Tag Archives: interest rate
As we approach the halfway point of the month we see the pound holding some of the gains we have witnessed in April but still very much under pressure! Unfortunately there is very little on the horizon to indicate significant further gains this month. If you are selling pounds to buy another currency holding out for further gains could be very risky, current levels should not be easily dismissed. Here are some of the key thing to note if you are buying or selling which may affect your rate.
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Will the UK leave the EU? Expect pressure on sterling due to political uncertainty. Markets and investors want certainty in their investments. Fears of the damage a split Tory government, the rise of UKIP and a broken coalition would do to UK business weighed on sterling yesterday. Can Cameron tackle the ghost of conservative past and deal with the question of Europe? It is doubtful I have to say and this will weigh down the pound.
UK Growth Last months data was impressive and welcome but 0.3% is not anything to get too excited about. True the latest data sets have all been positive but the marginal improvements on what were dire figures still have a long way to go. Ultimately the UK’s stagnant housing market (particularly outside London) needs invigorating – Construction is the main drag in recent years. The second revision of growth figures at the end of the month could easily be a market mover.
Depending on which currency pair you are trading there will of course be many other things to move the market. Looking in my crystal ball (which has been pretty clear lately) I cannot see significant gains for GBP against the majors. Maybe a cent or two? Once again I see more danger of things dropping as the confidence of the last few weeks wears off.
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I look forward to hearing from you!
After a busy week last week for Sterling this week seems as though it is going to be a lot quieter. Last week we saw UK Gross Domestic Product (GDP) figures come out at 0.3%, meaning that the UK avoided going in to another recession and providing a spike for Sterling against most major currencies. There is not a lot of data out for the UK this week, manufacturing data came out better than expected this morning and we saw a small spike for the pound but apart from this there doesn’t seem to be much going on in the UK.
In my opinion there are two data releases this week that have the potential to rock the markets. First up is the European Central Bank (ECB) Interest Rate Decision which will be released at 12:45pm tomorrow afternoon. There is a lot of speculation at present that the ECB are going to cut interest rates to improve their declining inflation. Inflation figures for the Eurozone were released yesterday showing a 0.5% decline. Generally an interest rate cut will increase public spending, in turn boosting growth and inflation. If the ECB chooses to cut their rates then I can see a strong bout of euro weakness against most major currencies, however with so much uncertainty still surrounding the Eurozone I can’t see this holding for very long.
I think that the other major data release this week could be US Non-farm payroll data out at 1:30pm on Friday. This always has the potential to change month by month and has a reputation for moving the markets significantly after its release. It is expected that the figure will be announced at 150,000 but anything other than the expected could cause some significant USD volatility.
We have a number of different contract options available that can help you make the most of spikes in the market, whether they are moving for or against you. If you would like to speak with one of our professional, friendly currency brokers then please contact me direct at firstname.lastname@example.org
GBPEUR Forecast – Will rates drop lower in April? Unlike the weather which remains as cold as a few weeks ago, the pound has shaken off some of the worst of this year. Concerns over Cyprus and the stability of euro zone banks, plus a slightly better performing pound indicate to me a fairly range bound few weeks of anywhere between 1.16 and 1.19. Significant gains for sterling look limited, as do significant gains for the euro. On balance I expect rates to be higher towards the end of the month as sterling slightly recovers and attention remains on the Euro zone economies.
What next for sterling? Will we triple dip? How can I protect myself? The next big event this month will be confirmation of whether or not the UK is in a triple dip recession. Numerous recent reports have hinted that the UK may have avoided the triple dip. I personally think this will be the case and we may see the pound find a bit of strength towards
the end of the month. If you are selling a foreign currency to buy pounds it may be prudent to act sooner rather than later. The New Zealand dollar is at close to all-time highs against sterling as are many other currencies. For more information to help you decide on when may be best to enter the market you can speak to our trading floor direct on UK Freephone 01494 787 478 and check live interbank rates here.
Should you have anything to consider in the future our specialist service is designed to save you money. For a free, no obligation chat or quote to see jus how good we really are you can speak with me directly on jmw@Currencies.co.uk
We have been particularly busy this morning due to the news breaking out of Cyprus. Not that the small economy, the third smallest across the Eurozone is receiving a bailout, but that as part of it funding needs to be raised by a bank levy. This bank levy is currently expected to be 6.75% on anything under €100,000 in any personal account held by a Cyprus account and closer to 8% on anything over. It seems that Germany is uncomfortable to pay out a country that they see as a hotspot for money laundering of rich Russians. This current proposal is being voted on today inside the Cyprus Government which could see a deduction to 3%.
