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

By
Jonathan Watson
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Flash crash sinks Pound to US Dollar rates

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

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

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

What can I do to protect myself?

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

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

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

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

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

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

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

With the Greek government finally forming a coalition will market confidence increase? Forecasts for USD, AUD, NZD and ZAR

By
Daniel Wright
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Pound to US dollar forecast Best time in 4 months to sell USD for GBP

As news emerged yesterday that Greece has managed to form a new coalition government, will this lead to an increase in market confidence? Personally I think yes. The new conservative led government headed by Antonis Samaras officially took power on Wednesday ending weeks of uncertainty that has rattled financial markets and I believe this may now lead to an increase in investor confidence and a potential drive towards the so called ‘risky’ currencies.

This could be good news for those selling currencies such as the AUD, NZD or ZAR as I personally believe investor demand and risk appetite for these currencies is likely to increase and hence their value will increase. I would expect GBP/AUD to fall towards 1.52 territory, HBP/NZD 1.95 and GBP/ZAR 12.85.  As a result we may also see a move away from the relative safe haven of the US dollar and I can see the cable rate continuing towards 1.60 and EUR/USD towards 1.28. Should you have a currency requirement involving any of these pairings and you would like to discuss my thoughts in more detail then please email Mike at mgv@currencies.co.uk

Cable rates also fall as the FED say no to ‘QE3’

GBP/USD rates fell yesterday as the Federal Reserve decided against launching the much anticipated ‘QE3’ as many analysts had expected. Instead the US government has decided to extend ‘Operation Twist’ a bond buying programme aimed at lowering long term rates and to stimulate growth. This gave the dollar a small boost in yesterdays afternoon session, rates have continued in this manner this morning – although for the reasons I have mentioned above I still feel a move towards 1.60 likely.

As my colleague Daniel mentioned below, the aim of this blog is to give an independent and impartial view on recent market trends and current market conditions. We are also here to help individuals and corporate clients alike achieve the best market price when buying currency. The process could not be simpler and we pride ourselves in achieving top market prices for our clients. Daniel has given a very simple breakdown of the service below however should you wish to speak with me to run through the service in full then I can be reached on mgv@currencies.co.uk or by calling 01494 787478

Sterling report and forecast against Dollar Euro and Australian Dollar

By
Daniel Wright
-
GBP to USD rates weaken after Theresa May statement last night

GBP/EUR –  There is every chance that September could  prove to be a defining month for the Euro and may provide us with a clearer  indication of the next significant move for this currency pair.

With the Spanish  banking system in need of potential further bailouts, it is the handling of this situation  and the repercussions of any further monetary assistance, that could prove  pivotal to one of the EU’s largest economies keeping its head above water. We  also have Greece coming under the spotlight once again and any decision on an  extension to their debt programme or elimination from the Euro may have a  significant impact on GBP/EUR exchange rates and could provide a spike for the Pound Euro pairing and another buying opportunity, if not handled with the upmost caution by EU leaders.

I do however feel Sterling could still drop a little further against the euro due to the  on-going EU debt crisis, as our own economy is at best stagnating. The warning  signs have been there for months, as PMI  data has been consistently poor and the  Bank of England cut growth forecasts on what seemed like a monthly basis. We  have seen multiple rounds of Quantitative Easing to try and boost lending but
with our banking sector causing more problems than they are solving, it seems to  have made little difference. Add to this continuing high unemployment and the  widest trade deficit since records began and I can see the pound coming under  increasing pressure over the coming months unless our economic data releases start to improve, and the wettest summer in years has certainly not helped trade.

In the current climate I feel that anyone that is due to buy Euros and waiting for the 1.30 level may be left  disappointed, unless there is a shift in public perception on the UK economy  and/or further fallout in the EU. I feel the EUR will find resistance at 1.25,  whilst any move up to the higher 1.20’s may be dependent on the outcome of  further reports from Spain and Greece.

