Tag Archives: weakness

Will the Canadian Dollar weaken in the coming months? Dr Doom believes so! (Daniel Wright)

Daniel Wright

Daniel Wright

For those looking to buy or sell Canadian Dollars I read an interesting report surrounding Canada this morning.

Nouriel Roubini (or Dr Doom as he is known) the man that predicted the big financial market crash before it happened has recently commented that he feels that the Canadian Dollar still needs to weaken by 10% to maintain the Manufacturing sector for the North American Country, this could be achieved by some aggressive easing measures in the near future.

of course whether we actually see something like this happen is actually completely in the hands of the Bank of Canada and not this widely respected economist, however due to the fact that the markets do move on speculation as well as fact this could mean that the Canadian Dollar may be in for a rocky couple of weeks.

At present the GBP-CAD rate is already almost 30 cents better than it had been a year or so ago so those looking to buy Canadian Dollars must already have a smile on their faces – there is a chance that they may even get a little more for their money in the coming weeks.

If you are looking to buy or sell Canadian Dollars in the coming days, weeks or indeed months then it is prudent to have an efficient and proactive currency broker on your side and I can help you with this personally.

The brokerage I work for has won numerous awards both for our exchange rates and customer service so I would be confident I could better any deal you currently receive from your bank or currency broker, feel free to contact me (Daniel Wright) directly by email on djw@currencies.co.uk and I will be more than  happy to help you personally.

Sterling weakness up ahead? Why now is a good time to buy the pound

Jonathan Watson

Jonathan Watson

Currently sterling is well supported largely due to the strong likelihood of the UK raising interest rates next year. Investors are taking up positions on sterling in anticipation of better returns in the future. 80% of currency transactions are speculative and whilst this is not a topic we deal in for clients , it is a topic that is extremely relevant in determining future market movements for our clients.

Longer term sterling appears bound to increase significantly as the prospect of ultra low interest rates becomes the past. The pound has been flirting with 5 year highs on a trade weighted basis which when you consider interest rates have been at rock bottom for 5 years makes sense.

Since we won’t actually see any actual hike for some time there is certainly a good chance of more GBP weakness but it will be in pockets and not reflective of a greater downward trend. If you are going to need to purchase the pound in the future moving sooner is I believe the best course of action. Please contact me directly for assistance in sourcing the best rates and the optimum peaks to trade on. I assure you of being able to beat the banks and currency brokerages.

Many of my clients selling say Euros and Dollars after a property sale are quibbling over the fact they are trading at multi year lows. I wholly sympathise with these clients because when you do the calculation on the losses selling six figure sums in the last year they are substantial. But if you look further back say at the 10 year and 5 year figures you will see current rates are not so bad.

Take Mr Smith in France for example, who may have purchased there when rates were say 1.50. Imagine buying a 200,000 Euro property at 1.50. This would have cost you 133333.33 GBP. Fast forward ten years and unfortunately he has had to sell to come back to the UK and had to take a hit on the price. He had to sell for 175,000 Euros and was not happy at having lost 25,000 on the price. However he managed to get 1.20 on the rate which means his 175,000 Euros are actually worth 145833.33 GBP. Suddenly it is not such a bad deal and when he considers all the fun times he had there, the whole experience has actually not been too bad!

This just shows the importance of exchange rates when considering overseas transactions. Sterling is at a very good level now which may yet improve. Understanding what is driving exchange rates is critical to getting the best deal. For more information on the forecast for your particular situation please don’t hesitate to contact me directly on jmw@currencies.co.uk

UK Inflation the lowest since October 2009. Sterling weakens on the back of the release. (Ben Amrany)

Ben Amrany

Ben Amrany

Sterling has been performing extremely strongly against both the Euro and US Dollar over the last couple of trading sessions with rates spiking to a 13 month high against the single currency and amazingly over a four and a half year high against the greenback.

On a trade weighted basis (16 most traded global currencies) sterling is the strongest it has been for five years now.

But why the turn around in fortunes?

Over the last few months economic data from the UK has been looking a lot healthier and recently under the Bank of England Governor’s forward guidance  plan the financial markets have advanced the date at which they think the Bank of England will announce an interest rate rise to February 2015, well before they expect a move from the Fed, the ECB or the BoJ.

