Tag Archives: GBPUSD 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.
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.
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’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.
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.