GBP/USD – Despite the negative economic outlook for the UK  as highlighted above, we have seen consistent GBP strength against the USD over  the past couple of months. The USD has always been seen as a safe haven currency  due to the fact it holds value better than others during times of crisis but  with the upcoming election and string of poor economic data and the fact that the head of the ECB has managed to bring back a little appetite to risk on the markets the greenback is not  moving towards the 1.50 level many analysts had predicted but instead is edging  closer towards and has been slightly above 1.60.  The threat of further Quantitative Easing is  also on investors mind and whilst the political uncertainty remains, I think the  USD could continue to struggle, even with the poor economic sate of the UK  economy.

GBP/AUD –  Sterling has rallied somewhat of  late against the AUD moving up through 1.55 and away from the 30 year lows back  in February. This is following reports that Australia’s economy is at risk of
recession in 2013. Commodity prices are rising and the demand in China for  Australia’s raw materials is starting to slow. There is also a general feeling  growing that Australia’s policy makers are becoming “complacent” but despite  these negative reports I still believe the AUD leads the way, as one of the  world’s strongest currencies and for that reason it may be wise to consider your  options soon.

To get in touch feel free to contact us on the numbers above and we will be happy to get you the very best rate of exchange for your transfer  – I beat banks and other brokerages on a daily basis so for taking two minutes to get in touch I could save you a great deal of money along with an award winnnig level of customer service or email me directly djw@currencies.co.uk

Sterling Outlook

By
Matthew Vassallo
-
Brexit news: Is a move below 1.10 for GBP/EUR realistic

A very quiet day for data releases in the UK gives us the briefest of opportunities to look at the week ahead to try to determine how the Pound may fair against other currency pairs.

The week is most certainly going to be focussed on Wednesday lunchtime when we have both the minutes of the last Bank of England Monetary Policy Committee meeting and the latest set of Public Sector Net Borrowing figures.

The minutes will confirm what we already know, that the decision was made not to change the base rate of interest in the UK and not to pump any more money into the UK via Quantitative Easing. Reading this you may be asking why, if we already know the result, is this likely to affect the markets? Quite simply, the minutes give us insight into the discussion around the decision and more importantly the differences of opinion that there were and this alone can cause some market volatility. More significantly, it also records the votes of the individual members of the committee and it is this that can stir up significant exchange rate movements as generally it gives us a pretty clear indication of how close we are to any changes in months to come and you quite often see these changes “priced into” exchange rates months in advance of them happening.

 

I think we are quickly approaching a crossroads in the UK as
we are seeing inflation levels increase and traditionally the way the Bank of
England would control that would be to raise interest rates – the problem
currently is that the very fragile UK housing market would be crippled if the
cost of borrowing were to go up? For that reason I think these minutes could be
the most significant of 2012 so far.

 

If you want to find out more about this in the run up to
Wednesday feel free to email me directly at mtv@currencies.co.uk, equally if you
have currency needs now or in the future and would like to find out more about
the contract types we have available to protect you against adverse market
movements don’t hesitate to get in touch.

Greek Banks have little Resources Left, A Deal is sure to be on the Cards (Daniel Johnson)

By
Daniel Johnson
-

The  referendum “no” vote was meant to be used as a bargaining chip to be used against Greece’s creditors, however the strength of this bargaining chip is questionable. With Greece’s Finance Minister Varoufakis’s resignation a deal may be on the cards. The new Finance Minister Tsakalotos has a far more agreeable stance on coming to an agreement.

Greece’s banks are now down to less than €500m, emergency funds are needed sooner rather than later. A deal for a bail out could be coming very soon. If that is the case expect the Euro to strengthen over Sterling. If you have a Euro requirement it would be the safe option to get your trade done.

Thank you for reading today’s Blog, I would greatly appreciate any feedback you have and would take pleasure in replying personally. I am more than than happy to assist you with any of your currency requirements. Feel free to e-mail me at dcj@currencies.co.uk or call on 01494 787 478 and ask for Daniel Johnson.

