Category Archives: USD

Currency Forecast 2015 – Knowing what may happen in the future allows you to free up time and limit your risk…

GBP

The pound has been one of the best performers of 2014. Will this be the case for 2015? I have to say for the earlier part of 2015 it looks highly unlikely as a very uncertain General Election should cause GBP weakness. We saw this with the Scottish referendum in September. It is not just the outcome here that is important. Business confidence will be significantly lower as both international and domestic businesses alongside individuals refrain from key decisions owing to the uncertainty. This election will be fought and possibly won or lost on the European question and this will greatly unsettle financial markets which in my opinion have failed to so far price this important event in.

Generally speaking the raising and lowering of interest rates causes a currency to fluctuate. If a central bank actually raise rates (or market observers think they might in the future) the currency should strengthen. If there are thoughts that they will lower rates the currency will weaken.

Applying this to the UK, expectations for most of the summer the bank would raise interest rates caused the pound to spike. Remember currency markets move on rumour and speculation as much as fact. This speculation has now been pushed back (and may be pushed even further back) into 2015, if not 2016. If this is the case it is likely sterling will likely fall further.

If you are expecting a larger currency purchase in the first half of 2015 there might be some good arguments for utilising a forward contract to fix current exchange rates. We were in an almost identical position 2 years ago on GBPEUR approaching Christmas and by March had dropped some ten cents.

Part of our service is keep you updated and examine strategies that will protect you from unexpected swings on the currency market so please email on jmw@currencies.co.uk to discuss the options available to you.

Euro

Inflation is the rate at which prices rise or fall. Rapidly rising or falling prices can destabilise an economy and managing Inflation has been a key aspect of the European Central Bank’s (ECB) economic policy in 2014.

Mario Draghi, President of the ECB has stated that the new year may see the ECB ramp up their Quantitative Easing (QE) programme. The ECB’s approach to their economic situation has changed in 2014 from reactive to proactive with a range of measures to try and encourage growth being put in place.

QE (sometimes referred to as printing money) is where a central bank injects money into an economy to rejuvenate it and some observers have predicted the future will be a ‘stagflationary’ period in the Eurozone. This is where an economy fails to grow and inflation is a problem. It might be that just like Japan and the US before the ECB needs to continuously be ramping up the QE presses, this could lead to Euro volatility depending how the market digests such news.

Predicting 2015’s movements on Euro rates could prove very difficult but with a large amount of policy having been decided on in 2014, it may be the Euro is more susceptible to movements from other currencies.

USD

As we expected the dollar has recovered but just like with sterling the rise is mainly linked to expectations the Federal Reserve will raise interest rates in 2015.

The US economy is finally performing well but is this mainly down to the trillions of dollars we have seen pumped into markets from their QE programme? The end of the Fed’s QE programme may yet unsettle markets, slowdowns in China, the Eurozone and the UK could see the US once again roll out the QE presses.

I would personally not be holding on for them to raise interest rates anytime soon and USDGDP traders might wish to take stock of the 15 cents improvements.

For more information on the forecast and to be kept up to date with the latest news please contact me on jmw@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

Best Rates of Exchange – When to Buy or Sell Currency? (Andrew Bromley)

Buy Euros Now? Stagnant Pound?

Sterling has been ‘range bound’ of late, with highs and lows being circa 1.2425 – 1.2650. Today had German GDP data at 07:00, which came out as expected at 1.2% and further highlights a lot of economists belief that the Germans are going nowhere fast! On the other side of the currency pair UK Mortgage Approvals came in slightly lower than expected at 37,100 against an expected figure of 38,500. Last month the figure released was 39,300 so this reduction is not good news for Sterling. Those holding GBP EUR will need to be wary of the UK GDP ‘1st revision’ tomorrow which is the re-release of last months GDP figure, taking in to account any data revisions during the month passed. If the UK GDP is revised down from the 3% figure released then expect immediate Sterling weakness, potentially down to the 1.24 level of support. On the other hand if the figure is revised up then expect to see Sterling test the 1.27 level. If you have an exchange to do and you’re not sure how to play it – please feel free to get in touch using the contact details below!

USD Romp – Buy USD Now?

