Could this week’s economic updates push the Pound higher?

Looking over a 1-month chart for the Pound to Euro exchange rate, the Pound has gradually climbed in a consistent trend against the Euro.

There has been little volatility, but the GBP/EUR pair have climbed from 1.1500 up to 1.1725 in the space of 1-month, which is an almost 2% increase.

At last week’s European Central Bank (ECB) interest rate decision and statement afterwards ECB President Christine Lagarde opted not to push back against expectations of a rate cut in the first half of the year. The markets are pricing in a rate cut from the ECB as soon as April which is earlier than expectations for the Bank of England.

The Euro weakened because of the language used by Lagarde, and I think we can expect to see further price fluctuations for the GBP/EUR pair if the Bank of England offers indications to when they think rate cuts are likely to begin.

The Bank of England’s first monetary policy meeting of the year will take place on Thursday. At the time of writing the BoE is expected to cut interest rates by 100 basis points this year, whereas the ECB and the FED Reserve in the US are expected to cut rates by 150 basis points.

Sterling has strengthened as a result of this prediction, so any changes to this outlook could influence the Pounds value.

At the last meeting the voting pattern stood at 6 voted to hold with 6 voting to hike rates. If we begin to see a change in sentiment this could also be picked up by the markets and cause a reaction in the Pounds value.

The Pound has begun the week trading just 0.5cents from its annual high against the Euro, and around the highest levels against the US Dollar since late July.

If you would like to plan around Thursday’s key update, and discuss exchange rates with me directly you can email me on [email protected] and I will be happy to offer you some insight regarding your transfer.

Pound Euro rates hit highest since September 2023

GBP EUR Hits New Yearly Highs as Inflation Soars

Today is a key day for financial markets with the latest Eurozone Interest Rate decision. For those unfamiliar, the European Central Bank (ECB) is the central bank for the Eurozone and meets today to discuss interest rate policy.

With sterling trading at its strongest in 2024 against the Euro, now is a very important time to be tracking levels. Today’s news has real potential to either upset the current trend or extend it further. If you are buying or selling Euros, this is arguably the key release of January. Speak to me to learn more by emailing [email protected]

We like to keep abreast of interest rate developments in the currency world because they are often one of the biggest drivers of currency movement. Typically speaking, higher interest rates mean a stronger currency. Lower interest rates mean a weaker currency.

Whilst the ECB is not forecast to cut interest rates until June, the currency markets might be predicting a cut sooner. Why is this? Well, yesterday the IFO (a respected German forecaster) lowered its German economic growth forecast for 2024 from 0.9% to 0.7%.

And the eurozone PMI (Purchasing Managers Index) data, also released yesterday, showed a bigger decline than expected. We did mention on Monday this PMI data could prove telling on GBPEUR levels, and so it was yesterday.

As we approach the ECB decision at lunchtime today, the currency markets, and financial markets in general, will be eagerly poised to see the interest rate decision at 13.15, and the Press conference at 13.45, both UK time.

The pound is currently trading at its strongest in 2024 against the Euro, above the forecasted averages. And it is less than a cent off the highest levels seen in the summer of 2023. To get higher than this, you would need to go back to July 2022.

Our expert team is waiting to hear from you, to guide you through this key piece of FX and financial market news, and help you to make informed decisions.

Please get in touch to discuss in more detail, and learn more about securing excellent exchange rates and receiving market insight.

Jonathan

[email protected]

Pound Sterling Forecast – Will the Pound Continue to Fall

GBP EUR Exchange Rate: Weekly Review May 21st  

Pound Sterling Forecast to Drop

The outlook for the pound continues to be on the negative side, as investors become less hopeful of an interest rate rise in the UK.

The Bank of England meet next week to discuss their latest Interest Rate decision, and the odds are very high of a continued pause.

Recent economic data seems to also indicate this is likely to the case, with continued concern over the economic outlook for the UK.

