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With retail sales improving will the UK avoid recession? Busy week for the UK, what impact will this have on Sterling exchange rates?
Latest figures have shown that retail sales have grown at their fastest pace in three years. The British Retail Consortium said like-for-like sales were up 2.7% from the previous year the best since December 2009. This is some welcome news for the UK economy and suggests we are on the right move to avoiding the ‘triple dip’ recession. Should figures continue to show positivity this could be some much needed respite for the pound which has had a torrid time since the start of the year falling over 8% against the single currency, 7.75% against the greenback and 7% against the Australian dollar.
Should you have an exchange requirement involving sterling then this mornings retail sales data is certainly a welcome boost but I would err on the side of caution. Today is relatively quiet day but heading into Wednesday and Thursday there is plenty of data to spoil the party. This starts with a speech from Bank of England Governor Mervyn King at 09:45 GMT tomorrow. King, as with many of his Bank of England colleagues, has been very open in recent weeks and months about talking down the value of sterling. The theory behind this is the weaker the pound the better the UK’s exports and hence an injection of funds from overseas to the UK. Of course if this works in its simplest form then great and this could help the UK avoid recession and it is a stance I believe the bank will continue to take, certainly during the month of March, something that is likely to keep the pounds value in check.
Following Kings speech tomorrow, Thursday will see the UK and Eurozone releasing their respective interest rate decisions at 12.00 and 12:45. I would expect rates to remain on hold but watch out for any talk from the Bank of England about Quantitative Easing (QE). It could be a close call as to whether they extend as King himself voted for more QE in February but was out voted by his fellow monetary policy committee members. Should we see QE extended then expect sterling weakness. Possibly one to avoid.
Anyone looking at GBP/EUR should also watch out for the Eurozone release. Again expect no move from Mario Draghi but watch out for his post decision press conference held at 13:30 for insight as to the future policy within Europe.
Looking toward the Australian dollar interest rates have been kept on hold by the Reserve Bank overnight but keep an eye on GDP data at 00:30 tomorrow morning. Expected to show a slight increase month on month from 0.5% to 0.6% – those buying Australian dollars are likely to get little benefit in the short term, unless these figures are worse than expected.
With so much data released this week it is important to keep regularly updated with market movements and trends as the market is becoming increasingly volatile. To find out more about the currency service we provide contact the office on 01494 725353 or email me with a brief description of your currency requirement and timings and I will be happy to track the market on your behalf and to help you decide the best course of action to try and maximise your exchange. I am also very confident I can better any price you are offered by any other provider. Please email Mike at mgv@currencies.co.uk for more information.
Pound hits 17 month low against a basket of currencies. GBP/Euro, GBP/US dollar and GBP/AUD forecast (Michael Vaughan)
Sterling exchange rates continued to react negatively to news over the weekend that Moody, the credit rating agency, downgraded the UK’s once secure AAA credit rating, but what does this mean for the pound?
Many are arguing that the downgrade should not be over hyped as this seems to be more and more common in this financially uncertain world. Of course the news is not great for sterling but is also not wholly unexpected with warnings having been made in the past that this scenario could well happen. Although the UK may be hit with increased borrowing costs in the future it is likely in my opinion to have limited negative impact on the UK economy, much in the same way it did when France and the US had their respective ratings downgraded. It has now left much of the of the western world in the same predicament, with only Germany and Canada holding onto their triple AAA status. For this reason I do not feel the impact on market confidence, and confidence in sterling will take as bigger hit as it may well have done had this happened a few years back.
I am still holding on to the same opinion that the pound is undervalued and I hold out in hope that we can avoid the ‘triple dip’ recession come the end of Q1. It is inevitable to me that until this point the pound will continue to struggle but the uncertainty surrounding Europe will also at some point return. Indeed the Italian election is likely to create more volatilityand has caused slight Euro weakness this afternoon as it emerged that estimates indicate Berlusconi’s centre-right party has pulled ahead with 31pc, closely lagged by Bersani’s centre-left group with 29.5pc. Beppe Grillo’s Five Star Movement looks to have won around 25pc. Political uncertainty can cause reduced confidence in the market and this may counteract any losses seen by the pound earlier this morning. I for one feel GBP/EUR will be contained around 1.15 area for the foreseeable future.
