Tag Archives: sterling forecast

Sterling Rallies Following Positive GDP Figures (Matthew Vassallo)

Sterling rallied again during Wednesday mornings trading, following better than expected UK Gross Domestic Product (GDP) figures. Figures came in above market expectation at 2.1% growth and this helped to boost Sterling’s value further, following a positive run during the first half of the trading week.

GBP/EUR rates jumped following US President Barack Obama’s comments on the weekend, regarding how Britain would be worse off outside of the EU, comments which boosted market confidence and helped to push the Pound up through 1.29 at this week’s high. This move was intensified following this morning GDP figures and a one point it seemed as though GBP/EUR rates may push 1.30, before the EUR found support snapping back towards 1.2850 by the close of European trading.

It was interesting to note that Sterling’s support waned following a report from White House hopeful Ted Cruz who said that the UK should be ‘at the front of the que’ for a trade deal with the US should we choose to leave the EU after June’s referendum. Whilst I will take these comments with a pinch of salt it comes as a stark reminder that despite this week’s reports indicating that we are more likely to stay than leave, no one actually knows what the outcome will be. The markets are likely to remain volatile for the foreseeable future and I would not be gambling on huge improvements for the Pound beyond the current levels.

If you have an upcoming GBP 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 on 0044 1494 787 478 and ask one of the team for Matt. Alternatively, I can be emailed directly on mtv@currencies.co.uk

Sterling exchange rates continue their surprising climb, offering a great short term opportunity? (Joseph Wright)

The Pound made gains across the board again today, following on from what was a surprising rebound last week which has provided those looking to convert Sterling into another currency, with a great short term opportunity.

As we all know, currency exchange rates don’t move in straight lines and I personally view this recent market movement as a short term opportunity to take advantage of, as opposed to the beginning of long term upward trend for Sterling exchange rates.

I’m of this opinion for a number of reasons. Firstly, I’m not sold on the reasoning behind this recent boost to Sterling’s value. It’s being predominantly put down to the most recent ‘Brexit’ polls suggesting that the ‘Remain’ camp is now in the lead, although I think it takes a bit more than this to shift market’s so substantially and I think speculators, looking to make a quick buck have been bargain hunting in large numbers which has driven up Sterling’s value. Once the profit taking begins I think we can expect sharp falls for the Pound once again, similar to those we saw just a few weeks ago at the beginning of the month.

Also, I think that US President Barack Obama’s recent statements underlining the UK Government’s desire for the UK to stay within the Eurozone has been met well by the marketplace, boosting sentiment for the short term. Once again I’m not expecting this sentiment to last, as it will only take one celebrity or person of significance to lend their support to the ‘Leave’ campaign and leave us with similar market conditions to those just after Boris Johnson opted to support the ‘Leave’ campaign, when Sterling rates of exchange dropped sharply.

There are many arguments in favor of remaining within the Eurozone, and the current polls are suggesting that the UK will. But irrespective of these factors it’s highly likely that we’ll continue to experience headwinds in the lead up to the 23rd of June when we have our vote, therefore investors will need to take advantage of the opportunities that arise in that time and as I’ve previously stated, I think that the current buying opportunities on the likes of GBPEUR, GBPUSD and GBPAUD will be short term.

If you are planning to use GBP to buy a foreign currency it may well be worth your time getting in contact with me on jxw@currencies.co.uk in order to ensure you make a well informed decision on when to make that particular transfer, as well as benefiting from highly competitive exchange rates from one of the UK’s leading foreign currency brokerages. Just provide me with a basic outline of your currency requirement and I will be back in touch with you as soon as possible. You can also contact me directly on 01494 787 478 if you would like to discuss anything in further detail, just ask for Joseph. 

 

GBP exchange rates are in recovery mode, but for how long?

Those looking to sell Sterling in order to purchase other currencies have been dealt a good hand this week as Sterling continues to recover against a basket of other major currencies.

I think the rebound has come as a shock to many as current GBPEUR levels are the strongest they’ve been all month, whereas just a week or so ago the pair were trading at an almost two year low of 1.2320. Cable (GBPUSD) trading levels are also at their highest point of the month, with the pair trading at 1.4349 on the central level.