Our forecast data suggests a weaker pound

Here at pound sterling forecast, our experts monitor the currency market forecast data that is available, to try and gauge the economic outlook.

Overall, we see a majority of the forecasters we have consulted suggesting the pound will be weaker in the future.

A higher interest rate will usually lead to a stronger currency, as it makes it more attractive to hold that currency.

With the Bank of England now appearing to have paused in their current interest rate hike cycle, the prospect for sterling to be stronger in the future has declined.

When should I buy Euros or US Dollars with pounds?

With the outlook for sterling having deteriorated because of a predicted lower ‘terminal’ interest rate for the UK, it might be argued that moving sooner than later is better.

Of course, no one can accurately predict exactly where the currency markets will be headed, but there is a majority of the forecasters who believe the pound will be weaker.

If you have any international payments to consider in the future involving the pound, it might therefore be wise to consult with us regarding the latest outlook and data.

We can carefully look at your position to try and best determine what options are available for you and what strategy will be best suited for you.

Please contact myself Jonathan Watson on Jonathan.watson@@lumonpay.com to learn more.

October Pound Sterling Forecast – Will the pound Fall?

Pound to Dollar Rate Drops to One-month Low

Pound Sterling Lower on UK Inflation Data

One of the key talking points today is this morning’s UK Inflation data which has shown a 6.7% year-on-year reading. This is slightly higher than expected but matches last month’s YoY figure.

The important Core Inflation number has dropped from 6.2% to 6.1%, but there probably isn’t enough in this data to suggest any major changes from the expectations the Bank of England will pause at their next meeting.

Expectations for the headline YoY reading were for a drop from 6.7% to 6.5%. The next Bank of England decision is 2nd November.

Sterling suffered across the board yesterday after wage data showed the jobs market is cooling.

This essentially means there is less likely to be Inflationary pressures from wages, which means less pressure on the Bank of England to raise rates ahead.

Next week, we will essentially have all of the key pieces of data that the BoE uses to determine Interest Rates. That is wage growth, this morning’s inflation piece, and labour market data.

In terms of further data this week for the UK, we have the latest UK Retail Sales data on Friday. Expectations are for a small contraction in the sector, as the cost of living continues to bite and the warmer weather saw consumers delay purchases of warmer clothes.

What will move Exchange Rates today?

In terms of the US dollar, we had some important US economic news yesterday with the latest US Retail Sales data, which increased by 0.7%, more than expected as households stepped up purchases stateside.

Data for August was also revised higher, reflecting increasing underlying strength in the US economy.

This saw the yield on short-term treasuries rise to their highest level in 17 years which reflects the ongoing expectations of ‘higher for longer’ interest rates in the US.

Goldman Sachs has now increased its GDP estimate for 3rd quarter in the US by 0.3% to 4%, which would be the fastest pace of US economic growth since 2021.

Today could see some Euro volatility as we get the latest EZ CORE Inflation data at 10 am, the expectation is for a reading of 4.5%.

Christine Lagarde will also be speaking around this time, and of course, her comments on how the ECB plans to tackle Inflation, but also promote economic growth could prove market-moving.

So key talking points for us today are UK inflation, EZ inflation, Christine Lagarde speech, and Fed speakers this afternoon.

For more information on what might move your exchange rate ahead, please contact me Jonathan Watson by emailing [email protected]

Will the Pound rise against the Euro in October?

Will the Pound move up against the Euro?

The Pound Euro exchange rate hit its lowest level since May after the Bank of England announced that they were pausing interest rates.

However, since then the Pound has started to make some small gains as we end the week and the month.

This morning the Office for National Statistics announced that UK GDP for quarter 2 grew at 0.2%.

The other announcement was that the year on year rate was revised upwards from 0.4% to 0.6%.

Later on this morning Eurozone inflation data will be coming out at 10am.

Inflation has been a key influence in central bank policy both to the Bank of England and the European Central Bank.

Inflation has started to fall in the US, UK and Eurozone recently which has led to them all considering what to do with policy moving forwards.