As with the Euro, the pound has suffered at the hands of the US dollar and Australian Dollar. I would certainly suggest anyone selling the greenback or Aussie to take stock and consider taking advantage. The US dollar is trading at the best in nearly 2 1/2 years and the Aussie is getting close to a 25 year high. Gains for both have been significant and certainly an opportunity for sellers, what about buyers? Again I see sterling making gains as we head throughout the course of the year, I see heavy resistance for GBP/USD at 1.50 and would expect the dollar to weaken as we head towards the US debt ceiling deadline in May. As for GBP/AUD I still feel the Reserve Bank of Australia will continue with its stance on interest rates and I would expect interest rate cuts throughout the year. I feel short term (1-2 months) those buying USD and AUD with the pound will continue to be disappointed but I can see a correction towards 1.55 on cable and 1.50 on the AUD in Q2.
Should you find this website useful and you are one of the many thousands looking at moving money in the coming weeks and months then please contact me on 01494 787478 or by emailing mgv@currencies.co.uk
As a specialist foreign exchange broker we have a number of different contracts to help private and corporate clients alike. To find out more and to see what savings can be made when compared to the high street banks and other institutions then please email mgv@currencies.co.uk with a brief description of your transfer and I will gladly be of assistance.
When making international money transfers why not speak to the experts? Get the best deal on your foreign exchange.
Whether you are a private client or multinational looking to buy Euros with Sterling expect little change in the coming weeks with the Bank of England appearing determined to talk down the prospects and hence the value of the pound. On Monday comments made by Martin Weale a senior member of the MPC (Monetary Policy Committee) have helped the pound continue its recent poor run as he stated the pound may need to weaken further to help make the UK exports cheaper. The theory behind this is to help give economic growth a much needed boost.
For me this policy could well continue from the Bank of England as priority for the MPC and Government will focus on avoiding the ‘triple dip’ recession. Should the UK see negative growth in the first quarter of 2013 then the UK is officially back in recession and this is something everyone would like to avoid.
I for one am hopeful we will avoid recession and as a result the pound could receive a welcome boost. We will not see see the Official figures from Q1 until April and for this reason we are unlikely, in my opinion, to see the pound gain much momentum in short term. For Euro buyers in particular it is a little concerning how strong the Euro is, even with some very poor data sets coming from the Euro zone it just shows how out of favour the pound is currently. For the next 6 weeks I can see the Euro remaining strong with GBP/EUR testing the 1.14 territory, and possibly below.
Bank of England Minutes – how could this affect my money exchange?
This morning the Bank of England will release its latest minutes from this months interest rate decision at 09:30. This release will show how the nine members of the Monetary Policy Committee voted at the Banks’ interest meeting held earlier this month and can prove very volatile for exchange rates, dependent on the outcome. For example should any of the members have voted for an interest rate hike then this could give some much needed support to sterling against most majors, in contrast if further monetary stimulus through QE (Quantitative Easing) was discussed this could have the opposite effect and the pound could continue its poor recent run against currencies such as the Euro and US dollar and AUD.
Get the best deal for US Dollars
As with the Euro gains for the US dollar since the start of the year have been significant. In a little over 6 weeks the dollar has gained nearly 5.5% – this is a difference of £10,125 on a $300k money exchange. Of course the BofE wishing to keep the pound weak will affect cable and I for one feel the dollar may well continue to strengthen and I can see a move towards 1.53 in the coming weeks, however should you be selling I would err on the side of caution as I feel we are nearing the dollars peak.
In the next three months the US debt ceiling deadline is due to expire and I for one feel the usual ‘will they won’t they’ approach from the US government will be seen. Officially if the debt ceiling is not extended then the US will be bankrupt causing catastrophic consequences to the world’s financial markets. Of course this situation is highly unlikely to happen but you can guarantee the market will price in the possibility and as result do not be surprised to see the US dollar weaken as a result. Expect a volatile period for GBP/USD
Data Watch – US FOMC minutes at 19:00 this evening. US version of Bank of England minutes and can plenty of volatility
GBP/CHF exchange rates
Still widely regarded as the one of the major ‘safe havens’ for currency investors the Swiss Franc has been making strong headway against the pound. In fact following yesterday’s moves the CHF was trading at almost exactly a 1 year high against the pound, a again of over 9% in the last 6 months. With the Swiss National Bank having taken drastic measures in the past to devalue the currency to improve their ailing exports, CHF sellers may wish to look at their options whilst rates are so strong.
