand for their raw materials. This demand has buoyed the Australian economy over recent years and the AUD has continued to benefit from this. Whilst reports over the past couple of days indicated China’s growth has indeed slowed, even more than many expected, I still think GBP will find huge resistance at 1.50 and then 1.55. Whilst our own growth forecasts remain so poor and our trade deficit seems to be forever widening, the Pound will struggle to make any serious inroads against the
impressive AUD.
For anyone looking to buy AUD, if 1.50 does become available again over the coming weeks I would seriously consider my position.
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 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 Continue to Recover? (Matthew Vassallo)
Following the announcement over the weekend that the UK economy had lost its triple AAA credit rating, many were expecting an unrelenting week of pressure on the Pound. As usual though things weren’t quite as cut and dry as initial predictions suggested and the Pound has been fighting back against the EUR and USD since yesterday afternoon’s trading.
Reports from Italy indicate that the current election process could end with a hung parliament and this has sent shockwaves through the markets, as worried investors are selling their EUR off the back of these concerns.
To me this scenario is a prime example of why it is difficult to have any long-term faith in the recovery of the eurozone, as key economic issues continue to undermine the ‘recovery process’ across the region. Whether it is Spain, Italy or Greece, there is always unrest just around the corner and it is for this reason that we cannot just assume that the EUR will continue to prosper off the back of inverstor concern over the UK economy and its own chances of recovery.
I do feel we may see the Pound start putting pressure on the 1.17 level, unless of course Sir Mervyn King and the Bank of England start talking down the UK economy again. This is always a likely scenario whilst our trade deficit remains almost the widest since records began, so expect some more doom and gloom when we hear his next public address.
In terms of GBP/USD forecasts, it is likely that we will see the USD remain strong throughout Q1 of this year. The Pound has seen a loss of over 10 cents since the start of the year but prior to this had been performing very well against the USD. Anyone expecting rates to drop below 1.50 need only look historically to see that we have not seen these levels for almost 3 years and I do believe we are more likely to see rates recover towards 1.55, than break through 1.50.
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.
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.
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.
GBP Fights Back Against the Euro but Negative Trade Deficit a Worry. GBP/USD & GBP/AUD Forecasts
GBP rates have spiked against its EUR counterpart during Thursdays trading, despite yesterdays negative report by BoE (Bank of England) governor Mervyn King. You could be forgiven for thinking that every announcement Mr King makes is nothing but doom and gloom regarding the UK economy and unfortunately yesterdays statement was more of the same. Whilst the UK basks in the success of the London 2012 Olympics and our athletes achievements, the UK economy is struggling to provide the same excitement. Once again growth forecasts have been cut and the words ’a long road to recovery’ seem to be used more often than any others.
As mentioned though the Pound has spiked by over 0.5% and at time of writing was sitting comfortably above 1.27 against the euro. It is difficult to pinpoint the exact reason for this, although in my opinion it was the fact that despite yesterdays negative outlook talk of an interest rate cut seemed to be downplayed. If this turns out to be correct it would be this, rather than the likelyhood of further monetary stimulus (Quantitative Easing) that was a major factor behind yesterday’s EUR strength. It is also conceivable that tomorrows ECB (European Central Bank) monthly report may hold further negative sentiment for the short-term recovery of the single currency and this is now being factored into the markets.
Either way we are still witnessing excellent buying opportunities on GBP/EUR, especially when you consider today’s announcement that the UK trade deficit is at a 15 year high and the worst since records began. The deficit measures how much imported goods and services exceed exports and this rise has been driven by a 4.6% month-on-month fall in the value of UK exports to eurozone and non-EU countries. In fact these levels become even more attractive when you consider the Pound has fallen off against most major currencies today, including both the USD and AUD. Personally I would consider your positions if you do have a EUR requirement, as these levels may come under pressure if we hear a positive news from European leaders over the coming days. I feel a move above 1.30 is now unlikely, unless there is a further shift in momentum and I am sticking by my previous predictions that a move towards 1.25 is more likely than a move towards 1.30 in the weeks ahead.
GBP/USD levels have fallen away during Thursdays trading, possibly because of the trade deficit announcement and a further reaction to yesterdays negative BoE report. Pressure is now being put on 1.56 and a move towards 1.55 is a possibility over the coming days. When you consider it looked as if we may be breaking back through 1.57, it would be wise to stay in touch with your personal currency broker for all the latest cable (GBP/USD) movements and any key economic data releases, that will ultimately affect the rate of exchange you will receive.
GBP/AUD levels have also fallen away during Thursday’s trading and at time of writing were sitting comfortably below the 1.48 mark (1.4775). Levels seem to be gravitating towards the all time highs we witnessed back in February and anyone looking to purchase AUD need to consider their positions due to this unwavering market support. The AUD has continued to strengthen off the back of China’s demands for its raw materials and a very attractive interest rate (3.5%). We also heard the announcement this morning that unemployment figures had fallen to 5.2%, which also gave the AUD a boost.
If you have an upcoming currency requirement and woulod like to take advantage of our award winning exchange rates, or would simply like 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 on 0044 1494 725 353.
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.
1.25 on GBP/EUR as Potential Greek exit Leaves Markets Anxious
Monday has seen GBP/EUR move back through 1.25, as the uncertainty surrounding the possibility of a Greek exit from the EU weighs heavily on investor’s minds. The markets did seem to be waiting for the Greek elections, before the next decisive move was made but with Europe’s woes continuing and seemingly unrelenting, the single currency may struggle to make up much ground in the short-term.
The negativity surrounding Europe is continuing to increase and for the first time publically, a major market segment has admitted putting contingency plans in place for the break-up of the euro. The chief executive of global insurance market Lloyds of London, has expressed his concerns and said they are now ‘preparing for that eventuality’ and would settle claims using multiple currencies.
This news is hardly likely to fill investors with confidence and at time of writing GBP/EUR had settled above 1.25, a level many analysts felt would provide resistance in the build-up to the Greek parliamentary elections in June. Personally, I feel a move towards 1.26 in the coming days is a possibility, as the uncertainty surrounding Greece continues to weigh heavily on the region.
If Greece were to exit the euro the results could initially be catastrophic for their economy and for the short-term fate of the single currency. The uncertainty that is surrounding the markets now will only increase and we could see euro weakness as investors run for cover. Personally I feel EU leaders will do everything in their power to keep Greece from defaulting, as it would set a dangerous president and the risk of contagion throughout the rest of Europe could be devastating.
If you would like to be kept up to date with all the latest market movements or have an upcoming currency requirement you would like to discuss, then please feel free to contact me directly at mtv@currencies.co.uk or on 01494 787 478.