Oil Prices on the rise

Oil prices have been rising dramatically over the last few weeks which is not good news as we head into winter in the northern hemisphere.

The weather still remains mild but the rising cost of oil will start to once again impact upon household bills.

Rising oil prices also affects the cost of manufacturing and production. This could be reflected in rising prices for the consumer too as we move forward.

Ultimately this could lead to inflation rising once again which could put pressure on both the Bank of England and European Central Bank to revisit monetary policy.

After 14 interest rate hikes in a row the Bank of England finally chose to keep rates on hold. This caused the Pound to briefly dip vs the Euro earlier this month.

However, since then the Pound has made some small gains vs the Euro.

If you would like a free quote when buying or selling Euros then feel free to contact me directly.

I have worked for one of the UK’s longest established currency brokers for 20 years today. Please email me directly and I look forward to hearing from you. Tom Holian [email protected]

 

Will the pound continue to fall? Sterling exchange rates hit multi-month lows

GBPEUR Forecast – Internal Market Bill Drives GBP Lower

Sterling finished the trading week on the back foot, closing out at 1.1480 against the Euro a four-month low since 15th May.

Unfortunately, against the dollar it was a similar story with the week closing out at 1.2235 against the Dollar a six-month low dating back to the 27th March.

The main reason for Sterling’s demise is the uncertain UK outlook from the financial markets, largely due to the economic data prints in the week.

Primarily lower than expected inflation print on Wednesday changed the outlook of Thursdays Bank of England interest rate decision. Inflation levels on Wednesday came out at 6.7% down from 6.8% but noticeably lower than the consensus forecasts of 7%.

Core inflation also declined sharply to 6.2% down from the forecasted 6.9% showing inflation is becoming less ‘sticky’ in the UK. In the earlier part of the week futures markets had Thursday’s meeting priced in at 80% chance of a hike and 20% chance of a pause, by Wednesday morning the probability had slipped to a 53% chance of a hike and 47% chance of a pause by the Bank. Thus, keeping pressure on an already faltering pound.

This data was the catalyst for Thursdays narrow 5-4 vote in favour of a pause, bring the curtain down on the Banks 14 consecutive base rate hikes from 0.1% – 5.25%. To further weaken Sterling the futures markets now price terminal rates in the UK at 5.4%, it was not long ago we had JP morgan calling for 7% base rate should the market conditions warrant it. Dankse bank have commented they now see November’s meeting also being a pause, stating the lack of significant data releases and time for considerable change to those releases (most notably wage growth and core inflation) between now and the 2nd November a key reason for the pause.

It is no surprise Dankse bank are bearish on the pound, with their six-month forecast for GBP/EUR weighing in at 1.1365. The bank are negative on the UK economy and tip it to underperform in coming months along with a less hawkish Bank of England.
Supporting the economic slowdown for the UK theory, Fridays Retail sales did little to excite the markets. A modest uptick to 0.4% growth for August, slightly under shot the 0.5% consensus.

Noticeably the year-on-year growth from August 2022 printed at 1.4%, showing the difficultly the retail sector is having. To put some context to how vital the retail sector is for the UK economy, in 2022 the total value of UK retail sales was £441bn, it contributes 5% to the UK Gross Domestic Product (GDP), roughly one third of total consumer spending goes through the sector and it employs roughly 3 million people. Its easy to see why weak figures can act as an early indication to the UK economic health.

Nevertheless, Rabobank have recently published their bullish Sterling forecast and tip rates to hit 1.1765 within a three-six month timeframe, a 2.5% upward swing from where levels finished the week. They consider a less hawkish Bank of England could benefit the pound, by strengthening the Economic profile of the country. A lower peak in rates, should soften the recessionary risk for the UK thus benefitting the pounds recent sensitivity to growth expectations.