It resulted in a run on the banks across Cyprus in a similar way we saw back in 2008 on Northern Rock here in the UK and the concern is this could spread across other European countries causing the house of cards to fall apart. It has in turn weakened the Euro significantly over the weekend making it the best time to buy the euro for over 30 days with the pound, a month high.
So when shall I buy euros?
Well the knee jerk reaction currently is quite attractive, I personally cannot see any spread of contagion in the near future so would be looking sooner rather than later. We also have to respect the UK Budget later this week on Wednesday which could easily put the Pound back on the negative sloop which is the more common route through 2013 with a 8% loss seen at some points against both the dollar and the euro this year.
However as the US markets have not traded on this news I can imagine a further gain for the pound this afternoon. If I needed to buy euros within the next 15 days I would be very much looking at rates today to complete my exchange or to limit my exposure but doing some and employing limit orders and stop orders. For more information on what these contracts are and the other benefits of using a currency broker over your bank contact me, Steve Eakins at email@example.com
This spike in the market has seen quick moving clients that had registered for SPIKE NOTIFICATIONS via firstname.lastname@example.org save nearly 3% compared to a week ago or £6,250 on a €200,000 purchase. If you would like to benefit from these notifications register your interest by giving me a call, Steve Eakins on the normal number or via email at email@example.com
Interest rates of a country traditionally have a big impact on the strength of their respective currency. If rates go up it normally strengthens that currency, this is why yesterday’s interest rate decision by both Europe and the UK were so keenly looked at. For example when the interest rates started to drop in the UK 4 years ago the pound lost several cents in a matter of 24 hours.
In the UK rates have stayed steady since July 2009 at 0.5% and I don’t expect a change any time soon however the shadow Monetary Policy Committee, (the equivalent of the shadow government), did vote for an increase to 0.75%. If we were to see that I would expect the pound to rally significantly.
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Cameron’s announcement today is welcome in some respects but presents a whole new set of challenges for the pound. Whilst in principle it makes sense as the UK does need to be clearer about how it engages with Europe, in practice the political wranglings and speculation we are now to endure for months and years will not be good for the pound.
Why is sterling suffering?
- Political Uncertainty - Where does the UK stand on Europe?
- Economic Uncertainty - Is Cameron and Obsorn’s economic plan flawed? Will the UK ever return to growth? Are we in a triple dip recession? Is the UK about to lose its triple A credit rating?
- The UK is no longer a safe haven – Last year at the height of Eurozone worries, the UK and pound found favour as a safe haven. There were also major fears over the US fiscal cliff and fears of a hard landing for China. These three big global concerns have all played out fairly well. Consequently investors are liquidating GBP positions because they see better returns elsewhere.
Where do you stand? As human beings we generally like certainty and clarity, we like to know where we stand. The same is true of investors, they want to understand their money will be safe and provide a decent return. Lately investors considering investing in the UK have been put off by the factors above and turning this tide will take time.
Friday’s GDP data for the UK is looking more and more important as it will underline the recent moves and determine how justified the GBP sell off has been. Don’t be surprised to see a small increase in the value of the pound if the number turns out to be not as bad as expected.
The pound is continuing to suffer lately but there will be spikes to take advantage of. Even if your transfer is a one off, we can help provide all the information to make an informed decision on when to enter the market. For a quick discussion of what you should know about your exchange and how it all works, please feel free to contact me Jonathan directly on 01494 787 478 or email email@example.com
I look forward to hearing from you
UK GDP Figures just released showed the Economy shrank less than expected. The revision upward from -0.7 to -0.5% was not wholly unexpected and despite being an improvement is nothing to get too excited about.
I expect the pound will continue to struggle against most currencies and anyone holding out for major improvements in the short term should brace themselves for further losses. The best options for managing currency risk will be different for each situation as each client will have their own specific requirements and limitations with which they have to work to. For a full discussion of what you should be thinking of and how to approach your particular exchange, please contact me Jonathan Watson on 01494 787 478 or firstname.lastname@example.org
GBPEUR – 2 week LOW GBPUSD – 3 month HIGH GBPAUD – 1 month HIGH GBPCAD – 1 month HIGH
GBPNZD – 5 week HIGH GBPZAR – nr 1 Year HIGH EURUSD – 7 week LOW
The Euro has clearly found some favour in recent weeks as US QE expectations weigh on EURUSD, optimism weighs on a Spanish bailout and Greece appears to be offered more time. A fall in borrowing costs of Italy and Spain too has helped ease the pressure of the last few weeks. 1.30 for the time being looks out of the questions and anyone holding out for this would do well to remember we were at 1.1978 at the turn of the year and the highest the rate has been is 1.2880, and that was over a month ago.
