Tag Archives: sterling forecast

2 Key reasons to sell the £ today! Politics and Economics…

If you need to make some currency exchanges in the New Year involving the pound, you should be very much aware of some volatility expected on exchange rates. It is important to note that making firm predictions is impossible but just like we predicted in the Spring sterling would rise against the major currencies towards the middle and end of the year we can now make a prediction in the New Year sterling is likely to fall. We cannot tell you exactly how much by or which date but falls of up to ten cents on GBPEUR and 15 cents on GBPUSD wouldn’t be completely out of the question.

How can you make such a forecast? Well primarily I am basing this one major event, that is the General Election. Political Uncertainty and Economic Uncertainty are two key reasons to sell the pound today. These two factors are likely to combine and undermine much of the confidence we have seen behind sterling in 2014.

Economic Uncertainty – The sums don’t add up. The UK is still spending much more than it receives in tax receipts which is ballooning the public debt. Much slower growth than forecast will obscure the Chancellor and the OBR’s (Office of Budget Responsibility) plans for the economy to heal itself through more tax income. The Eurozone is slowing down, China and the global economy are slowing down, where exactly will all this growth come from? The current plans set out by Mr Osborne some 4 years ago were well received by markets at the time but how much patience is there? How long will workers and business stand by the current government with no real signs of the improvements promised and discussed?

Headlines surrounding the lack of any major economic progress by the government are likely to dominate the New Year and this will in my opinion combine with Political Uncertainty to fuel a sell off on sterling.

Political Uncertainty - It is very rare the government of the day increase their share of the vote when challenging for a second term. This is because it is more than likely the government has lost popularity  by nature  of being in government and the opposition can pick holes in their abilities. The Tories whose laissez faire approach to economic policy is generally the favoured approach by the markets (versus the uncertainty of Labour getting us in more debt) will likely lose their hold on parliament and require further support in the form of another coalition. Will it be the Liberal Democrats? Unlikely, they have lost swathes of support in the UK. Will it be UKIP? They plan to leave the EU immediately which in the short term at least would be terrible for UK plc as business and government has to completely renegotiate international relationships.

The Tories are also talking about an in or our referendum on Europe. The prospect of the UK leaving the EU is potentially disastrous for the UK. Attitudes towards the UK as a centre for global business will deteriorate and we will, at least in the short term suffer from a loss of inward investment.

Labour’s economic plans are not well thought out and involve some fairly draconian measures which will ultimately limit competition and drive investment overseas.

When you look at how sterling reacted to the Scottish Referendum in September we are reminded of the potential for political and economic uncertainty to affect markets. If you need to make a transfer involving the pound in the New Year making some plans now might well be a wise move because what is very clear is that the market shave not yet factored in any of the issues outlined above as of yet. Whether this trend manifests in January or the week before the election is impossible to say. But holding on to find out is the risk and with the pound at such great levels compared to averages of the last five years, it would appear any decision to hold on too long may become very costly.

To keep up to date with market ‘spike notifications’ and ‘rate alerts’ or for a personal forecast for your situation please contact me Jonathan on jmw@curencies.co.uk

 

 

GBPEUR rates spike higher above 1.27 but fall back very quickly!

GBPEUR has fallen from 1.2755 as the high today back down towards 1.2637 as Mario Draghi disappointed on the big Eurozone ‘QE’ question. In fact what we saw was him refrain from announcing a full blown QE operation. This caused the Euro to strengthen and I think represents a good opportunity for anyone selling the Euro in the future. Longer term it does seem very likely that the Euro will be weaker against the pound, on balance if you are buying sterling with Euros buying on the dips is the best way to maximise your transfer.

The big gamble on GBP rates in 2015 is going to be the election. It would not be surprising to see an increase in voter apathy and the old 2 or 3 way party system split yet further. If you have any major transactions in the New Year making some careful plans now might be a very good idea. We offer a range of contract options including the option to fix prices for the future and trade automatically at certain higher or lower rates. A quick discussion with us over the best strategy to maximise your deal really might be best the course of action. Just look at the high to low movements today! A well placed order could really make a big difference in rates on a large volume of currency.

If you wish to learn more please contact me Jonathan directly on jmw@currencies.co.uk

Will Sterling Continue to Strengthen? (Matthew Vassallo)

Sterling received a huge boost yesterday with gains against  both the EUR & USD. Despite yesterday’s economic headlines being dominated by George Osborne’s Autumn statement it was the currency markets which went into overdrive during early trading yesterday.

GBP/EUR rates spiked by over a cent a half against at yesterday’s high, with the Pound trading back above 1.27, having started the day closer to 1.25. This move was unexpected but it was also helped by the positive stance taken by Osborne, who raised UK growth forecasts for 2015 and beyond. The UK economic recovery is well on track and it will now be interesting whether the Bank of England (BoE) consider raising UK interest rates sooner than expected.