Personally I think these market movements have provided Sterling sellers with a great opportunity to take advantage of while it lasts, as I think this is just a slight uptight within a longer term downward trend for Sterling exchange rates, and I expect the downward pressure to return to the Pound as Britain’s political uncertainty continues to be a headline topic.

The boost to Sterling’s value has been due to increased risk sentiment within global markets which has also been reflected in stock markets, also the most recent polls coming out of the UK suggest that the ‘remain’ camp is in the lead and this news has been received well by investors. The UK Government has been working hard to sway voters into remaining in the EU, and much of the ‘remain’ camps recent support could be due to The Treasury’s claims that the UK economy could shrink by 6% by 2030 should we leave, costing the average household £4,300 per year.

I think it’s fair to say that we can expect a reverse of the Pound’s fortunes if the ‘Brexit’ polls suddenly show a change in the UK populations voting plans, and I’m expecting headwinds in the lead up to the referendum on the 23rd of June should the likes of Boris Johnson offer their support to the ‘leave’ camp once again, and I don’t expect Sterling exchange rates to be this favorable for much longer.

Important data to look out for today comes in the form of UK Retail Sales Figures as well as Public Sector Net Borrowing figures both for March and coming out at 9.30am, and then later today the ECB will announce it’s most recent Interest Rate Decision followed by comments from ECB President Mario Draghi. Each event has the potential to move currency markets and feel free to get in contact if you would like to discuss these data releases further.

If you are planning to use GBP to buy a foreign currency it may well be worth your time getting in contact with me (Joseph Wright) on jxw@currencies.co.uk in order to ensure you make a well informed decision on when to make that particular transfer, as well as benefiting from highly competitive exchange rates from one of the UK’s leading foreign currency brokerages. Just provide me with a basic outline of your currency requirement and I will be back in touch with you as soon as possible. Alternatively you can call me directly on 01494 725353.

What can we expect this week for the pound? (Jonathan Watson)

Jonathan speaking on BBC NEWS 24 in February

Jonathan speaking on BBC NEWS 24 in February

Great British Pound (GBP)

Important news this week for sterling is  Unemployment data on Wednesday which is expected to remain stable at 5.1%, this has been one of the key strengths of the UK economy, if the predicted rise in average earnings from 2.1 – 2.3% rings true sterling could be in for a good day on Wednesday! Thursday is Retail Sales figures which are always a volatile release and can impact markets, if you don’t see the sterling move you are looking for on Wednesday then this could be the one to watch.

In summary sterling should remain in a better position this week, the pound has slipped in recent weeks but found some form last week with better than expected Inflation data and better news concerning the government. David Cameron’s dreadful previous week was recovered from the worst points and a particular damning report by the Treasury on the Brexit has reconfirmed the governments position potentially further aiding the Remain camp. I expect this report and better UK data to help give the pound a lift by the end of the week but a lift that will be rather fragile when we (and financial markets) take into consideration the Referendum only 9 weeks away!

EURO (EUR)

A fairly tame start to the week with some Construction and Current Account figures gives way to a busy end of the week as Friday sees Manufacturing and Services data for the Eurozone. Thursday is the key date for the Euro however as we have the European Central Bank decision and Monetary Policy Statement. The last meeting saw almost 4 cents movement in the afternoon and whilst I don’t expect quite the volatility this is usually a volatile time as markets digest Mario Draghi’s assessment of the Eurozone. Following the ECB bazooka of low interest rates and QE last month Inflation has risen which should give Mario Draghi cause for cheer and possibly help the Euro rise.

In Summary the Euro looks set to remain strong but might lose some ground to a stronger pound on Wednesday. Thursday is the key date so if you need to buy Euros moving before Thursday might be sensible, GBPEUR buyers have received almost 3 cents improvements from the lows of April which given the uncertainty ahead should not in my opinion be dismissed too easily.

United States Dollar (USD)

This week is a range of mid tier releases in the US focusing on Housing Starts (Tuesday), Home Sales data (Wednesday) and Jobless Claims (Thursday). The dollar had weakened on the news the Fed were resigned to just the two rate hikes this year but has now found traction again. Two hikes is better than none and with the UK stagnating and the Eurozone still focused on ‘easing’ measures the dollar is still top of the class.

In summary there remains a good chance that the dollar will strengthen further against the pound longer term but this is sterling’s week. If you need to buy dollars with the pound taking advantage of any spike this week is I believe the best way forward.