Eurozone data shows no signs of a recovery across the continent, although there were small hints that the downturn was bottoming out. French PMI service sector data, declined to a 34-month low along with the Flash manufacturing PMI dipping to 43.6 from 46 previously. Data from Germany was mildly better with manufacturing and service PMI both showing mild positive gains against the forecasted prints.

Rabobank use the recent weak economic data sets from the bloc to further support their Bullish projections for GBP/EUR. Stating the recent revise of growth projections across the Bloc by the European Central Bank, supporting the Banks hypothesis of a technical recession in the second half of 2023 and a shallow recovery through 2024.

The Dollar has regained its strength and had a very successful weak across the board. Cable levels posted its third consecutive weekly decline, continuing its bearish trend that began mid-July. Since then, Cable levels have fallen from 1.31 to 1.2235, a 6.6% decline.

The recent strength of economic data from the US has provided the greenback with solid support, combined with recent Federal reserve comments. The FOMC kept the Fed interest rate unchanged as expected at the range of 5.25%-5.50%.

In their projections, most members anticipate that further tightening may be appropriate before year-end. They also forecasted less rate easing for the next year compared to previous expectations, so base rates in the US could be higher for longer.

Fed Chair Jerome Powell reiterated the message and tone of recent weeks and meetings, emphasising that future rate hikes are still likely if inflation rebounds and the economy continues to perform well, particularly with a tight labour market. Following the meeting, the data showed that the US labour market remains robust with initial and continuing jobless claims reaching their lowest levels since January. The US dollar index, which measures the value of the dollar against a basket of foreign currencies (Euro, Japanese Yen, Swiss Franc, Pound Sterling, Canadian Dollar and Swedish Krona) posted its 10th consecutive weekly gain, marking a record streak.

Should you have a currency exchange to carry out involving buying or selling the Pound it is more important than ever to have an experienced and proactive currency broker on your side. Feel free to contact me today on [email protected] and I will be happy to discuss the various options available to you.

Will the Pound Fall Further on Bank of England Decision and Falling Inflation?

Sterling lower after UK Inflation drops more than expected to 6.7%

The pound has dropped across the board today after UK Inflation data came in lower than expected. This is good news in one sense as the Bank of England has been trying to bring this down for many months.

Sterling has been supported by expectations of a higher interest rate in the future, with a key meeting tomorrow.

UK interest rates are much higher in the last year than in recent years, this will typically see a currency stronger.

The Bank of England was thought to have an easy decision tomorrow to hike interest rates once more, but this is less clear now.

Will the Bank of England hike UK Interest Rates tomorrow?

This is now looking like a difficult decision, with Inflation falling under its own accord.

The prospect of raising interest rates has always been a battle between controlling Inflation and seeking to prevent too much of a fall in economic growth.

The UK economy has been struggling of late, with economic growth falling more than expected. Recent economic surveys have pointed to drops in business sentiment as well, you can read about this here.

By raising interest rates too high, the Bank of England risks choking off the economic activity in the economy that is present, creating other problems.

How will the pound react in the next 24 hours?

The volatility has already begun following today’s Inflation data, and tonight is the latest US Interest Rate decision which might well prove a market mover too.

Looking at the US, the US dollar accounts for around 60% of globally traded foreign exchange. This means any shifts in the US dollar could stoke volatility in other currencies connected to it like the pound, Euro, AUD, NZD, CAD, ZAR, and many more.

Then, tomorrow is the Bank of England decision at midday, where we might well see some further volatility given the uncertainty from the interest rate decision.

With it being a near enough 50-50 split, there is real potential for a move on the pound.

Essentially, a higher interest rate could see the pound rise, whilst a pause might see sterling weaker.

Investors will closely follow the news to rebalance their positioning on all manner of investments, which could see some turbulence for the pound.

GBPEUR levels are currently 1.1550, with GBPUSD 1.2357. The pound is over two cents off a one-year high against the Euro, whilst the dollar is at its strongest against the pound since June.

If you are seeking to benefit from market movements or wish to check you have an appropriate FX strategy in place, a call with an expert like myself could prove beneficial.

