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Will the Pound continue to climb this week, and how could the BoE’s meeting influence it?

By
Joe Wright
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The Pound climbed in the lead up the Spring Budget last week and following it, Sterling exchange rates continued to climb as markets seemed impressed by the rhetoric outlined by the Chancellor.

For the first time in just over 3-months, GBP/EUR broke above 1.1400 and managed to consolidate its position above that key threshold. The reason I believe that 1.1400 is a key threshold and the Pound managing to break above and consolidate above this level, is because it had previously been tested on three occasions but to no avail.

Between December and last week, GBP/EUR had attempted and failed to break above 1.1400, and now that it has thanks to some positive news for the UK economy, it will be interesting to see whether the pair can continue this upward trend.

The Chancellor of the Exchequer, Jeremy Hunt believes that the UK won’t fall into recession, and this headline comment along with other signs of stability for the UK economy are what pushed GBP exchange rates higher.

This week could also see movement for GBP exchange rates, as the Bank of England’s interest rate decision will be announced on Thursday. Previously there had been expectations of a 50-basis point hike but this expectation has turned in recent weeks. There is now just a 31% chance of a 25-basis point hike with most analysts expecting rates to remain unchanged.

Perhaps an unexpected hike could push the Pound higher, and the decision takes place on Thursday so please feel free to register your interest with us if you wish to be updated regarding any market movements for GBP.

Tomorrow core inflation figures for the UK will also be released, with expectations for the rate to drop below 10% for the first time since August of 2022.

If you would like to discuss an upcoming currency exchange, exchange rates or any potential market moves regarding your transfer please feel free to get in touch. You can contact me (Joe) on [email protected]

Sterling exchange rates climb in the lead up to tomorrow’s Spring Budget

By
Joe Wright
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Sterling saw gains yesterday to start the week and this trend has continued this morning, with GBP/EUR almost reaching 1.1400 earlier today.

A break above 1.1400 would be a 2-week high and interestingly the GBP/EUR pair have found resistance the last 3-times this level was tested.

Despite tomorrow’s Spring Budget expected to be far less eventful than the Spring Budget last year, the financial markets are still cautious of the impact the Budget can have on financial markets so it’s worth being aware that the Budget takes place tomorrow.

Back in Autumn of 2022, the fiscally lavish roll out of plans by the Chancellor of the Exchequer Kwasi Kwarteng under a Liz Truss conservative government had a dramatic impact on GBP exchange rates.

The Pound fell to the lowest level against the US Dollar in roughly 35 years at the time, and dropped to an annual low of 1.0800 against the Euro.

Jeremy Hunt is now Chancellor after being appointed by Truss to replace Kwarteng last year, and Rishi Sunak opted to keep him in the role after he brought calm to the markets when appointed. Tomorrow he’s expected to announce plans for 12 new investment zones in the UK’s most budding industries and generally play it safe after the fall out from the last Budget.

Despite these expectations, GBP has strengthened in the lead up to the budget so it will be interesting to see if there’s a response to any unforeseen announcements tomorrow.

Aside from the Spring Budget economic data this week is light. On Friday the Consumer Inflation Expectations are due for release at 9.30am but apart from this economic data is light.

If you would like to discuss an upcoming currency exchange involving the Pound, or any other major currency pairs please feel free to register your interest with me (Joe) on [email protected]

I will be happy to provide quotes and insight into any upcoming data announcements that could impact your plans, and also discuss the numerous contract offers our brokerage provides our clients.

Sterling exchange rates remain under pressure despite upbeat data releases

By
Joe Wright
-

During yesterday’s trading session the GBP/USD exchange rate dropped below the key 1.20 handle, even if only for a brief moment but it’s a sign of the Pound coming under pressure regardless.

The Pound has also lost some ground against the Euro and after spending some time trading in the 1.13’s and testing 1.14, the pair are now firmly in the 1.12’s despite some better-than-expected economic data releases out of the UK.

There has been a lot of talk and media headlines warning of a recession within the UK owing to an economic slowdown coupled with increasing inflation levels and interest rates creating a cost-of-living crisis.

During yesterday’s economic releases there were some encouraging signs for the UK economy though, as the construction sector reported a strong rebound in fortunes. Activity within the building sector is measured by the CIPS Construction Purchasing Managers Index (CPI) and during February growth was reported, as the figure released was above 50. The fastest level of growth was reported in 9-months which for now will ease concerns of a long-lasting recession.