Service Data Important For Sterling & ECB Announcement And US Non-Farms Out Today (Colm Gilhooly)

By
Daniel Wright
-
GBPEUR rate remains steady as markets await the Autumn Budget

The pound has done very well in the last couple of days buoyed by better than expected Manufacturing and Construction PMI.  The Service sector data is published shortly, and as this is the mainstay of the UK economy, there is every chance that if this follows suit then the pound could be in for another good day.  In all the UK economy seems to be on the right path with the jobs market improving, the economy growing, and house prices now back to their pre-crash 2007 peak.

The only caution for the Bank of England is that wages haven’t risen in line with other things, and house prices may have risen too fast risking another bubble.  UK interest rates are expected to go up in the not too distant future which is helping the pound gain in value, but I am not convinced it will happen this year, so the pound’s rise is more likely to be slow and steady rather than meteoric.

The other major news today is the ECB interest rate decision and press conference.  The Euro has been under huge pressure due to low growth and inflation for months on end, resulting in the ECB taking the drastic step last month of cutting interest rates again and introducing a negative overnight deposit rate for banks (with the aim of forcing them to loan the money out rather than hold it on their balance sheets).

Draghi left the door open for further intervention if data didn’t improve and news in June has been pretty underwhelming for the Eurozone, however I would be surprised if anything happens today as I think they will take a “wait and see approach”, giving a bit more time to assess if their recent measures have worked.  However if he suggests there is further action on the horizon at the press conference, the Euro could get into more trouble.  The lack of action may give a temporary reprieve to Euro sellers, but I expect this to be short -lived, so if you are selling a gite in France, or selling a villa in Spain, I would be tempted to move very quickly – if you would like help then email Colm at cmg@currencies.co.uk and I would be happy to explain how our currency transfer service works.

The pound is near a 6 year high versus the US Dollar which has also struggled due to data not meeting forecasts and very dovish comments by the Federal Reserve about the prospect of interest rates in the US. This has been exacerbated by the fighting in the Middle East and the affect this has had on oil prices soaring – as the US is a petro dependent economy higher oil prices means rising costs for US companies and consumers.  It is a great time to buy US Dollars so i would be tempted to lock in now before the tension subsides and at some point US interest rate rhetoric will change to a slightly more hawkish stance.  As tomorrow is a bank holiday in the US due to Independence Day, the important non-farm payroll data is released this afternoon rather than it’s normal Friday slot.  Jobs figures are hugely important to the US economy so could also be an early trigger point.

The Aussie Dollar slipped overnight due to weak retail figures- I think this is a good opportunity as the AUD moves to 1.83 well over the 1.80 pivot point.  If you need to make a currency transfer and want to get the best exchange rate then feel free to email Colm at cmg@currencies.co.uk and I would be happy to help.

Where Next for GBP/EUR Exchange Rates (Matthew Vassallo)

By
Matthew Vassallo
-

GBP/EUR rates have floated between 1.21-1.22 on the exchange for the majority of the trading week, as Sterling continues to hold its position against the single currency. Sterling had put pressure on the 1.22 level and it seemed as if the momentum generated over recent weeks may carry it through. However, the EUR has found support around that level, with GBP/EUR rates moving back towards 1.2150. With little data out this week the markets have remained fairly flat, although Wednesday’s Bank of England (BoE) minutes did seem to reinforce the belief that the UK economy is continuing on its road to economic recovery.

Certainly when you look at the UK and Eurozone economies it seems as if the UK’s recovery is ahead of its Euro counterpart, certainly in terms of its growth prospects for the rest of 2014. The Eurozone is also fighting against the feel very real chance of deflation across the region, which would add a huge burden to an already fragile economic recovery. Whilst market conditions change extremely quickly it may be prudent to consider your position if you need to sell EUR over the coming weeks, as the negative feeling around France’s debt and concern by ECB president Mario Draghi that the EUR has gained too much value, is negatively affecting the regions recovery and the markets perception of it.

