Tag Archives: GBPEUR Forecast
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.
Pound strength following King Speech (Steve Eakins)
Today, which is probably the busiest day this week has already provided a few surprises. It was this morning confirmed that France has re-entered a recession creating euro weakness, UK Unemployment is improving and then currently the current Governor of the Bank of England, Mervyn King, in his last speech seems to be talking the value of the Pound up. In summary GBPEUR rates have now risen from the 2 week low at the beginning of the day towards a near 4 month high we last visited 4 weeks ago.
So what next for GBPEUR exchange rates?
Near future – EURO buyers may want to hold off till tomorrow when we have the last big data release for GBPEUR this week when the Eurozone confirms their Consumer Confidence figures for April. The expectation is for this data to show a contraction so rates may climb further for GBPEUR following this news which is released at 10 am BST. Euro sellers may want to move before hand as a result.
Medium term – Next week we have UK Production Price Index, UK Retail figures, Bank of England minutes, UK GDP figures and UK Mortgage approvals. Expectations for these releases will be more concrete on Monday so keep reading here for the latest forecasts and updates on these releases. This should help highlight potential buy and sell opportunities when it may be the best time to trade through next week.
Longer term – A lot hinders on the new Bank of England Governor Mark Carney that starts his post at the end of June. He may want to come in with an instant impact changing interest rates or the current asset buying program. It may the beginning of July when we see this and is already expected to be an interesting event that may give direction to exchange rates for the following few months.
If you are in the currency market and are interested in a more personal view on how the above events could affect you, feel free to contact us on the normal number (01494 787 478) or myself personally, Steve Eakins via email at hse@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.
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’s Recent Spike Continue? (Matthew Vassallo)
The Pound has benefited this week from the on-going unrest in Cyprus, which has caused investors once again to pull their funds away from the unpredictable EUR. This move is in stark contrast to the overwhelming sentiments of the past couple of months, which has seen the EUR move from strength to strength against GBP. This move was facilitated in a large part, due to the complete lack of confidence in our own economy. The UK stands on the verge of a potential triple-dip recession and when you add our poor growth forecasts (as highlighted by yesterdays budget) and weak exports, it all combined to put Sterling under considerable pressure.
So the question many will be asking now is will the Pound’s recent spike continue? The answer in my opinion is that it is highly unlikely.
Whilst we have see GBP realign itself against both the EUR and USD over the past couple of days, there are a number of variables we have to consider. The first is of course the on-going debate in Cyprus, where talk of a ‘bank levy’ charge on all foreign and domestic imports has been met with the expected uproar. This has caused the EUR to weaken and the knock on effect was the Pound rising against the single currency. We must remember it was the lack of investor confidence that caused the EUR to lose value, rather than any real confidence in GBP.
The second thing to consider is that due to the fact the USD strengthened so quickly against GBP and by so much, some sort of realignment was always to be expected. You can also take the view that as the US economy has started to pick up, investors risk appetite has started to return and this has led to a move away from the ‘safe haven’ USD and into riskier assets, such as the ZAR. I do not expect rates to start moving back toward 1.55 anytime soon, with further spikes dependent on how economic data is viewed over the coming weeks.
In summary, the events unfolding in Cyprus make for grim viewing and at one point the public protests were on the verge of descending into full blown anarchy. I for one would not be readily accepting someone ‘stealing’ 10% of my money, which if you strip away the political jargon, was exactly what the initial proposal suggested. I do feel that we will see a resolution and Cyprus will find a way to receive the 10 billion EUR bailout fund it requires and once this happens we could well see the focus switch back onto the UK economy and the Pound will most likely be the one to suffer when this happens.
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.
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.
Why the pound can only get weaker! Current pound sterling exchange rates should not be taken for granted…
The pound has dropped quite sharply this year and with very good reason. The number one question I am hearing is will it drop further and as painful as this may be to hear, the answer I have to say is yes. This is good news for those selling a foreign currency to buy sterling, read on to find out how we can help save you money and ensure you trade at the right time.
The UK economy is uncompetitive. Five years of a major depreciation in the value of the pound has done little to ignite the recovery many expected would be under way. It is majorly in the Government’s and Bank of England’s interest to have a weak pound as this will help the recovery and gives credibility to their economic plans. A major devaluing of the pound is the only way the UK can get out of the mess it is in.
Martin Weale from the Bank of England stated only recently that it was in the UK’s interest to have a weaker pound and I expect that these sentiments will prevail for most of the next few months. It is therefore unrealistic to expect that the pound will suddenly make major improvements against the major currency pairs.
Are you considering a currency exchange involving the pound and wondering where all this is headed? For an unbeatable rate of exchange and market updates to ensure you don’t miss out please feel free to contact me Jonathan directly on jmw@currencies.co.uk or call 01494 787 478. To ensure I can best help you it would be useful to provide an outline of your situation and a contact telephone number.
Tomorrow we have the Bank of England minutes which are likely to cause the pound to lose further ground against the majors. Rates could drop up to a cent or two. There is a very slim chance some members may have voted for a rate hike but I doubt it. The minutes last month were more telling and this could be the case again. I will be watching this release very closely to see what is happening as it may well provide news on where rates will go in the future. If you are too busy to read through twenty pages of Bank of England data please register an interest with me!
To best assess the future we can always look to the past. The pound was strong last year because of Eurozone worries. Investors put money into the pound as a safe haven. This year as those fears have subsided and the UK economy teeters on the brink of an unprecedented triple dip investors have sold off their GBP positions and this has contributed to a weak pound. My predictions are therefore that sterling will continue to suffer in the future and that anyone who thinks this is the lowest it will go should not take current levels for granted.
The best way to ensure you do not suffer at the hands of market movements is to register an interest. As specialist currency brokers we set this site up for our clients and new clients alike. Our personal and proactive service means we can watch the rates for you and provide all the information to make an informed decision. Please feel free to contact myself Jonathan directly on jmw@currencies.co.uk or call 01494 787 478 and ask for me.
I look forward to hearing from you and assisting you with your currency matters.