Do you have a currency transaction to consider involving the pound? If so this week could see a return to favour which given the Referendum ahead is I believe something well worth taking advantage of! For more information on events to be aware of surrounding your currency transaction please contact me Jonathan Watson on jmw@currencies.co.uk

 

 

“Should the United Kingdom remain a member of the European Union or leave the European Union?”

This is the question that will be posed to the British public on the 23rd June 2016. The polls which got it so badly wrong in 2015 are on different days highlighting both sides a possible winners with no clear winner being determinable at present. The expectation does seem to lean towards the Remain vote rather than the Leave. This analysis is based purely on the fact that voters will be fearful of the unknown and be scared into voting Remain. What we do know is that the rate is likely to drop much further in the coming weeks as investors avoid sterling due to the risk that it will only lose further value.

Lately we have seen a very poor run of form for the UK and the pound with David Cameron coming under immense pressure because of his father’s tax affairs and the way the government is handling the decline of the Steel Industry. Mix in the rising trade deficit and economic indicators pointing towards a slowdown in various areas of the economy and we have all the ingredients to upset sterling exchange rates.

If you have a currency transfer involving the pound I would be preparing for further losses in the coming weeks and month. I firmly believe the storm clouds gathering over the UK will get darker and this predicament for the pound will get worse before it gets better. I expect GBPEUR to trade between 1.15-1.30 between now and June. For April to May I expect the range to be 1.20-1.25, May to be 1.18-1.25 and then for June 1.15-1.30. This big swing for June takes account of both the potential outcomes of the Brexit vote, eg a Leave vote would see a sharp devaluing of the currency whilst a Remain vote would see a big spike. I expect GBPUSD to trade between 1.36 and 1.47 for the same period (between now and the Referendum) and GBPAUD 1.60 – 1.90. If you wish to discuss these rates or want predictions on another pair please email me on jmw@currencies.co.uk

What can I do to protect myself?

To try and navigate such uncertainty there are tools at your disposal to try and help limit your exposure. These are some of the more popular contracts to help manage your currency requirements.

Forward Contract – For a small deposit you can fix current exchange rates up to one year in advance. The rate is fixed throughout and you can draw down the funds at the fixed price when you pay off the deal.

Limit Order – You choose a higher level in the market you wish to buy at eg 1.30 on GBPEUR. Once the level is hit we automatically but for you at the desired level. Exchange rates move every second and can move 3 cents on particularly volatile days, this contract means you don’t miss out if it jumps about quickly.

Stop Loss – This is the opposite to the contract above, you choose a lower level you don’t want to get worse than and if the market drops you do not get worse than that rate. This is a great way to manage the price you receive in a market that is falling.

Trying to predict the currency markets is very difficult but from time to time there are events such as this referendum which do provide a predictable outcome. I firmly believe between now and June the pound will come under selling pressures because of the worries over the referendum and its possible outcome. Yes the rates might rise after but you do need to be rather brave to hang on for that amount of time and in the end there is no guarantee the rate will be higher or lower.

It is clear it is going to be a very uncertain few months so if you have any transfers to consider please keep in touch with us on the blog to keep up to date with the latest news and pound sterling forecast!

If you have any transfers you wish to learn some insight on please email the author Jonathan Watson on jmw@currencies.co.uk. Jonathan is an Associate Director at one of the UK’s leading foreign exchange brokers and has written extensively on the Brexit, being quoted in newspapers and even appearing on BBC News, the story of which he will be more than happy to share with you.

Sterling Under Pressure on the Exchange (Matthew Vassallo)

Sterling has come under further pressure during Tuesday’s trading, with the Pound suffering heavy losses across the board. This has been a regular trend since the turn of the year and I am not anticipating a sustainable recovery for GBP under the current market conditions. Why we have seen the Pound lose so much value in such a short space of time is being heavily debated and I will touch on the key triggers shortly. The catalyst for today’s drop was further poor economic data released this morning, in the form of UK Markit Services figures, which came out under expectation at 53.7. This caused the Pound to slip back below 1.25 on the exchange and this move was then intensified by better than expected Retail Sales figures for the Eurozone, which is always considered a key release by investors. This caused the markets to panic and investors have likely sold off large GBP positions, which has caused GBP/EUR rates to drop perilously close to 1.24.

