Tag Archives: QE
Where now for the pound? GBP/USD, EUR and AUD forecast. Get the best rates for your money exchange (Michael Vaughan).
Today we have plenty of data releases that may affect the pound against a host of currencies. Below I will run though what I feel will be the most important and how these may affect the pound against a host of major currencies throughout the course of today.
Firstly starting at 09:30 this morning we have the ILO (International Labour Organisation) releasing latest UK unemployment figures. Figures are expected to remain flat at 7.8% matching last months data and may do little to alter the current position sterling finds itself against the USD, EUR and AUD. Of course should the figures be anything different from the expected and we could see volatility. Personally I would expect to see little movement in exchange rates following this data set. To follow this anyone buying Euros will need to keep an eye on the next round of Spanish bond auctions, this follows on from yesterday’s successful auction and positive European ZEW figures (economic sentiment figures). This gave a boost to the Euro yesterday driving GBP/EUR below the 1.24 mark. Again should we see a positive uptake of the 10 year bond then this should give support to the single currency and further drive towards 1.2350.
For any one with an interest in GBP watch out for a speech from Monetary Policy Committee (MPC) member Spencer Dale at 10:45. Rumours are surfacing that the Bank of England may adopt further Quantitative Easing (QE) in the New Year and should this speech give any indication towards this then the pound may find little support – this could drive GBP/USD initially towards 1.60 and GBP/AUD towards 1.52.
US dollar buyers also have a very busy day ahead as following this mornings data we then cross the pond to find a host of data that will make this afternoons session very interesting for cable. There has been a lot of talk over the ‘Fiscal Cliff’ and the deadline looming towards the end of the month, this of course is still firmly on investors mind and will keep the dollar in check in the short term, however today the Federal Reserve (FED) will be releasing their latest interest rate decision – where additional stimulus is expected through QE. Analysts expect up to $45bn to be made available and of course you could argue that this has been priced into the market already, however I would still expect any stimulus to reverse any losses seen against the dollar this morning and would expect the GBP/USD levels to remain at 1.61 and above. Long term should the US government reach agreement over the Fiscal Cliff, which I believe they will, then this is likely to bring support back to the dollar and I would see GBP/USD back towards 1.59 in the New Year. Today and the next few days could bring some good opportunities for US dollar buyers.
Finally we come to the Australian Dollar. The Aussie has been strong for some time now with the Reserve Bank of Australia undertaking a number of measures to de-value the currency helping the export situation for Australian products. For many reasons these policies have not had the desired effect, however I feel we are due a correction for GBP/AUD and I with the mining sector in Australia (for which the economy is so heavily reliant) beginning to falter, I feel a move towards 1.60 is more likely than 1.50. Recent business confidence figures from November have also fallen sharply taking them to their lowest levels since April 2009, this weaker sentiment and a continued threat of future interest rate cuts by the RBA should keep the AUD weaker in the long run, anyone selling may wish to take advantage whilst levels are just 5 cents from the record lows seen earlier this year.
To run through my thoughts and forecasts in more detail please do not hesitate to contact the office on 01494 787478. I am more than happy to speak with you to run through the current market conditions and provide you with a quote when it comes to your individual foreign exchange requirements. There are a number of contracts available that can help maximise your position and to run through these in more detail please email Mike at email@example.com
Sterling relatively stable today but we could see volatility tomorrow following the Bank of England minutes (Mike Vaughan)
Sterling exchange rates have remained relatively stable against a host of currencies but anyone with an interest in the pound should keep an eye on tomorrow key Bank of England minutes due for release at 09:30. In these minutes the Monetary Policy Committee (MPC) will explain the reasons behind the decisions they made at the interest rate meeting two weeks ago and will also give insight as to what policies might be in store in the run up to Christmas and beyond. An area that will be closely scrutinised will be how the nine members of the MPC voted in relation to the banks asset purchasing programme of Quantitative Easing (QE) – should this have been a closely divided decision ie a close majority voted for keeping QE on hold and the minority voted for an extension, then this will give significant clues that the next round of QE is just around the corner and I would expect the pound to lose value as a result of this. Of course if the decision was not close (eg a 7-2, 8-1 or even a 9-0 split) then we may in fact see Sterling exchange rates spike against most majors. Because of this uncertainty the minutes are notoriously volatile as far as the currency market is concerned and might be something you wish to avoid.