Events in the last couple of days goes to show how quickly you have to act should the pound spike. Once the pound hit the highs mentioned it quickly weakened over the next 24 hours by over 1 cent against the Euro and 2 cents against the Dollar. The weakness has occurred as the UK just posted its lowest inflation figures since October 2009. This pushes back interest rate hike expectations and I have been stating for a long time that the lower inflation falls it gives the Bank of England more scope to keep rates lower for a longer period of time.

The further inflation falls theoretically the weaker the pound could get so this is one to keep a close eye on over the next few months. 

Tomorrow will be interesting for all with a requirement as the latest unemployment data and Bank of England minutes will be closely watched as the markets will try and digest any economic trends for the UK and any divisions between the MPC on the banks forward guidance policy.

Now that we have seen Inflation falling further, sterling may just come back tomorrow should we see a continual trend of falling unemployment and just one member of the MPC voting for a rate hike now. But should the data come out the other way then sterling exchange rates may just fall back towards 1.20 against the Euro and 1.65 against the Dollar.

If you are in the situation needing to move money internationally and looking for the best price – please feel free to contact the author – Ben Amrany – via the telephone number at the top of the page or via email at bma@currencies.co.uk

Mark Carney helps sterling to rise, will it last?

Mark Carney and the Bank of England have raised UK growth forecasts helping sterling to gain against a number of currencies.  At the same time they have underlined interest rates will be on hold for a long period of time which limits just how much higher we can expect sterling to rise in the coming weeks and months.

Jonathan Watson

Jonathan Watson

If you have a sterling transfer to consider in the coming weeks and months making some plans now at these levels may be a sensible move. 

In other news the new Federal Reserve Chairmen Janet Yellen underlined Quantitative Easing in the US is likely to continue until there are significant improvements in the jobs market. And overnight Chinese economic data was much stronger than expected presenting what I believe is a very good opportunity for anyone selling Australian dollars or South African Rand to buy GBP.

I am available to assist in the planning and execution of any international money transfers you need to make (including bringing funds back to the UK or Europe). Unfortunately no one can tell you exactly what will happen on exchange rates but having won awards for our service and rates, we are extremely well placed to offer expertise in managing your currency exposure.

For a breakdown of strategies and options on your particular exchange please call me Jonathan in UK office hours on 01494 787 478 or if you prefer email a quick outline of your position to jmw@currencies.co.uk

Market Alert – Sterling outlook changes

Jonathan Watson

Jonathan Watson

Next Wednesday is a key date for anyone with an interest in sterling. The Bank of England will announce its QIR or Quarterly Inflation Report which will provide insight into just how the pound will perform for the next few sessions. Whether you are buying or selling sterling this release is likely to create some movement on the markets which will alter the value of your currency purchase.

I am of the opinion some sterling weakness is likely and it is for a reason I have been highlighting for much of 2014. That is the gulf between what the Bank of England is saying about interest rates and what the market has priced in.

80% of currency transactions are speculative. The reason we see movement on exchange rates is indicative of what the market thinks or feels may happen. Since Mark Carney took office the pound has performed very well as the UK economy has improved. By tying Unemployment to the raising of interest rates focus has been very much on a UK interest rate hike. And perfectly legitimately the market has over bought sterling in anticipation of UK interest rates being raised sooner. If you look at the language of Mark Carney and the Bank of England however any possible rate hike is much further ahead than the market speculators are guessing.

Therefore I think despite the improvements in the UK economy warranting increased confidence, these high expectations surrounding sterling may now be misplaced and the risk to the downside has increased. Tomorrow we have some Industrial and Manufacturing data which last month caused sterling to weaken. We also have Trade Balance data tomorrow which we know is one of the major negatives surrounding sterling and the UK economy.

The outlook therefore for sterling has changed and just like the market has been subtly amending its positions anyone considering an international money transfer involving sterling too, should take note.

We are specialist currency brokers who offer market insight and commentary alongside award winning exchange rates. if you have a transaction to consider, small differences in your rate can make a huge impact on the amount of currency you receive.

For further information please contact the author directly on jmw@currencies.co.uk or call 01494 787 478 and ask to speak with Jonathan.

Are you ready for the emerging market sell off!

Jonathan Watson

Jonathan Watson

There has been much background speculation for years about a mass market sell off on ‘riskier’ assets and finally it looks like the dam has burst it banks. Make sure you don’t get caught in the flood! 

Often on exchange rates clear trends and patterns are difficult. Every now and again something creeps up however which is plain to see. And the current trends on the pound versus a whole host of what we term ‘riskier’ currencies is playing out as expected and may yet deteriorate further. Here is a list of the key currencies which I think will be affected:

 - South African Rand, Turkish Lira, Australian dollar, Canadian dollar, New Zealand dollar

Why are they in trouble?