The recent change in mood surrounding the Euro may well turn out to be misplaced down the line, but for the time being faith has returned for the Euro and the pound, which is still in a recession looks unable to capitalise.
As I have been expecting GBPUSD continues to ebb higher and we are currently at a 3 month high. I would not rule out the 1.60 rate in the coming weeks and months particularly if there is more QE in the US. QE is however not quite the dirty word it once was on both sides of the Atlantic and consequently the market may have already priced this in. Any further gains on this pair may be hampered by the general poor state of the pound.
GBPAUD, GBPCAD, GBPNZD, GBPZAR
A surprise fall in Japanese Imports and Chinese warnings over their economic growth caused a wobble on the Aussie proving it is not immune to the general slowdown engulfing the rest of the world.
This has had a knock on effect on the Kiwi, Cad and Rand, presenting some excellent buying opportunities (see above).
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It is always worth a second opinion and I have never had any trouble getting my clients the very best rate.
On a day where the Bank of England (BoE) governor Sir Mervyn King said that Britain could be in the grip of the “most serious financial crisis ever” and that “it was crucial to do the right thing” The Monetary policy committee (MPC) decided to inject £75 billion into the UK with their quantitative easing programme in an effort to revive the UK economy.
Yesterday was the first time since November 2009 that the BoE decided to extended QE which suggests that the MPC is growing increasingly concerned about the UK’s economic prospects and rightly so. At the current rate we could be heading back into recession.
For those of you with a requirement to sell the pound you should be made aware that, every time QE has been introduced the pound weakened against most major currencies over the course of the month. Sterling hit a low of 1.02 against the EUR and 1.38 against the USD back in 09.
Yesterday may have been the beginning of a trend which pushes the pound lower up until the end of the year. The biggest concern going forward now is the threat of further QE being introduced in the future.
We witnessed losses for the pound up to 2% in the space of an hour yesterday and I can see sterling exchange rates hitting levels of 1.48 against the USD and even falling back close to 1.10 against the Euro. This even with all the issues that surround the Euro zone sovereign debt crisis.
If you want to safeguard your rate of exchange and take away the stress and hassle of what may occur for sterling exchange rates please contact me on firstname.lastname@example.org and we can explain how easy it is take out a forward contract and give you the peace of mind that you may be looking for.
Market as volatile as 2008 – When this whole crisis began… My thoughts on things – There are some exciting times ahead but also some worrying ones!
The currency markets over the past few weeks have been unbelievably volatile and we have seen the stronger performers (JPY,CHF) over the past few days moving up to 4% in a day as central banks attempt to devalue their currency as the pure strength is really causing them high troubles.
Japan for instance is having a horrible time with exports now, as the price against the USD has gone so far that the states are no longer buying in anywhere near as much as previously so companies, such as Toyota are struggling.
The Pound has also gained 7 cents against the New Zealand Dollar over the past week, 5 cents against the Australian Dollar and 4 cents against the Canadian Dollar however just the two against the Euro.
I start to ask myself is this the time that the Pound is starting to puff out its chest and become one of the harder currencies that investors are really looking at in the current market as a currency they can put their money into.
If only the Bank of England were talking rate hikes we could see a substantial gain for Sterling in the next few months against the majority of majors, but they still seem very wary of doing so, a big shame for those that buy supplies from overseas or are in the process of buying a property abroad.
Maybe we need to not kick ourselves when we are down so much, ok we do have problems in the U.K but in my view they are nowhere near as bad as our friends in Europe and allies across the pond in my opinion.
The next few weeks and months are going to be some of the most volatilie when it comes to currency I personally feel I will have ever seen – Apart from the GBP-AUD moving 20 cents in one day in October 2008!!
Be aware that if you have currency transfers to do you do not want to be in a position where you can be caught out, protect yourself from adverse market movements either with forward contracts, limit or stop orders.
Today is key for the pound and the Euro as we see key interest rate decisions for both the U.K and Europe and although no changes are expected all eyes will be on comments following the releases and surely the head of the ECB cannot continue to be confident and look at further interest rate hikes?? Who knows, we have been surprised many times before!
Do feel free to email me directly email@example.com should you wish to discuss any transfers you do have be it corporate or personal and being an expert in this field I will happily assist you in getting the best rate of exchange and putting together a plan for how to approach it.
Alternatively call me (Daniel Wright) directly on 01494 787 462 or fill in the enquiry form on the right hand side of this page.