My opinion on timing for the purchase of USD would be to get the currency bought ASAP! The greenback took a huge amount of strength from the conclusion of the bond buying (Quantitative easing) and seems at home in the 1.50s. I think that as international commodities are weak (Iron Ore, Gold, Oil) investors will be keen to keep their funds in the safe haven currency (USD). This will keep USD strong and subsequently, I don’t feel that USD buyers will see a figure much stronger. I would be inclined to buy sooner rather than later in this position. This afternoon has US GDP and Consumer Confidence (13:30 and 15:00 respectively), you may see movement at this time.

As mentioned, please feel free to drop me a line if you do have an exchange to book. The direct line to the trading floor is 01494 787 478 or email me AJB@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

Sterling gets a Lift? (Tom Holian)

With inflation falling below the Bank of England’s target there was an outside chance that the minutes from yesterday’s BoE meeting could have been different from the previous month.

The minutes showed that 7-2 were in favour of keeping interest rates on hold which led the Pound to strengthen marginally against the Euro during yesterday’s trading session.

This morning German manufacturing data has come in a lot worse than expected which has sent GBPEUR rates above 1.25.

In a few minutes UK Retail Sales data is due out and the expectation is for growth of 3.8%. Anything higher could keep Sterling strong against the Euro.

French economic growth has been struggling recently and questions are being raised as to whether the French are taking their situation seriously enough. With growth on the continent struggling there is still a chance that the ECB may intervene with monetary policy at next month’s meeting which could result in Euro weakness in the longer term.

US Inflation data is published at 130pm today and as the world’s leading economy if the data is positive this could result in Dollar strength which often results in Euro weakness.

If you have a currency transfer to make and want to save money on exchange rates then contact me directly for a free quote. Tom Holian teh@currencies.co.uk

 

 

GBP/EUR Volatility Likely to Continue (Matthew Vassallo)

It’s been a volatile few days for Sterling exchange rates, with the Pound losing value against both the EUR & USD. This negative trend was created following last week’s UK quarterly inflation report and the suggestion that UK interest rates were unlikely to be raised until the last quarter of next year, news which immediately knocked investors’ confidence in the Pound, pushing it back below 1.25 against the EUR and below 1.57 against the USD.

This morning we had the latest Bank of England Minutes and it was interesting to note that despite last week’s indication that UK interest rates would not be raised anytime soon, two members of the BoE still voted in favour of one now. This news has helped to push GBP back up to 1.25 against the EUR and with Eurozone Construction data coming in worse than expected we could see further gains for the Pound during Wednesday’s trading.

There is likely to further movement on Cable rates this evening as we have the latest Federal Open Market Committee (FOMC) minutes, which are usually a key market mover. These minutes give us an insight into the economic and financial conditions of an economy and can be used as a benchmark for their recovery process.

It is another busy day on the markets tomorrow, with the latest UK Retail Sales figures and Eurozone Consumer Confidence figures. We also have a host of US data, including the latest inflation & employment figures, before ECB president Mario Draghi’s speech on Friday.

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 are worth capitalising on!

If you think recent drops on sterling were bad you should prepare for worse as these moves are likely to be extended in the future. Next year is a tremendous amount of uncertainty as to where the political situation in the UK will head.

If you are debating any currency transactions why not speak to one of our specialists regarding all of your options. Remember that you can forward buy your currency locking in current levels and rates. I would expect a recovery in  sterling down the line andI feel therefore current levels represent a very good opportunity to sell Euros for sterling.

If you wish to learn more about your situation why not email me Jonathan on jmw@currencies.co.uk

Best Rates of Exchange – When to Buy Euros? Andrew Bromley

Stirling Weakens on Carney Comments

The Pound had a rocky road yesterday as following good Unemployment data, GBP EUR spiked to provide short buying window whilst the market was over 1.28, close to the 2 1/2 year highs. However, GBP was bought back to earth with a bump following Bank of England Governor Mark Carneys speech on the associated inflation report. Carney indicated that as inflation is sitting at a near 5 year low (1.2%), an interest rate increase this side of summer is not going to happen. With the General Election next year, it is my opinion that if the economy warrants it, we will not see an increase until either November or December 2015. This address weakened Sterling to the early 1.27 mark, with today opening up even lower at the 1.2650 region. Those buying Euros may be wise to take advantage of the rates before we potentially see GBP EUR keep sliding down from its spike, potentially to the 1.24 region.

USD The Performing Economy?