On Thursday we have the Thanksgiving holiday in the US, this is likely to keep dollar movements relatively low key. Of course the GBP/USD pairing is vulnerable to the minutes tomorrow but I would expect to see dollar movements limited as we head towards the end of the week. Longer term I feel the cable exchange rate is likely to move towards the 1.55 territory as global and investor confidence remains low – indeed global markets have taken a nosedive today following Moody’s downgrading of France. With this in mind investors are likely to remain cautious and I can see the major benefactor being the US dollar.
This downgrade of France and reduced investor confidence could also create some swings for currencies such as the AUD, ZAR and NZD. Should you be buying any of these currencies then we may see some short term spikes in your favour. Today is an example with the pound gaining (at the time of writing) 0.5% against the AUD, 0.6% against the NZD and 0.3% against the ZAR.
To discuss the current market conditions and to get a detailed forecast then please contact me on the office number 01494 787478. As one of the UK’s largest independent currency brokers I am confident of undercutting any price offered and would be happy to provide you with a competitive commercial rate of exchange for your pending transfer. Please contact Mike on 01494 787478 or email firstname.lastname@example.org
Sterling given a slight boost following UK retail sales survey but still jittery in the wake of Hurricane Sandy (Mike Vaughan)
Sterling exchange rates have been given a slight boost today following a survey that showed better than expected retail sales in October which have improved chances of a sustained economic recovery in the UK. This positive data follows on from the much better than expected GDP data released in the UK last Thursday which showed the UK is officially out of recession posting 1% gains and beating the 0.6% forecasts. The sceptics out there will say that these figures have been grossly over inflated following the London 2012 Olympics and I believe these figures could well be revised down in the months to come, however it clearly indicates the UK is on the right track and as a result I can see a drive in the pounds favour against a number of currencies in the run up to Christmas – as long as the Bank of England decides against extending Quantitative Easing (QE) next week!
Will QE in the UK happen?
If you had asked me this question before last Thursday then my answer would have been a certain ‘yes’ – however last Thursdays impressive GDP data has thrown somewhat of a curve ball to the Bank of England and I am now sitting on the fence as far as this one goes. I do feel the prospect of future QE is still in the minds of the monetary policy committee however I believe this decision will now be delayed until the New Year as they digest the recent positive results and will see how the Christmas period develops. For this reason I believe the pound is in a reasonably strong position and I would see a move towards 1.26/27 for GBP/EUR, as for GBP/USD – this is somewhat of an unknown as the cleanup operation from Hurricane Sandy begins.
As my colleague Daniel discussed in his post below, the outcome of a natural disaster is somewhat of an unknown quantity as far as the money markets is concerned. First and foremost lets hope that Sandy does not prove as destructive as many people expect, however as the New York Stock Exchange is closed for the second day running, the first time in over 100 years that weather has caused the closure of the US markets for two straight days, tomorrow will prove a very interesting day as the market digests the destruction and the cost to the US economy of the cleanup operation.
Should you have an upcoming currency transfer tomorrow could be a very volatile day for all major currencies and I would certainly suggest keeping in contact with your broker should you have a position to arrange in the short term. The impact of Hurricane Sandy could move the markets in either direction but I would certainly expect an initial sell off for the USD dollar and would see GBP/USD moving toward 1.62, however a drive may actually be seen back in the USD’s favour longer term as it will still always tend to benefit in times of uncertainty, this may also mean a sell off for some riskier currencies such as the Euro, AUD, NZD and ZAR and you may find some good buying opportunities for a number of these currencies.
I work for one of the UK’s largest independent currency brokers helping thousands of clients gain access to various contracts to help maximise their currency exchange. Through trading with us you know you have access to highly competitive commercial rates of exchange and your funds are secure. As a regulated industry (we are regulated as a payment institute with the FSA and a money service business under the HMRC) each individual and business client can be safe in the knowledge that when trading with currencies.co.uk your are getting the best rate of exchange and service to match. To find out more on the process and to discuss my current market views and how these may affect your particular exchange then please contact Mike on 01494 787478 or email email@example.com
As always the first week of the month tends to be quite a busy one and this week certainly is no exception.