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 exchange rates against your current provider, then please feel free to contact me directly at mtv@currencies.co.uk.

Buying Euro and Dollar rates still tentatively dipping following Sunday’s revelations (Joshua Privett)

By
Daniel Wright
-

Many with an upcoming Euro or Dollar purchase or sale are watching GBP/EUR, GBP/USD and GBP/AUD with a keen eye after the curve-ball given by Theresa May on a Sunday morning political talk show.

Second guessing political outcomes seems to have caught up with investors once more as it did during the Referendum, when financial institutions lost billions betting that there would be a Remain vote.

Some investors, despite the recent hints from Boris Johnson that Article 50 will be enacted early in 2017, believed that there would be further hints of delays which would allow the Pound some respite. The sudden realization that this was not the case caused the Pound sell-off on Monday morning which has undercut Sterling’s buying power against all major currencies.

The question on everyone’s lips is whether this news will simply be a short-term sting?

The only certainty now is that this official time-frame of six months at most will continue to be a background feature in the marketplace. Companies now planning their capital allocation for the next quarter and even for the turn of 2017 will now face the question of whether investment in the UK is a priority, and whether their profits should be stored in Sterling or a more stable currency?

Whilst there is no definitive answer, the sensible option would be to act warily concerning the Pound and the UK economy for the moment until a better idea of what a ‘Brexit’ entails begins to manifest. Any fall in demand for the Pound should see buying Euro and Dollar rates begin to slide further.

My personal suggestions for any reader would depend on the time-frame you have to conduct your transfer. If you require a foreign currency within the next week, moving immediately should avoid the gradual fallout permeating the marketplace at the moment and undercutting the Pound. You can contact me on 01494 787 478, simply ask the reception team to be put through to Joshua, for a competitive quote on your transfer, or simply to discuss the options open to you to safeguard an upcoming transfer. I have never had an issue beating the rates of exchange on offer elsewhere, so a brief conversation could save you thousands on an upcoming transfer.

A longer time-frame allows you greater flexibility to see how the fresh data sets on economic performance in October allow for a reverse in the current trend for Sterling.

A point of note, if you are considering purchasing Australian Dollars in the short-term, the news coming out overnight from the Reserve Bank of Australia affirming previous statements that no further rate cuts will occur this side of 2017 means that the sting for GBP/AUD was more exaggerated than on GBP/EUR, GBP/USD.

You can also get in contact by filling out the form below, and whether you have a buying or selling Sterling requirement, we can discuss the options open to you to safeguard your transfer against any adverse movements, and make the most of any opportunities which may emerge in the time-frame you have allocated to conduct your currency exchange.

[contact-form to=’jjp@currencies.co.uk’ subject=’PSF’][contact-field label=’Name’ type=’name’ required=’1’/][contact-field label=’Email’ type=’email’ required=’1’/][contact-field label=’Contact number’ type=’text’/][contact-field label=’Desired currency’ type=’text’ required=’1’/][/contact-form]

Sterling 4 Year High Against US Dollar (Tom Holian)

By
Tom Holian
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Pound to US dollar forecast - Will GBP/USD levels drop below 1.30?
Tom Holian
Tom Holian

If you have a requirement to buy US Dollars now is the best opportunity seen in 4 years as the British economy goes from strength to strength as expectations are the the UK will be the first major economy to raise interest rates. Previously the Bank of England suggested that rates would go up once UK unemployment dropped below 7%. However, with the unemployment dropping much faster than originally predicted this has led the BoE to reconsider using this factor as a reason to change rates and have removed it from their agenda.

I have said for months that I think interest rates will go up in the UK during the fourth quarter of 2014 as the data releases for the last 6 months have been on the whole very positive for the UK and have been reflected in very strong Sterling exchange rates against US Dollar and Euro which hit 4 year highs and 12 month highs seen during Friday’s trading session.