As mentioned GBP/EUR rates have been on a downward spiral since the turn of the year. Ironically it was the overvaluation of the Pound for much of 2015, particularly against the EUR and to some extent the USD, that has caused many of the issues facing the UK now. The pound was driven up due to the complete lack of confidence in the Eurozone and the decision by the FED not to raise interest rates until late last year. GBP/EUR was pushed north of 1.40, whilst GBP/USD rates were trading comfortably above 1.60 for a sustained period. When you look at the effect this had, particularly on GBP/EUR it easier to understand why we have seen such a drop.

The fact the Pound was so overvalued caused our exports to fall, which in turn put pressure on our Construction & Manufacturing sectors. The Bank of England (BoE) then had to change their stance and have been actively talking down the UK recovery, with the hope this would artificially drive Sterling’s value down and boost that facet of our economy. We have also seen a run of very inconsistent economic data and this has caused investor confidence to dissipate and add to this the on-going debacle regarding the UK’s future participation in the EUR and the upcoming referendum in June and it becomes easier to digest.

I feel it is likely things will get worse before they get better and whilst the current trend won’t last forever, the key question is where we finally see GBP bottom out. It is not beyond the realms of possibility that Sterling’s value will continue to tumble up until the referendum and then we will be questioning how much of a recovery we will see. I would look protect myself against further losses and gauge any longer-term positions based on market developments over the coming months.

If you have an upcoming GBP currency requirement and would like to be kept up to date with all the latest market developments ahead of your transfer, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 478. You can ask one of the reception team for Matt, or alternatively I can be emailed directly on mtv@currencies.co.uk

Sterling Under Pressure

Sterling has come under further pressure during Friday’s trading, with heavy losses against all of the major currencies. The Pound has been suffering for some time but following today’s negative downturn the key question is how much further can it fall? The catalyst for today’s move was this morning’s poor UK Manufacturing data and an upturn in the same release for the Eurozone. This solidified Sterling’s losses form yesterday, with GBP/EUR rates falling almost 2 cents during the day, hitting a low of 1.2463.

The reasons behind Sterling’s dramatic decline have been well documented and any faint hope of a recovery seems to be dashed before it’s even begun. The Pound had found support around the current levels and at one point it even seemed as though a move back towards 1.30 was on the cards. The key point to focus on is that these loses continued, despite UK Gross Domestic Product (GDP) figures being revised up to 0.6% growth earlier this week. This is always considered a key economic release by investors and is used as benchmark to gauge economic output and growth potential. The fact this positive reading did little to ease pressure on GBP, reinforces my belief that the current market conditions are likely to handicap any major advances for the Pound in the short-term. Investors risk appetite will not increase whilst there is so much uncertainty surrounding the UK recovery and this was evident once again earlier this week, when comments by the Tata Steel President eluded to the fact that they may pull their UK presence due to the lack of long-term growth prospects.

What has become clear is that the UK will be fighting this negative perception for many months to come and clients who have an upcoming GBP currency requirement may wish to realign their expectations, as in my opinion last year’s highs are a thing of the past.

If you have an upcoming GBP 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 on 0044 1494 725 353 and ask one of the team for Matt. Alternatively, you can email me directly on mtv@currencies.co.uk

UK Budget Dominates Headlines (Matthew Vassallo)

Many of today’s headlines are centred around today’s UK budget, delivered shortly by chancellor George Osborne. The overriding consensus is that he is preparing the UK for some tougher times ahead and will focus on the long-term, setting out a plan for 4 billion in extra cuts, along with an increased spending on infrastructure. This has been countered by the shadow chancellor as a press stunt ‘to hide George Osborne’s failures’.

Whichever way the markets look at it what is clear is that the UK recovery has stalled since the turn of the year and the green shoots of recovery have quickly retracted underground, with the Pound suffering on the exchange as a result. The current mire is in part, due to the high value of the Pound for much of 2015. Due to our trade restrictions, we were forced to rely on the Eurozone as our main outlet and with the problems they faced it was an unsustainable objective. Exports fell and our trade deficit increased, causing a slowdown in our own recovery.