Global events have construed to put these currencies in a very tricky position. They have all been historically very strong against sterling due to improvements in their economies as a result of either strong demand for their natural resources (Australia, South Africa, Canada) or large scale overseas investment into the country (Turkey). Much of this money has been as a result of the QE (Quantitative Easing) programmes advocated by the United States and to a lesser extent the UK. All this extra money has had to go somewhere and so it has into stocks and other areas which offer a generous return.

The money is now being withdrawn and it is weakening these currencies. So long as the UK economy keeps improving (which is a very strong likelihood) and China slows down (which it is) this situation is likely to persist and deteriorate.

If you have any overseas interests to eventually return to pound sterling now is a very good time to weigh up your options. And it is not just these currencies which are in the firing line. Sterling is gaining against all currencies up at multi year highs against both the US dollar and the Euro. As the pound increases in value and we return to more normal exchange rates (from say 5 – 10 years ago) it will become much more expensive to buy pounds in the future.

We offer an option to ‘fix’ an exchange rate up to a year in advance which means if you know you will need to bring back funds in the future you can book the rate in now so you know exactly what you will get. This is very useful for anyone who is selling a property overseas as it means they know exactly what the sterling value of their property will be once the funds become available.

If you are interested to learn more I would be very happy to have a chat with you about your personal situation. Please email me on jmw@currencies.co.uk or call 01494 787 478 and ask to speak with Jonathan.

Would you really bet against the Bank of England?

Jonathan Watson

Jonathan Watson

‘Be greedy when others are fearful and be fearful when others are greedy’ is a famous quote by the legendary investor Warren Buffett. Markets often don’t go the way everyone expects and initial reactions can exaggerate the true value of a situation. I think this is very true with the current bets on UK Interest rates being raised and anyone expecting exchange rates to just keep climbing may end up very disappointed.

Tomorrow we have the Bank of England (BoE) Governor Mark Carney speaking at the Davos summit which could well be a market mover. To be clear the policy of forward guidance has indicated the bank will consider an interest rate hike if the Unemployment rate falls below 7%. This does not mean that they will actually do so and therefore the current bets that the UK will be raising rates soon as a result of the improvements in the Labour market may be wide of the mark.

Yes of course interest rates must be raised but it may not be for some time yet. It could easily be another year or two and in that time the pound could be very susceptible to shocks and dip lower. The longer term forecast would be sterling strength as the economy is clearly on the right trajectory. However markets do not follow set paths and with rates so good at the moment it would be foolish to gamble that they will keep climbing and be available in the coming weeks and months.

I feel some kind of correction is due for the pound and that could happen as soon as tomorrow once Mark Carney makes clear why interest rates have to be on hold despite improvements in the jobs market.

If you need to buy or sell sterling the current market is at a very important level. With multi year highs against a range of currencies we are at a key crossroads on many different currency pairings. For a quick overview of your situation please contact me on jmw@currencies.co.uk or call 01494 787 478 and ask to speak with me Jonathan.

A good retail number for the UK may help the pound strengthen tomorrow but pressure will be on sterling throughout today. (Ben Amrany)

Ben Amrany

Ben Amrany

Data is thin on the ground today in the UK but there are still key releases  that can have an impact on buying Euros and US Dollars. This morning we have already seen inflation data out of Germany which showed no change and was as expected. At 10 am we have the same release but for the whole of the Euro zone. This could easily cause more volatility and we have already seen GBP/EUR dip below 1.20.

It seems that every time the pound tries and cement itself above 1.20 something occurs and pushes it sightly lower. What may dent the pounds rise is the ECB monthly report. This may give an insight into future policy by the ECB and if they talk up the Euro like they have in the past it may cause the Euro to strengthen further. My recommendation is that while the pound is over 1.20 capitalise on buying your currency before the decline may start.

Over in the US this afternoon they release all of their inflation figures followed by a speech by the FED chairman Ben Bernanke This could lead to a volatile end to the days trading as it may give an insight into future fiscal policies by the central bank.

Going forward while the USD is above the 1.60 level it is still attractive to but. If the FED step up their Tapering then we would expect the Dollar to strengthen significantly. All food for thought and the next 2-3 months will be an interesting one on the market.