Sterling also saw a spike against the USD, providing USD buyers with some much needed respite after a difficult few weeks for the Pound. The USD did recover towards the end of Wednesday’s trading and I still feel it is likely Cable exchange rates will be back at 1.55 by the end of 2014.

Today both currency pairs have levelled out ahead of the BoE & European Central Bank (ECB) interest rated decisions and monetary policy statements, both of which are considered key market movers.

If you have an upcoming currency requirement and would like to be kept up to date with all the latest market movements, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact me directly on mtv@currencies.co.uk

Where Next for Sterling Exchange Rates? (Matthew Vassallo)

Sterling continues to hold its position against the EUR but has struggled to make any significant inroads against the USD over recent weeks. On-going economic problems inside the Eurozone are handicapping the single currency and despite a slowdown in UK data, the Pound continues to find support around 1.26. UK Gross Domestic Product (GDP) figures were released this morning and came out as expected but it was European Central Bank (ECB) president Mario Draghi’s recent comments, regarding how the ECB will take drastic measure to combat the threat of deflation, has helped to push GBP back up to the current levels.

However, the same can be said for GBP/USD rates with the pair now trading between 1.57-1.58, a far cry from levels seen over the summer which were comfortable above 1.60. The USD has also been boosted by an improving economy and it now looks likely that the US FED will raise interest rates before the Bank of England (BoE). US GDP figures were revised up from 3.3% to 3.9% and this has all helped to support the USD around the current levels. I do feel a move towards 1.55 is likely, so if you have USD to buy it may be prudent to consider your position before any further losses.

If you have an upcoming currency requirement and would like to be kept up to date with all the latest market movements, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact me directly on mtv@currencies.co.uk

How well do you really understand what is driving your exchange rate?

The pound looks likely to rise against most of the major currencies longer term as the UK appears likely to raise interest rates in the future. This is important because the raising and lowering of interest rates by a central bank greatly affects the strength or weakness of a currency. Understanding this fact – that the raising and lowering of interest rates greatly affects the strength and weakness of a currency – is key to predicting where exchange rates are headed.

One of the major reasons for GBP strength in 2014 is high expectations the UK would raise interest rates in 2014. This expectation has been pushed well back into 2015, if not 2016 and anyone holding on for this to happen to make an exchange had better have a long time to do so! I remember in 2012 we were almost in an identical position , with expectations high the UK would raise interest rates in the coming year or two. We then had the Eurozone crisis deteriorate (remember Greece on the brink of leaving the Eurozone) and the following Spring the UK entered a triple dip recession and the pound crashed from 1.24 to 1.14 in about 6 weeks!

I do not think we are likely to see such a sharp move but with the General Election and increased political uncertainty on the cards for 2015 a tough patch for the pound appears highly likely. Even though May 2015 seems many months away it is not actually that far in terms of exchange rates. Considering you have seen anywhere from 5-15 cents movement per year for the last few years on GBPEUR, making some plans now for currency in the new year is clearly sensible. 

We offer a range of contract options to fix exchange rates at currency levels and also to automatically purchase when a desired rate is hit (stop / loss and limit order). Speaking with or emailing us with a brief outline of your situation carries no obligation. We are currency specialists who are here to assist in the safe planning and execution of your transfers.

The real risk on exchange rates is doing nothing and leaving it all to chance so to learn more please contact me Jonathan on jmw@currencies.co.uk,

I look forward to hearing from you.

Thank you,

Jonathan

BoE & ECB Keep Interest Rates on Hold (Matthew Vassallo)

The BoE & ECB kept interest rates on hold at 0.5% and 0.05% today, a move that was widely anticipated. The BoE also indicated they would not be adding to the current Quantitative Easing programme, which currently stands at £375bn. Any rise in UK interest rates is now likely to be pushed back until late next year, which is likely to dampen investor confidence in the Pound. The cynic in me believes this may be a prudent ploy by the BoE to keep the Pound’s value under control, amid the on-going economic difficulties faced by the Eurozone, as they will not want the Pound’s value spiralling out of control.

The USD has continued its recent run against GBP, with 1.60 now looking like the benchmark for Cable exchange rates. We had seen the Pound trade closer to 1.65 for a sustained period but moving forward it looks as though the USD will now find support below that level and I wouldn’t be surprised if GBP/USD rates were back around 1.55 come Christmas.

It’s been a volatile few days for GBP/AUD exchange rates, with the Pound gaining unexpected ground earlier this week. GBP spiked over four cents during Wednesday’s trading, with the Pound moving through 1.86 at the high. This move was, for the most part attributed to a 0.7% decline in Brent oil futures, which caused a major selloff of commodity based currencies such as the AUD.

If you have an upcoming currency requirement and would like to be kept up to date with all the latest market movements, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact me directly on mtv@currencies.co.uk

Tomorrow’s Non Farm Payroll could be more important than the rate decisions today!