Should you have an upcoming money transfer to arrange and you would like to discuss the currency service we provide then please contact the office on 01494 787478. Through using the services of a specialist currency broker clients can make significant savings, often in excess of 2% when compared to the mainstream banks. Our service is designed to take a very pro-active look at the market for our clients by utilising a number of different contracts and our ‘market watch’ service. Should you have a target rate in mind and would like me to monitor the market on your behalf then please email Mike at mgv@currencies.co.uk
Where now for the pound? Can the UK avoid the triple dip recession? Is sterling undervalued? (Michael Vaughan)
On what has proved to be yet another extremely volatile day for the markets what are the possibilities for GBP exchange rates over the course of the next few weeks and months? Today the pound has had a slight reprieve against the Euro as Euro Zone GDP (Gross Domestic Product) figures came in worse than expected at -0.6% (double that of the UK).
My colleague Daniel makes some very interesting points in his post below and has given a very strong argument as to why the pound is low and likely to remain that way, however I am struggling to see how the pound can remain as low as it is, particularly against the Euro. The global downturn has been headline news for a number of years now and I for one am getting a little bored by the doom and gloom shown in all forms of the media. Surely if the media was a little optimistic about the future then this may give people the impetus to get up and go!?!? I for one am confident we can claw ourselves out of the dreaded ‘triple dip’ and am hopeful the Confederation of British Industry (CBI) are right in their forecasting of 0.3% growth for Q1 of 2013. If we can avoid the triple dip then I believe the pound may well be geared for a brighter Q2 and Q3 and would expect to see a move back towards 1.20. In the meantime I can see GBP/EUR remaining range bound between 1.15/1.17 – some great levels for those with Euros to sell.
How to get the best out of your foreign exchange?
Should you be one of the many private or corporate clients with a currency exposure, how do you get the best from the market? My best advice is to get yourself prepared well in advance. I know this may not always be easy, particularly for business’s who are not 100% aware of their exposure from month to month, however by being in a position to strike when the market spikes unexpectedly, you could find your self saving thousands on your money exchange.
I am often amazed, particularly with private clients that have committed to purchasing lump sums of currency but have not looked at the exchange rate for a couple of weeks. We would all like to buy at the high and sell at the low but in the real world this is not possible so give your self a fighting chance by monitoring rates and by utilising the services of a specialist currency broker. Here we have a number of contracts tailor made to help maximise your exchange. We will also take a far more pro-active look at the market than the banks, keeping clients informed of market trends and peaks and troughs in the market. Why not see what we can do for you?
To get further insight to the full currency service we provide please contact me on 01494 787478 or by email. I can happily track the market on your behalf and contact you if your target rate becomes available, I am also confident you will be pleasantly surprised by the savings we can make you. Email Mike at mgv@currencies.co.uk
GBP/EUR, GBP/USD and GBP/AUD exchange rate forecasts. Get the best deal on your foreign exchange
As we head towards the tail end of the week we have another busy day ahead on the money markets. Today we have the release of the Bank of England interest rate deciosion at 12:00 followed by our Euro zone counterparts releasing their decision at 12:45. Both central banks are expecting to keep their respective base rates on hold and this is unlikely to cause too much volatility for the GBP/EUR pair but watch out for the post interest rate press conference held by Mario Draghi (head of the European Central Bank). Often ‘Super’ Mario, as he is affectionately known to some, can be notoriously optimistic about the Euro zone and its future and it is often this and how investors interpret his comments as to what can affect the direction of the Euro – anyone with an interest in the Euro should keep a close eye on this press conference. Likewise watch out for the NIESR GDP estimate for GDP (Q1 2013 forecast at -0.3%). The NIESR (National Institute for Economic and Social Research) is a well respected think tank and often accurate with their predictions, should we see -0.3% growth in Q1 then the UK will be officially back in recession, this data is unlikely to do many favours for the pound.