We have now seen the markets attention switch to the upcoming EU referendum in June and the uncertainty this is causing is weighing heavily on Sterling’s value. With today’s budget confirming our economic slowdown, it becomes easier to understand why we have seen such a turnaround, in terms of market perception since the turn of the year.

Whilst I hope the Pound will find support around the current levels, particularly against the EUR & USD, it seems as though any sustained improvement will only be possible when these key triggers have been removed. Personally I would not gamble on what has become an increasingly volatile market and secure any short-term Sterling positions, as we could see further losses before a potential recovery later this year.

If you have an upcoming currency requirement and wish to discuss the current market conditions and forecast, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 478 and ask one of the team for Matt. Alternatively, I can be emailed directly on mtv@currencies.co.uk

Sterling Exchange Rates Under Pressure!

PrThe pound is under pressure and is likely to remain so! This week is a very tricky one for the pound with the Budget, Bank of England Interest Rate meeting and Unemployment data. So far this year sterling has been the worst performing currency as fears over Brexit increase and any interest rate rise gets kicked well into 2017 and perhaps beyond! Despite this the pound is still at some pretty attractive historical levels for the last five years against most currencies. GBPEUR is range bound between 1.27 and 1.29 which considering the average a few years was more like 1.10-1.20, isn’t terrible for Euro buyers. GBPAUD and GBPNZD remain at elevated levels, GBPAUD is lower at 1.90 but I helped people buy property a few years ago in Australia at 1.50! The Kiwi is still on the back foot following last week’s interest rate cut and at 2.13 remains very good level historically.

Probably the best performer against the pound has been the USD which hit close to 7 year highs a few weeks ago. Further USD strength could arise from Wednesday evening’s Federal Reserve Interest Rate Decision. US economic policy has a big impact on global exchange rates and could impact sterling against other currencies. As the decision causes movement on GBPUSD and EURUSD it will lead  to independent movements on the pound and the Euro.

If you are buying a currency with sterling the turbulence of 2016 is only likely to continue further in the coming weeks and months. This will present opportunities for clients who have made plans in advance. Unfortunately just sitting around waiting for an exchange rate to go your way doesn’t always help! If you are considering a currency transfer I am very confident I can offer you some useful information to help you make an informed decision. In my many years personally assisting clients to buy and sell foreign exchange I have also written many articles on the markets online, been quoted in Newspapers and as you might be aware was also asked to appear on BBC News to discuss the Referendum – please read more here if you are interested.

Unfortunately all of this doesn’t give me any better qualification than anyone to tell you exactly what will happen because of course financial markets are unpredictable. Having said that there are certain themes and trends which can be identified and explained to help form an opinion of ‘when’ might be a good time to purchase or sell. For more information please email jmw@currencies.co.uk

What is next for the pound? (Jonathan Watson)

The likelihood of the Brexit is still weighing on the pound and confidence in the UK and the pound remains subdued. The prospect of Brexit is not going to go away and if you are expecting to buy or sell the pound in the future the rates are not going to just settle down. The likelihood of the rates rising higher are low in my opinion since the expectation is firmly for political uncertainty to be a big contributing factor to GBP weakness. We saw this with the Scottish Referendum and recent General Elections. Markets do not like political uncertainty and these events are by nature uncertain because we just don’t know what is next! Markets price in the various outcomes and have to take account for the ‘worst case’ scenarios.

Whether you are In or Out is irrelevant, the point is that the market has to take consideration of the fact we could leave. Otherwise the market would be very volatile on an Out vote if it hadn’t already priced it in. Expectations for the rate to just keep rising or rise dramatically are I believe therefore a little misplaced as as we approach the 23rd June the pound is likely to come under pressure again.

All in all the outlook for the pound is rather choppy and as yesterday’s ECB (European Central Bank) decision shows nothing should be taken for granted on exchange rates. Within two hours the rate was between 1.273 and 1.3065! A well time decision could have made or broken your day and it just shows the importance of making plans and keeping up to date with the market.

Next week there is a raft of economic data to move sterling including the UK Budget and Unemployment data on Wednesday. If you wish to be kept up to date with any important news on the market please email me on jmw@currencies.co.uk. I was very lucky to be asked to feature on the BBC News a couple of weeks ago regarding the Referendum and whilst I cannot tell you exactly what to do, I am sure I can offer some useful tips and information to help you make an informed decision. bbcnew3