Tonight we see a speech from Ben Bernanke (Head of the Federal Reserve in the States) which could give indications as to the next approach we may see from the States regarding economic conditions.
On top of this we have the Reserve Bank of Australia interest rate decision, once again no change in rates is expected however comments on economic policy or on how the economy over in Australia is performing may lead to a highly volatile night for the Australian Dollar which has struggled a little of late, be sure to keep chjecking our sister site http://www.australiandollarforecast.com/ for the very latest on the AUD.
We have a fairly quiet day in general on the cards for Stering tomorrow unless any surprises pop up, with just Halifax house price data to consider and some inflationary data for the Euro.
Trade balance data for Australia is out overnight which again means those with an interest in Australian Dollars need to make sure they either have protection against adverse market movements or a limit order in place to take advantage of an overnight spike – Feel free to contact me firstname.lastname@example.org if you wish to know how these contract types work, there is no cost to place them and they could potentially save or make you thousands of Pounds.
European retail Sales kick off Wednesday morning which may prove a tricky day for the Euro as traders speculate on what may come from the European Central Bank interest rate decision and press conference on Thursday afternoon.
In my opinion Thursday is the big day for most with a currency requirement this week – We have three big releases inclusive of the Bank of England interest rate decision at 12:00 (no change in rates expected but any mention of QE may dent the Pound) European Central Bank Interest rate decision at 12:45pm (again no rate change expected however the press conference shortly after always throws up a lot of market volatility) and finally we have the minutes from the last rate decision in the States at 19:00pm. Confirmation on how the QE3 decision came about and future plans to tackle economic problems may lead to all currencies moving around a lot overnight – once again a limit order or stop loss may be a sensible approach.
Friday we have Non Farm Payroll data at 13:30pm which is a data release important for those with a Dollar interest and indeed interest in the ‘riskier’ currencies such as the AUD, NZD and ZAR. Non-Farm Payroll datais essentially the number of people in Non-agricultural employment over in the States and is a key indication as to how their economy is performing.
This release can cause quite a lot of volatility because predictions are made in advance and these can be wildly out. The market moves on rumours and predictions as well as fact, and should the figure come out quite a way from initial predictions the market does correct itself rather swiftly.The reason this effects the AUD, NZD and ZAR and pretty much most majors is because as I am sure you can imagine it will affect attitude to risk and will lead to rapid movements of large amounts of money globally in what generally presents an interesting week to say the least without any surprises popping up during the course of it.
If you have an upcoming transfer to carry out and want to get the best exchange rates along with great customer service and knowledge of the markets then email me directly email@example.com I welcome all enquiries for bank to bank transfers however i’m afraid I cannot help with cash transactions or speculation.
I have almost bored myself to death (and probably many clients!) in recent years debating the merits of QE, Quantitative Easing. One of the UK’s now infamous institutions, that backbone of the economy, provider of growth, the last chance saloon for an economy brusied and battered by the global financial storms. Like it or loathe it, it is here to stay and we are sure to see more soon. The Bank of England has made clear by precedent that this is how they plan to respond to continued pressures on the UK particularly from declining Eurozone trade weighing on UK plc.
Quantitative Easing is the process whereby the Bank of England buy up UK government bonds providing liquidity in the financial system to help boost growth. It has weakened the pound in recent years as it increases the money supply and is a sign conventional stimulus measures (cutting interest rates) are not working.
It is a sign of the uncertain and fragile economy that the government has succumbed to 3 separate rounds in the last few years totalling £325 bn. As long as the UK is suffering low growth and international demand is low we are unlikely to see the Bank of England adopt a different stance. Mervyn King famously warned of a ‘zig-zag’ economy in the coming months and years and this will likely be (and is indeed being) reflected in the price of the pound. If you are considering any currency transfers understanding the peaks and troughs of the value of sterling, as well as what is driving the movements is key to getting the best rates.