As with the Euro the pound has had a tricky time of late against the greenback. The pound has fallen some 4.5% since the ‘fiscal cliff’ debacle and is showing little signs of slowing. To me there is more room for the pound to lose against the dollar and you may find a move towards 1.55 short term, particulalry if investor confidence takes a hit and the dollar gains from its ‘safe haven’ tag. I for one however feel the dollar is not the safe haven it once was and I can see the dollar losing ground when the US debt ceiling deadline creeps ever nearer. Unless the US can extend this deadline and congress can reach an agreement, the US cannot afford to pay off its debt and it is effectively bankrupt. Now this scenario is highly unlikley to occur as the knock on effects across the financial markets would be catastrophic, however for me it is likley to put pressure back on the dollar. The deadline as already been extended until mid May (originally was the end of February) – come April/May expect the dollar to see pressure and I for one can see 1.60 return, untill then USD buyers are unlikley to get much change from this market.
Overnight Australian unemployment figures and business sentiment figures were slightly worse than expected. We have seen the Aussie weaken by 0.3% as a result breaching 1.52. Tonight at 00:30 GMT watch out for the Reserve Bank of Australia Monetary Policy Statement – this will give insight to future monetary policy and how the economy is performing. This may well hint at future interest rate cuts – we have seen a series of cuts from the RBA over the past 18 months and should this suggest more to come against the dollar could lose out.
Currently this market is proving to be extremely volatile. It is currently not uncommon to see the market swing anywhere between 1-2 cents each day making it extremely difficult to forecast the next market move. For this reason it is becoming increasingly more important for clients to keep in regular contact with their broker. We are here to keep our clients up to date with market trends and have a number of tools to help safeguard and guarantee a particular rate of exchange for delivery at a pre-agreed maturity date. Should you wish to discuss the current market and how this may affect your individual requirement then please do not hesitate to contact me (Mike) at mgv@currencies.co.uk
As we start a new month will we see confidence return to the pound? Get the best deal on your foreign exchange.
Since the turn of the year the pound has had a torrid time and makes for some pretty poor reading. Below I have given the figures against a number of commonly traded currencies to see the difference this makes on a £200k money transfer over the last 30 days:
GBP/EUR – high/low change – 4.65% – €13,920 difference on £200k money transfer
GBP/USD – high/low change – 3.95% – $12,800 difference on a £200k money transfer
GBP/AUD – high/low change – 4.4% – AUD 13,180 difference on a £200k money transfer
GBP/NZD – high/low change – 4.55% – NZD 17,040 difference on a £200k money transfer
GBP/CHF – high/low change – 3.1% – CHF 8,960 difference on a £200k money transfer
As you can see it has been a poor start to the year but will it continue?
To me it is all a little surprising how far the Euro has moved, if you look at the fundamentals behind the UK and our European counterparts, surely we are still in a better position than Europe? One could argue that Mervyn King (head of the Bank of England) its getting his way as he has been open in calling for a weaker pound to improve the UK’s exports, he is also notorious for talking down the UK’s chances of short term recovery whereas Mr Draghi (his counterpart at the European Central Bank) is often far more bullish when it comes to European finances. For me this is somewhat of a facade and I for one feel this pair is due a correction heading back towards the 1.20 territory. Should you be selling Euros, for this reason, and whilst levels are not far from a 14 month high, it may well be worth considering your options – this may include the use of a forward contract allowing you to guarantee your position even if you do not have full availability of your funds.
As for the USD, AUD, NZD and CHF – the moves for these might be dependent on investor confidence. Currently investors seem to have found comments from many of the central banks as positive and hence we appear to have seen a drive towards riskier currencies such as the AUD and NZD. To me this trend may continue in the short term but I also feel the current sell prices should be attractive. To me it is inevitable problems in Europe will re-surface and this is likely to knock investor confidence, this may also be compounded as the extended US debt ceiling deadline draws closer in May. This could cause the USD to move back towards 1.60, and likewise a move away from the AUD and NZD. I also feel the Reserve Bank of Australia will continue with their monetary easing and this could also pile pressure on the AUD and NZD – I can see these moving back towards 1.55 and 1.93 respectively.
The major benefactor of falling confidence could be the CHF, and I see this staying strong for the foreseeable future.