USD sellers will be happy to see that we are at a 14 month low GBP USD. Selling below 1.60 was an unrealistic expectation until the Fed decided to finish its bond buying process (Quantitative Easing). The US economy seems to have gone from strength to strength in the last two weeks, and may continue to push GBP back to the 1.55 region and below. USD sellers may want to get their exchange done and take advantage of the low rates, with buyers scratching their heads as to whether or not the Pound will bounce back? My opinion is that Sterling will not push back over 1.60 for the short term, potentially not even until the new year.

Swiss Franc – Sell Now??

On 30th November the Swiss National Bank meets to agree on its next move to support its economy. It has been written on this site previously that there is a ‘peg’ linking EUR and CHF at 1.20. The market is only just above this level, which if breached (a drop below 1.20) would mean the SNB would have to act to support its economy. The SNB believe that CHF has been overvalued for an extended period of time, and it has affected Swiss Businesses ability to compete with potentially falsely expensive stock. There is a good chance that the SNB will weaken CHF substantially, with most currencies to make immediate gains. If you are selling CHF, I would be strongly inclined to get funds exchanged prior to 30th November to eliminate the chance of a substantial loss!

Please do feel free to drop me a line if you are looking to act on any of these currencies.

The direct line to the trading floor is 01494 787 478 or email me ajb@currencies.co.uk

 

 

 

Sterling interest rise goes back further

Expectations for the UK to raise interest rates were pushed back further today as the Bank of England hinted that any such expectations were now probably being pushed back into later 2015. I personally expect the pound will come unstuck further in early 2015 as uncertainty around the UK’s General election takes hold. The uncertainty of the outcome of next year’s election is likely to weigh heavily on investors minds and sterling is going to be in for some tougher times next year. The in or out status of the UK and the EU will be a major headache for investors debating where to put their cash.

If you need to buy a foreign currency with the pound in the next 6 months then moving sooner might be best. If you do not have full availability of funds you can fix a rate without all the money being required to be paid. If you wish to discuss your situation and what might be about to happen in the future why not get in touch on jmw@currencies.co.uk

Exchange Rate Forecast – GBP CHF EUR USD

GBP CHF (Sterling – Swiss Franc)

Today opens up with a big focus on EUR CHF. In September 2011 the Swiss National Bank put in place a minimum level that the EUR CHF could trade at. They set 1.20 as a minimum level, as they felt that any stronger than that would be damaging to the Swiss economy – an overvalued CHF would mean overseas business would seek a cheaper economy with which to trade. With this is mind if you are looking at a GBP CHF trade, there is a very real possibility that you will see a spike in your favour imminently! If you have a CHF Mortgage in Cyprus that you are considering repaying, do get in touch as you’ll want to take advantage of favourable market movements more than others!!

GBP EUR (Sterling Euro) Exchange Rate Forecast 

In terms of Sterling this week, Wednesday morning sees the release of UK wage inflation data and its inflation report. Wages and inflation had been heavily featured in the press this week – even the BBC had a big article on the CPI / Inflation comparison this morning. It is generally believed that wages should rise in line with inflation, leaving space for the Bank of England to increase the base rate of interest in a performing economy. If wage increases are still substantially out of line with inflation, then it would leave Mark Carney at the Bank of England no choice as to keep the Interest rate at 0.5%. This would be interpreted as a sign of weakness for the UK and may subsequently see Sterling weakness.

Friday has a whole host of Eurozone GDP announcements. The Eurozone as a whole is pretty stagnant, as no economy is particularly active in line with where Mario Draghi and the European Central Bank need them to be. I think that Friday will see Euro weakness as unless things change literally overnight, the Germans and French have a lot of ground to make up to be back to where they were performing in say 2007!

GBP USD (Sterling Dollar) Retail Sales on Friday

GBP USD is pretty quiet this week, perhaps a gift for those who have not yet been able to take advantage of the near 12 month best for selling USD. US Non Farm pay roll data (employment) came out lower than expected on Friday of last week, so a continuation of weak US data could be seen and may push GBP USD back over 1.60… If you are Selling USD, I’d be tempted to get exchanged prior to Friday and take advantage of the rates!

Please feel free to get in touch if you have an exchange to do – regardless of the currency pair! We can help you achieve award winning exchange rates, plus open you up to a large range of contract options to help better take advantage of spikes etc.

Please call the trading floor directly and ask for me Andrew Bromley 01494 787 478

or alternatively email AJB@currencies.co.uk

 

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