On Friday it was shown that Eurozone GDP was higher than expected at 0.5% which although arguably is a good thing for the Euro this has not affected the currency rates. Indeed, as inflation is worryingly low at just 0.7% on the continent this puts pressure on the ECB to cut interest rates which more often than not will have a weakening effect on the currency involved so I would expect the Euro to remain weak during early next week.

UK Inflation data is due out on Tuesday morning and expectations are for the level to be measured at 2% so anything higher could send Sterling up. In Germany an economic sentiment survey will be released which if negative could also have a detrimental effect on Euro exchange rates so if you’re thinking about buying Euros you may wish to secure something early-mid next week.

If you have a currency transfer to make and want to save money compared to using a bank then contact me directly Tom Holian teh@currencies.co.uk

Latest media coverage from our writers! What next for the pound?

By
Jonathan Watson
-
tariffs and jobs data to impact Pound to Dollar rates

bbcnew3Last night I was very pleased to be asked to appear on BBC News to discuss the ‘Brexit’ question and Sterling weakness. I was asked how I thought upcoming events would influence the pound moving forward and as regular readers will know in my opinion the future is because of this very issue not looking too rosy for the pound. At the beginning of this year I wrote here how I believed the pound would like lose value (you can read the post here) and I can offer further predictions on Sterling exchange rates here. The remaining question of course is will this continue? Well my answer is that yes I believe it will but following such a torrid day yesterday this may not manifest immediately. In fact the rest of this week could be quieter but that isn’t any reason to hold back from making plans! Thursday is an important day with the latest GDP figures for the UK, sterling is unlikely to come under renewed pressure again this week but could easily trade in the recent lower ranges against most currencies.

When should I buy Euros?

If you need to buy Euros with pounds and want a little more for your money make sure you are ready to buy by the 10th March! Many of my clients are concerned with GBPEUR movements and the one hope for Euro buyers with pounds is next month’s ECB decision on Quantitative Easing on the 10th March.  If (and it is an if) the ECB embark on further QE this should weaken the Euro making it more attractive to buy Euros. Thursday this week is also important because we have Eurozone Inflation data which will give us a clearer picture on what to expect next month for the European Central Bank (ECB).  Essentially worse Inflation data makes it more likely we will see more QE in March. Understanding upcoming economic events are key to making some plans on when to make your currency purchase so if you are unsure or just wish to have a chat about your requirements please speak to me Jonathan by emailing jmw@currencies.co.uk

If you are selling Euros dare I ask what you are waiting for? Since November you have made 10% on your currency deal. This is normally the kind of mov
ement you may see between the high and low in a year. Current Euro to GBP rates are the best in 16 months and whilst of course they may improve further if I was selling Euros I would be very worried about next month’s ECB decision and just how this could impact my purchase. If you have Euros to sell and wish to learn some information on the best time to sell in this market, please email jmw@currencies.co.uk

Will USD to GBP rates improve further?

This week is the release of US GDP figures which will help provide some further direction on cable prices. GBP weakness has helped drag the pair down to fresh lows touching close to a 7 year high but I cannot see it getting too much better in the short term. Thursday and Friday’s GDP data will be key to determining the next moves but I do feel much of the bad news for sterling is priced in and because of a high chance of the Federal Reserve reviewing their previous bold comments that they will raise rates again, the dollar will weaken.

I have worked a specialist foreign exchange broker for 6 years personally assisting both businesses and private clients with their foreign exchange requirements. I am a big fan of talking abut the market and am very pleased to be quoted in the press and other articles online. If you are considering a currency transaction involving the pound this is a very interesting market at present and I would be very happy to discuss with you all your options and the latest forecast for you. Please email jmw@currencies.co.uk with an outline of your situation and preferably a phone number, I will respond as quickly as I can!

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