I have worked in FX payments for 14 years and handled tens of thousands of transactions for both private and corporate clients. I have been quoted in newspapers and even once appeared on BBC News talking about Brexit. Feel free to ask me about that one!

Would you benefit from a free, no-obligation FX check-up? You can ensure you are getting a good rate and have properly taken stock of current events. You can also explore all of your options which can help limit your exposure to the FX markets.

Alternatively, please call 0204 506 5672 and ask to speak to Jonathan Watson.

Here is my LinkedIn profile https://uk.linkedin.com/in/jonathan-watson-46591057

Pound Sterling Forecast: How to get the Best Pound to Euro Exchange Rate

Pound to Euro rate continues to fall, making history in the process

Pound Sterling Forecast, what we can expect for the pound?

Getting the best pound to euro rate is about being prepared and tracking key economic data and information.

“Hope”, is not usually a good strategy. Relying purely on “luck” and hoping that the market will magically go your way can often lead to disappointment.

Just because you cannot totally predict the direction on rates, doesn’t mean you should just give up and accept your fate.

To help my clients get the best rates, I take the time to fully understand:

– Their timescales. How long do you have?

– Their attitude to risk. What type of volatility are you prepared to accept?

– What are your goals? Do you have a target rate or budget, how realistic is it?

It is only be being honest about the answers to the above, and analysing the latest market intelligence, you can truly devise a strategy.

What events will move my rates ahead on pound sterling rates?

Tomorrow sees the latest Eurozone Interest Rate decision, with the decision at 13.15 GMT and the Press Conference due after 13.45.

These events can see volatility in the run up to, and after the event, making being in touch with your Lumon specialist vital.

Any clients looking to consider a currency payment in the future should be aware of this potentially volatile event today, with financial markets mixed over opinions as to what we might see.

We can often see currency market movement when there is uncertainty as to which direction economic policy or data will take, and markets readjust to the fresh news.

The ECB (European Central Bank) have a hard decision between keeping interest rates on hold to encourage economic growth, versus raising interest rates to combat high inflation.

The market indications are the ECB is quite evenly split at present, opening the door to some movement on Euro levels today.

Whilst principally affecting the Euro, there is much scope for volatility influencing the pound, the US dollar and other currencies.

Any currency connected to the Euro including the Australian dollar, New Zealand dollar and Canadian dollar could be in for a ride.

What else is happening that might affect the pound this month?

The pound trading quite close to the one-year highs on GBPEUR and we have a Bank of England and US Federal Reserve Interest Rate decision next week

With the ECB due tomorrow, a conversation with a specialist could prove beneficial, to navigate the news and ensure you are making informed decisions regarding your currency transfers.

If you need to buy or sell the pound against the Euro, US dollar, Canadian dollar, Aussie dollar, Kiwi dollar or any other currency, please get in touch.

“The best way to predict the future, is to create it”

Pound Rises on ‘Higher for Longer’ Interest Rate Expectations

GBP EUR Exchange Rate: Weekly Review May 21st  

Sterling stronger as UK interest rates remain high

Sterling has been higher following a dip last week. Interest Rate expectations are setting the tone for some of the positions we are seeing so far.

The Bank of England raised interest rates as expected 25 bps last week taking UK interest rates to 5.25%. We did see Sterling dropping on the news.

Cable dropped to $1.2623, its weakest level against the dollar since late June. GBPEUR fell to 1.1565, both have since recovered.

This does highlight once again how sterling has been once again weaker following an interest rate decision to hike.

Friday saw the latest US Nonfarm Payroll data, a key factor used by the Fed in determining their pace of interest rate hikes.

This showed fewer jobs being created with 187k versus 200k than forecast but represented a trend higher in the number of news jobs from June, which was 185k.

The US unemployment rate also came down to 3.5% from 3.6%, taking the pressure off the FED a little in their quest to control inflation but also avoid hurting the US economy.