For the pound in general tomorrow we are eagerly awaiting the key retail figures from the busy Christmas period. We are expecting a good number after many retailers stated that they had a good Christmas. YOY we are expecting the number to have risen by 0.6% up to 2.6% and any number above this may assist sterling strengthening.

If you are in the situation needing to move money internationally and looking for the best price – please feel free to contact the author – Ben Amrany – via the telephone number at the top of the page or via email at bma@currencies.co.uk

 

Why now is a good time to sell your foreign currency to buy the pound (Jonathan Watson)

Jonathan Watson

Jonathan Watson

The pound has fallen slightly against most currencies following yesterday’s inflation data. Essentially lower inflation reduces the need for an interest rate hike which has been and I expect will continue to be the main driver for the pound this year. I wrote about the impact of market expectations and the bank’s own predictions on interest rates recently on this blog, you can read my post here.

The pound has also been under pressure following some not as good as expected data releases for Manufacturing, Industrial Production and the Services sector. Against the Euro the pound is down 1.1% currently from last week. This is presenting a good opportunity which may not last as there is good news for the pound expected on Friday with Retail Sales data released. Many Retailers have been reporting strong figures (bar the big supermarkets) and I would expect a pick-up in the sector to aid the pound.

We could therefore be looking at a good opportunity to sell euros to buy sterling currently. We could also be looking at a good opportunity to sell Australian dollars, Canadian dollars, New Zealand Dollars and US dollars too. The pound is slightly weaker from the highs of last week but this is not expected to last too long.

The overall picture of sterling strength I do feel remains, here are the rate predictions I made for the early part of 2014.

If you have an upcoming currency requirement and would like to learn more about what to expect and get a better exchange rate please contact me on jmw@currencies.co.uk or call (+44) 01494 787 478 and ask to speak with me Jonathan.

 

Onward and upward for the pound? Actual Rate Predictions 2014

The charge ahead for sterling resumed today as all the indicators pointed to improvements in the UK economy. The data was not exceptional but on the whole in line with expectations and therefore positive for sterling. The Trade Balance data was slightly ahead of expectations which gave the pound a good base to start the day from. Let’s have a look at just where exactly rates could be headed in 2014!

GBPEUR – Mario ‘save the Euro’ Draghi raised his credibility yet further by being quite frank about the challenges still ahead for the Eurozone. You have to sympathise with the ECB for juggling so many balls and not dropping any recently. Greece’s Unemployment is 27% but the German economy is growing. Clearly two economies at different stages of the economic cycle! The main danger ahead appears to be ‘deflation’. There is scope for the ECB to do more to loosen policy and I would not rule out any further action down the line. For this reason I would favour the pound over the Euro, GBPEUR 3 month high to low 1.18-1.23

GBPUSD - The Federal Reserve ‘taper’ has not really strengthened the USD as expected last year. If anything the market is now accepting this and signs the US economy is doing well is providing confidence in the global economy. On this pair too I would favour the pound although sentiment can quickly change! GBPUSD 3 month high to low 1.60-1.67

GBPAUD - Not a good time to be holding AUD I am afraid. And the outlook is not great for the rest of the year. The Fed taper, the Chinese slowdown and the prospect of further interest rate cuts are all keeping pressure on the Aussie. We know from history this currency can be very difficult to predict and once it moves, you can see 10 cents in a matter of days. Again I would favour the pound here, GBPAUD 3 month high to low 1.80-1.95

GBPNZD - Usually the Kiwi loosely tracks the Aussie but the prospect of the RBNZ raising interest rates down the line is keeping the Kiwi strong. The thing is the economic conditions in Australia are not terrible, hence the Kiwi remaining supported. 80% of currency transactions are speculative investments and the Kiwi and Aussie are used by speculators as their interest rates are higher. Over the last few years they have both been very strong but now as times change they are being sold off, the main loser the Aussie. GBPNZD 3 month forecast 1.95-2.05

GBPCAD - The Canadian dollar has been suffering as investors pull out positions taken up over the last few years to find better returns. The Bank of Canada has stated an intention to loosen economic policy and with the USD weakening so much too, the CAD has followed suit. GBPCAD 3 month forecast 1.75-1.85

Getting the best deal on your exchange is achieved through the service of a currency broker and careful consideration of the market. If you need to make an exchange I would personally be very interested to speak with you to discuss the market and how perhaps we can help you to make the most of your transfer.

For more information on strategies and all of your options please feel free to contact me directly on jmw@currencies.co.uk or call 01494 787 478 and ask to speak with Jonathan.

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