Part of the highly personal service we can offer is to keep clients informed and aware of these movements so they can not just secure a commercial rate, but also do so at the right time. The actual timing of an exchange is where a currency broker like myself can really add value. There are many companies that claim to offer the very best levels and on a like for like basis I am always able to beat them. But rather than beat the competition by half a cent, I will always look to provide a forecast which clients can use to potentially improve the rate by many cents!
The National Institute of Economic and Social Research did offer a ray of light this week with a GDP estimate for Q2 in the UK at 0.1% growth. The figures would pull the UK out of the technical recession and reduce immediate calls for further QE. I think over time the pound will claw back value against most currencies but it will probably take a good few more years of this uncertainty. And of course there is the elephant in the room in the form of the Eurozone debt crisis. The UK which relies so heavily on overseas trade cannot afford to have its biggest trading partner in crisis.
So I think that we are now looking at a situation where things will probably get worse before they get better. The pound is still holding many of the gains seen in the last few months that saw it soar to close to a 3 year high on a trade weighted basis. The prime example is against the Euro, although today we are two cent off the best GBPEUR rates all year, and that is with the prospect of a ‘Grexit’ on our hands. I personally cannot see how Greece can be allowed to leave the Euro and think this weekends news may be a bit of a non event. Don’t get me wrong it is big news but I think there is much more to come down the line and we are not at the edge of the cliff yet. The Eurozone have shown last week with the Spanish bank bailout they are prepared to accomodate the needs of their members even if it is an eleventh hour move. To do any less would be to undermine the authorative approach they need to keep up to keep everyone in line.
If you have any currency transfers to consider I would be delighted to speak with you as I am very confident I will offer you a much better rate than you are currently achieving via your bank or another broker. I will also be happy to provide a forecast and currency audit to ensure you do not suffer from bad rates or from a lack of understanding of what is driving your exchange rate.
Do you think the pound is bound to climb further in the coming weeks, particularly against the Euro? Many do for obvious reasons but I personally think the rate may be hampered. I would wholly welcome any discussion on the topic below
For more information please contact me directly on 01494 787 478 (overseas clients welcome just use 00 44 1494 787 478) or email firstname.lastname@example.org quoting PSF
You can also follow me on Twitter at www.twitter.com/CurrencySaver
Hope to speak to you soon!
Today is one of the key days of the month for anyone with an interest in the value of sterling as once again it is the time for Mervyn King and the remaining 8 members of the Monetary Policy Committee to release the latest interest rate decision. Recently Christine Legarde, the head of the International Monetary Fund, has been calling for the Bank to cut rates from the already record low of 0.5%, a move that I personally would find very surprising and unlikely. I, as with many of my colleagues, believe rates will remain on hold at 0.5% and as a result it is unlikely the pound will experience too much movement. To me what is far more important for the short term direction in Sterling exchange rates will be whether the Bank has decided to extend QE (Quantitative Easing).
QE is a subject that we have touched on numerous occasions and quite honestly might be a little tedious for regular followers of this website, however its importance cannot be avoided. In its simplest term it is the act of the Bank printing more money in order to get the high street banks lending, give the economy a boost and in theory help the UK economy dig itself out of recession. Its fundamentals are far more technical than that but you can do your own research should you wish!! What is important however is the affect ‘printing money’ has on the value of the host currency. Again if you look at a simple ‘supply’ and ‘demand’ model, the more of a product the cheaper it becomes and the same is the case for currency. Should more Sterling be introduced to the money supply then the value of Sterling will fall, hence a pound becomes less valuable – for this reason should you be transferring Sterling to any currency today or in the coming days and weeks, then an extension of QE should cause concern. I personally feel today may be a little too early for the bank to increase QE, however I think it is very much at the forefront of the MPC’s mind. Should QE not be extended we may see a small spike for the pound, but be in a position to take advantage as I do feel further monetary stimulus is just around the corner.
Do discuss my views and to run through the service we provide at currencies.co.uk then please email Mike at email@example.com and I will happily run through my thoughts and opinions to try and help you make the best decision when it comes to your individual transfer.