If you would like updates on the market, register your interest by emailing me with your particular currency requirements (contact details, currency pair, volume and time frames). I would be happy to run through my current forecasts and to provide you with a quote for your upcoming exchange. I can be reached at mgv@currencies.co.uk
Anyone with an interest in the pound should keep an eye on UK GDP tomorrow. GBP/EUR, GBP/USD, GBP/AUD and GBP/NZD forcasts
Sterling exchange rates have struggled since the start of 2013 falling 3.5% from the high when compared to the low. This is a substantial move in a little over 3 weeks and is a worrying trend for the pound.
For me the next big data set for anyone with an interest in this pair will be today’s eagerly anticipated UK GDP data. Following the NIESR (National Institute for Economic and Social Research) forecasting -0.3% growth for Q4 of 2012, the market is predicting the worst. Early indications are not particularly positive and were compounded yesterday following predictions from the IMF (International Monetary Fund) that the economy will expand by just 1%, less than the 1.1% they predicted in October and below the official Government forecast of 1.2%.
Preliminary forecasts are suggesting anywhere between -0.1% and -0.3%. I for one feel that should the data come in as expected or hopefully better than expected i.e. 0% or better then I believe the pound could have a better end to the weak. I am also a little surprised at how poorly sterling exchange rates have performed since the turn of the New Year. Yes recent data has not been as good as we had hoped for; however the fundamentals behind the UK economy are surely in a better place than those of our counterparts in Europe?
I for one feel this pair is due a correction and can see levels heading back towards the 1.20 territory. Should you be selling Euros, for this reason, and whilst levels are not far from a 1 year high, it may well be worth considering your options – this may include the use of a forward contract allowing you to guarantee your position even if you do not have full availability of your funds.
Where now for cable? Pound at a 5 month low
As with the Euro the pound has had a tricky start to 2013 when compared against the greenback. Cable rates have been steadily falling, moving just over 2% from the high to low this year (a difference of $6,720 on a £200k transfer). For me tomorrows GDP will also be key for the short term trends on this pair, but longer term the debt ceiling deadline expiring at the end February could cause some volatility for the USD. Anyone that closely monitors the currency market will be aware that ultimately the main factor that can drive the money markets is investor confidence. During times of confidence riskier currencies (typically currencies offering higher yields such as the AUD and NZD) will perform very well and the so called ‘safe currencies’ historically the USD and CHF will devalue. However the current market does not seem to be moving as expected and for this reason is becoming increasingly difficult to forecast, and potentially the USD is not the safe haven it once was?
On Wednesday the US House of Representatives approved legislation that temporarily suspends the requirement for Congress to approve the nation’s debt ceiling (initially due to expire at the end of February). Republicans voted to approve the nearly four-month suspension on limiting America’s borrowing, backing away from an immediate battle with President Barack Obama and a possible first-ever default on the country’s obligations. Until changing course, Republicans had been threatening to demand dollar-for-dollar spending cuts to match the increase in the nation’s borrowing limit. As a result the dollar has strengthened – something that may well continue and I can see this testing the 1.57/56 in the coming weeks. Longer term, watch out for the ‘debt ceiling’ to rear its ugly head again, this may well push dollar rates back towards 1.60 in the months to come.
AUD, NZD
As mentioned in the previous paragraph these currencies have far outperformed Sterling in recent weeks and months. In fact the Aussie is just 3 cents away from the all-time record lows seen in August 2012 and likewise so is the Kiwi. This to me is representing an excellent time for anyone selling these currencies as I for one feel the Reserve Bank of Australia is likely to continue with its monetary easing as seen over the past 18 months. I would expect another rate cut within the next 3 or 4 months as the RBA is again likely to be concerned about the strength of the AUD and the impact on its export market. I would also expect the slowing mining sector in Australia to directly impact the dollar (caused by falling growth in China) and this too is likely to put pressure on GBP/AUD – I would not be surprised to see a move back towards 1.55 as a result.
As for GBP/NZD – historically the Kiwi will track the AUD and I would expect a move back above 1.90.
