Tag Archives: spanish bailout
Where is the GBPEUR rates of exchange going – AAA credit rating, Spanish bailout, future of the Euro (Steve Eakins)
This week GBPEUR rates have generally been falling and the expectation by many people in the market is that it will continue to fall in the run up to 2013. The reason for a majority of the fall this week has been down to news across the pond in America and poor data from the UK.
Firstly in the US the FED confirmed that there will be a big increase in their own QE program, a huge $45 billion a month every month through 2013. This puts there total QE spending up to $4 trillion potentially. Following this commitment by the US that they will continue to spend themselves out of trouble, the risk appetite of traders around the globe increased hugely. They in turn started buying risky currencies including the euro and it is this additional demand that strengthened the single currency making it a lot more expensive to buy.
Through yesterday GBPEUR rates also fell further and this was down to announcements from Credit Rating agencies and the commentary from the Bank of England (BOE.) The last of the big three Credit Rating Agencies put the UK’s AAA Credit Rating at RISK which Great Britain depend so heavily on. (If this was to fall it would push borrowing costs up for the UK and could easily hurt the growth out of what could become a triple dip recession.) Commentary from the BOE hinted that it was not really a worry which the markets did not believe, hence the fall in the Pound in yesterday trading.
So what for GBPEUR rates for next week?
Next week is a busy week for the UK as we see releases including Consumer Price Index, Production Price Index, Retail figures and Bank of England Minutes. All of these could easily push rates by over 2 cents next week costing buyers an additional cost of £3,250 for every €200,000 purchase. Plus from the US it is likely we will see news that the Fiscal Cliff will be resolved – This will probably increase the risk appetite and again hinder euro buyers. Over all you can see that EURO BUYER’s are not in for a happy time in the run up to the festive period so they may want to limit their risk and move sooner rather than later. EURO sellers are probably going to be the better off from Santa this December.
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Thanks,
Steve Eakins
Elite Trader
Foreign Currency Direct PLC
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.