US ~Non Farm Payroll data is due tomorrow which could be a big market mover as it is the first one since the US stopped their QE programme. Today’s meeting with Mario Draghi might also be very interesting and should be a market mover, the least interesting thing is probably the UK’s Bank of England decision which is not expected to yield anything new.

How can you make a decision on when is the right time to enter the market if you don’t know what is happening? The idea of this blog is to provide information on just where rates are headed and make sure you get the best price when you do decide to enter the market. If you have a transaction that you need to consider why not get in touch with our specialist team to find out more about moving money internationally at the very best rates.

Sterling has done really well this year as the UK economy improves and investors position themselves for the UK to raise interest rates. Next year we would expect the UK elections to move the market, the increased uncertainty surrounding the political situation in the UK is bound to cause ripples on exchange rates.

When considering making a currency exchange understanding what is driving the exchange rate is vital to getting the most from the market.  Please contact  Jonathan on jmw@currencies.co.uk for a quick overview of your position and to learn more about getting the best rates.

What to look out for on the pound in the coming months…

When considering making a currency exchange an understanding of what is driving the exchange rate is vital to getting the most from the market. How can you make a decision on when is the right time to enter the market if you don’t know what is happening? The idea of this blog is to provide information on just where rates are headed and make sure you get the best price when you do decide to enter the market.

Sterling has done really well this year as the UK economy improves and investors position themselves for the UK to raise interest rates. Next year we would expect the UK elections to move the market, the increased uncertainty surrounding the political situation in the UK is bound to cause ripples on exchange rates. If you have a transaction that you need to consider why not get in touch with our specialist team to find out more about moving money internationally at the very best rates.

Please contact me Jonathan on jmw@currencies.co.uk for a quick overview of your position

Where Next for Sterling Exchange Rates? (Matthew Vassallo)

Sterling has had a mixed week on the markets so far following a run of inconsistent economic data releases. Despite GBP/EUR spiking back to 1.27 on the exchange, I do not anticipate any major spikes for GBP against either the EUR or USD from the current position. With UK inflation now at a five year low, coupled with our growth forecast being cut for 2015 means the Pound is likely to struggle, especially in the short-term.

Eurozone Consumer Confidence figures came out as expected today and were up on last month’s figure and this is also likely to help the EUR to find support around 1.27 and I still feel it is far more likely that we will see GBP/EUR move back towards 1.25 than spike up to 1.30 and considering we are still trading very close to a two year high on the pair, I would be tempted to consider my position around the current levels if you do have an upcoming EUR purchase.

GBP/USD is currently floating around 1.60, with the USD spiking yesterday following the US FED’s decision to end their current Quantitative Easing programme. This is an indication that the US economic recovery is now moving ahead of the UK’s and I would be very surprised if GBP/USD moves back through 1.60 for any sustained period in the lead up to Christmas.

If you have an upcoming currency requirement and would like to be kept up to date with all the latest market movements, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact me directly on mtv@currencies.co.uk

GBP Dips Following Poor UK Retail Sales Figures (Matthew Vassallo)

GBP has dipped during Thursday morning’s trading following the release of the latest UK Retail Sales figures. With figures dropping in September by 0.3%, it is another indication that all is not well with the UK economy and it now seems as if our recovery is stagnating. With inflation falling to a five year low recently and on-going concerns over the knock effect the Eurozone slowdown is having on the UK economy, we may find that GBP struggles to make any further sustained inroads against the EUR.

Tomorrow is likely to be a key date for investors, as we have the latest set of UK Gross Domestic Product figures. A country’s GDP figure gives investors a key insight into the overall performance of that particular economy and with UK growth expected to fall in Q3 from 0.9% to 0.7%, we may find that the Pound continues to come under pressure as we head into the weekend.

GBP/USD rates dipped again during yesterday’s trading with a sustained move under 1.60 now looking likely in the short-term. The USD was boosted by better than expected US inflation data released yesterday and with question marks now hanging over the UK economic recovery, I do feel as if the USD is likely to gain further market support. Cable exchange rates have traded above 1.60 for so long that a correction is well overdue in my opinion and I wouldn’t be surprised to the USD put pressure back on 1.55 by Christmas.

Following the devastating events in Canada over the past days, which have reminded the world of the dangers we still face by terrorism, the focus has shifted away from their economy. RBC Governor Poloz cancelled a speech last night, as the country came to grips with the tragedy.

Looking at any knock on effects for their currency and GBP/CAD rates dipped during yesterday’s trading, despite the fact the Royal Bank of Canada (RBC) interest decision came out as expected, with the central bank keeping their base interest rate on hold at 1%. Whilst this was widely anticipated their subsequent monetary policy statement indicated the Canadian economy was seeing ‘renewed vigour’ in consumer spending and the real estate market since July.

If you have an upcoming currency requirement and would like to be kept up to date with all the latest market movements, or simply wish to compare our award winning exchange rates with you current provider, then please feel free to contact me directly on mtv@currencies.co.uk

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