If you would like updates on the market, register your interest by emailing me with your particular currency requirements (contact details, currency pair, volume and timeframes). I would be happy to run through my current forcasts and to provide you with a quote for your upcoming exchange. I can be reached at mgv@currencies.co.uk
As the country is braced for snow, the pound could also have a frosty start to the day with Retail Sales figures released at 09:30
As much of the country prepares for a deluge of snow we could also find the pound has a frosty end to the week with Retail Sales figures released at 09:30 this morning. Currently GBP exchange rates are on a significant downturn against a host of currencies having lost over 3% against the Euro and 2.2% against the US dollar in the last two weeks. This is a worrying trend for anyone buying Euros or Dollars and today’s figures may also do little to support GBP today. For anyone selling Dollars or Euros I feel these current levels are a real opportunity and should be looked at closely. Next weeks UK GDP figures could be the turning point for Sterling, should they come in better than the NIESR’s predicted -0.3% then we could see the pound reverse some of its losses as the market is pricing in and expecting the worse, for this reason I actually feel the pound will recover a fraction next week.
The US dollar I feel will also come under a little pressure as we head into February with the debt ceiling deadline looming. As with the ‘Fiscal Cliff’ debacle to me it is inevitable the US will avoid this debt ceiling but I am sure congress will leave it until the last minute and it is this uncertainty that I am sure will put pressure on the dollar. I feel we will see the 1.58 area tested before this but would expect to see moves back towards 1.60+ in February.
For anyone looking at the AUD and NZD, these are also experiencing strong surges against the pound since the start of the year. The AUD and Kiwi have both gained nearly 1.3% in 2013 and historically tend to track each other. Overnight we have seen China release their latest GDP figures, these have come out at 7.9% – better than the forecast 7.8%. This is likely to give further strength to the Aussie and Kiwi during the course of today. I do feel however 2013 will be a better year for Sterling against both these pairings. I feel it is likely the Reserve Bank of Australia will continue with cutting interest rates this year to help devalue the Aussie as exports from Australia are struggling and this in turn is hampering the Australian economy. Unfortunately the heady heights of 2.50 are long gone but I would expect to see 1.60 at some point this year.
Should you have an upcoming currency transfer and you would like to discuss the current trends then please contact the office on 01494 787478. As a specialist foreign exchange broker I am confident I can undercut any price you are offered, whether this be via your bank or any other institute. To discuss the service in detail and to run though the contracts and rates of exchange we can achieve please email Mike at mgv@currencies.co.uk
Pound exchange rates continue to struggle against a host of currencies, will this trend continue?
Pound exchange rates have struggled since the start of the year against most majors bar the US dollar, the burning question for many is will this continue? For me I am a little surprised at some of the moves, in particular the heavy losses we have seen against the Euro. I am still confident the Pound will have a better year against the single currency but early indications suggest any gains may be some way off. Moves have come about due to a couple of factors. Last week Mario Draghi (head of the European Central Bank) decided to keep the base interest rate for the Euro zone on hold at 0.75% – this was not wholly unexpected, however many analysts and market commentators (myself included) had expected a likely rate cut to assist the ailing European economy in the next few months. Following Draghi’s press conference this seems increasingly unlikely and as a result demand for the Euro has increased and hence so to the value. To compound this figures from the NIESR (National Institute for Economic and Social Research) a well respected think tank have predicted -0.3% growth for Q4 2012, making the dreaded triple dip recession very much a reality. This will be confirmed on the 25th January – a date that should be firmly in your mind if you are dealing with Sterling in the coming weeks. Of course if the figures are better than expected the pound may be grossly undervalued and a correction seen. Keep in contact with your broker to for up to date analysis of the current trading conditions.
The Australian Dollar has posted strong gains against the pound today rallying nearly 0.5% but has held steady against the single currency. This week is relatively quiet for the Aussie with the most notable data set being on Thursday with employment change figures. Figures will give clues as to the current performance of the Australian economy and could throw up some surprises for the dollar throughout the course of Thursday’s trading. Elsewhere data sets for the beginning of the week are dominated by European and UK data todaywith German GDP data and European trade balance figures followed by UK Inflation and Retail sales figures. Those looking at buying AUD with GBP should also keep an eye on a speech from the Governor of the Bank of England Mervyn King. King is scheduled to speak at 10:00 and historically can be overly cautious about the UK’s prospects, this could keep pressure on the pound and I see rates hovering around 1.5150-1.52.
EUR/AUD exchange rates have been relatively stable over the course of the last three months, reaching a high of 1.28 and a low of 1.22, the average trade price sitting in the region of 1.25/26. Current market levels are at 1.2652 and I personally see little change for this pairing in the coming weeks and would expect a range between 1.25/27.