This ultimately saw the US dollar slightly weaker, which has been mildly supportive for sterling lifting cable to 1.2750, with EURUSD 1.0975 and a 1.1610 reading this morning on GBPEUR.

What are the latest FX forecasts showing us?

If we look at the latest forecast data from our sources, we can see the following on GBPEUR:

    • 13 out 52 forecasters see us Above 1.1650 =
    • 39 out 52 – Below 1.1650 =

Using this data, we can see on GBPEUR we are potentially very close to the top of the ranges.

For GBPUSD, it is more mixed, based on a spot ref of circa 1.2750. It appears that the market is fairly split on the direction of GBPUSD with a move to 1.3000 or 1.2500 fairly even. But leaning slightly to the upside.

“Higher For Longer” for UK Interest Rates

When looking at the pound and UK Interest Rates, one of the key takeaways is “higher for longer”. We expect UK interest rates will be at an elevated level for a longer period of time than previously thought.

The chances of Interest Rate hikes next month are as follows, BoE 85%, FED 16% and ECB 36%

The Bank of England are still in a difficult position trying to control UK inflation which is still very high at 7.9%

It is clear we are nearing the terminal rate with now only one or two hikes left, as the Bank of England has to wait for the full effects of the previous rate hikes to be felt in the wider economy.

In fact, there are some warning signals in the economy. We are already seeing some of the potential negative effects of higher interest rates.

Taylor Wimpey, one of the UK’s largest house builders reported profits falling by a quarter. They are blaming rising interest rates and a sluggish housing sector, plus lack of demand for new housing. Taylor Wimpey expects to build 10,000 homes this year, compared to 14,000 last year.

Wilkinson, the high street retailer is to enter administration. The higher interest rates we see places increases strains on the economy and creates the conditions where we can see weaker businesses put under extra pressure. We know about the UK cost of living crisis caused by higher rates. Weaker high street retailers going out of business is a classic warning sign of potential economic problems ahead.

This really brings into importance the key release for sterling this week, GDP figures on Friday…

If you have a transaction to consider and wish to consult an FX expert regarding the latest forecast news, please get in touch.

GBPEUR hits 11-month highs ! Will the pound keep rising ?

The pound has been rising but can this continue

Expectations for the pound to carry on rising remain fairly high in the FX markets as sterling has continued to touch fresh highs.

Against the Euro we have been comfortably in the 1.17s, and against the US Dollar 1.29. GBPEUR levels are an 11-month high and GBPUSD levels are testing 16-month highs.

The outlook for sterling has increased and improved as investors back further interest rate hikes in the future.

Typically the raising of an interest rate sees the relevant currency stronger, as it attracts further investment.

When we look at the future forecasts on interest rates, we see that markets are predicting UK interest rates over 6%.

What could destabilise sterling?

If we look further into the future, we can see a number of potential issues which could upset sterling exchange rates.

The potential for higher interest rates to trigger recession is documented as it stops spending.

This has been quite well researched and the now increased chance of interest rates hikes, makes a longer and deeper recession more likely.

In fact, when the Bank of England raised interest rates last month, the pound did fall.

Some research I had looked at regarding the pound and Bank of England interest rate decisions, did actually show that in the 24 hours following these events, the pound was lower.

So, the very thing that is causing the pound to rise in principle, is actually and could very easily cause it to fall.

Looking around the corner, we never quite know what the financial world and FX markets will deliver.

The movements we see are ultimately just a reaction to investor’s sentiment towards the ongoing news and current affairs.

For now, sterling is performing well and this is presenting an excellent opportunity for those buying Euros, US Dollars or many other currencies.

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None of the information contained in this website constitutes, nor should be construed as financial advice. It should not be interpreted as a solicitation to offer to buy or sell any currency or as a recommendation to trade.

Where interbank exchange rates are referenced within the website these should only be used as a guide on the performance of a market. These rates are not indicative of our exchange rates – please contact us for a quote.