AUD buyers or sellers may also wish to keep a close eye on GDP data from China on Friday. Figures are release early Friday morning and expected to rise from 7.4% to 7.8% year on year. With China being the largest net importer of raw materials from Australia, these figures can have a major impact on the Aussie value, with better figures from China generally meaning a strengthening of AUD. Better figures on Friday could boos the dollar and vice versa.
As a specialist foreign exchange broker my aim is to help my clients achieve the most from their current positions. By speaking with us early and giving an idea of timings for your exchange we can run through the best contracts to help maximise your exchange. Keeping in contact with your broker is essential in the current climate with big swings experienced across most pairings. To run though our service in full and for an in depth forecast then please email Mike at mgv@currencies.co.uk
Busy week for the pound. How to get the best deal for your foreign exchange.
Heading into the first full working week of 2013 we have a busy week in store for the pound so lets take a look at what data sets are being released and how these may affect GBP exchange rates against a host of major currencies.
Today has been relatively quiet with the pound steady against most majors (other than the Kiwi Dollar (NZD) with the pound having fallen nearly 0.4% at the time of writing). Against other notable majors (USD, EUR, AUD, CAD) the market has been very flat with less than a 0.05% spread covering them all. Heading into tomorrow we have a busy day for the Euro with Euro Zone retail sales figures, economic sentiment data and unemployment figures all released at 10:00. Forecasts are suggesting a slight increase for both retail sales and economic sentiment – however unemployment is expected to show a slight rise so this may counteract any positivity from retail sales. I would expect volatility for the GBP/EUR pairing in tomorrow mornings session and would expect a move towards 1.22.
Moving into Wednesday anyone looking at GBP/AUD should keep an eye on Decembers retail sales figures, these are often slightly over inflated due to the Christmas period but are still a good insight as to how the economy is performing. Lately we have seen a slight downturn for the Australian economy with pressure focused on the mining sector and this has resulted in a spate of interest rate cuts by the Reserve Bank of Australia throughout 2012. These figures will be keenly viewed and if released as expected may give a slight boost to the Aussie. Long term however I personally feel the AUD is over valued. I see current prices as an opportunity for anyone selling the dollar but would expect to see some better opportunities for AUD buyers in the coming weeks and months. My reason for this again stems from the falling demand for raw materials in Australia, particularly from China. The Australian economy is heavily reliant on the mining sector and ultimately this downturn is likely to have a negative effect on the dollar, I also believe the RBA will come under continued pressure to devalue the currency to make exports more attractive. As a result I can see a drive towards 1.60 in Q1 of the year. Should you have a need to buy or sell AUD and would like to get a competitive commercial rate of exchange then email mgv@currencies.co.uk
Wednesday will also see a release of Euro Zone GDP. A major release that can have an impact on investors appetite and cause swings for a number of currencies, notably the Euro and USD. The USD is still classified as the ‘safe haven’ currency and should we see any improvement from Europe (figures forecast to stay at -0.1%) then we could see a drive from USD to the Euro and a weakening of US dollar exchnage rates across the board. Of course the reverse could happen should the figures from Europe prove to be worse than expected.
As we head into the latter stages of the week watch out for the first meetings of the year for the Bank of England and the European Central Bank. Both will release their latest interest rate decisions at 12:00 and 12:45 respectively. It would certainly be a surprise to see any movement from either side and likewise I would expect any monetary stimulus (Quantitative Easing) to be kept on hold. Anyone buying or selling Euros should pay close attention to the post decision press conference from the ECB scheduled for 13:30 GMT. This will see the head of the ECB (Mario Draghi) give insight to future monetary policy and it is at the point that often big swings can be seen in the market rates. Possibly one to avoid.
Finally Friday will see manufactuirng figures from the UK at 09:30 (forecast for as strong improvement that should lead to GBP rates rallying as a result) followed by UK GDP estimates at 15:00. These are released by the National Institute of Economic and Social Research, a well respected think tank and can be very accurate. They are keenly viewed and depending on the result could see big swings for the pound against all majors.
Should you have an upcoming currency exchange to arrange and you would like to discuss the current market trends and run through the many different contracts we have available to help maximise your exchange then please contact the office on 01494 787478 or email me (Michael Vaughan) at mgv@currencies.co.uk and I will gladly be of assistance.