Car sales also jumped by 26% is another positive economic release, but despite these positive data releases the Pound remained downbeat and slowly weakened throughout the day’s trading session, breaking below 1.2000 against the US Dollar as previously mentioned.

This morning Halifax has reported that UK house prices grew by 1.1% during February which could calm concerns of a property market correction.

I have previously touched on how UK property prices can impact consumer spending habits so signs of stability within the property market are a positive for the UK moving forward. Once again though, this data has done little to boost the Pound which could be a sign of further weakness to come for GBP exchange rates.

Looking forward, Friday could be busy for GBP exchange rates as UK GDP figures will be released along with Industrial and Manufacturing data. Do feel free to get in touch if you wish to plan around this release.

You can contact me (Joe) directly on [email protected] if you wish to obtain a quote for an upcoming currency transfer you plan on making. We can also set up rate alerts and offer an overview regarding upcoming economic data releases which could impact currency markets.

Why has the Pound begun to improve against the Euro this week?

By
Tom Holian
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Major economic data releases helping the Pound, and causing disruption for other major currencies

This week we have seen the Pound benefit from several economic data releases, surprising the market with more positive than expected readings, as well as some weaker data coming out of the European bloc.

The Purchasing Manager’s Index reading, which is a great indicator of the UK services sector’s economic position, posted above 50 to signal that this sector is now expanding in the latest month, as well as the manufacturing and composite sectors releasing positive data too.

The GBPEUR rate now sits at 1.135 at time of writing, reaching 1.1382 at the highest point and 1.8cents higher than the lows of the week, and GBPUSD up from 1.192 to 1.213.

The Bank of England had previously almost guaranteed a UK recession for 2023 but, couple these releases with the positive Retail Sales figures from the previous week, that stance may begin to change in the weeks to come.

As mentioned above, we have seen the Euro lose ground this week against major currencies, losing nearly 2 cents on the Pound and just over 1 to the greenback, bringing the EURUSD rate to 1.059 at time of writing.

After the Consumer Price Index released displaying that inflation was decreasing at a quicker than expected pace, there were doubts within the market that the European Central Bank could keep up with its bullish stance in terms of its monetary policy, previously signalling another 50 basis point hike at the next meeting in March.

This week’s release of services data might support those doubts as the Manufacturing PMI data released lower than expected at 48.5, and this reading gives us an indication of the overall economic condition of the bloc as the manufacturing sector takes up the majority of the Gross Domestic Product reading.

The next monetary policy meeting for the ECB will take place on the 16th March and any announcements from officials along the way will give us a better idea of what to expect moving forward.

US Dollar News

The US Dollar has also benefitted from recent surprise reading in economic data releases, which has caused a slight U-turn on expectation of their monetary policy.

The expectation was for the Federal Reserve to slow down interest rate hikes in the coming months as inflation continues to slide, and start to cut them by the end of the year.

Recently, we have seen the inflation slowing at much slower pace than expected, recently release was 0.2% higher than the expected reading, as well as the Non-farm payrolls/labour data displaying 330,000 more new jobs than the market priced in for.

This week saw positive PMI releases across the board to support this further, so could we see the Fed change their stance at their next monetary policy the week after the ECB have doubts over their decision?

If you would like a free quote when buying currency compared to using your own bank then contact me directly and I look forward to hearing from you.

Tom Holian [email protected]

Will the Pound continue to fall against the Euro & the US Dollar?

By
Joe Wright
-

Sterling begun the week in a subdued fashion and traded within a very thin range throughout yesterday’s trading session.

There was little economic data released pertaining to the UK economy outside of housing data, which showed that property prices rose by just £14 between January and February which is the smallest increase reported by Rightmove since the property website begun recording property prices.

Throughout the day GBP/EUR barely broke a trading range of 25 pips, and this morning this trend of thin ranges has continued although there are some releases later this morning which could potentially impact GBP/EUR rates.

UK Services and Manufacturing PMI data will be released at 9.30am this morning and both are expected to show further contractions in the sectors. A figure below 50 demonstrates a contraction within the sector, and the expectation this morning is for Manufacturing to show 46.8 and for Services to show a figure of 48.3. These sectors collectively cover close to 90% of the UK economy so markets are likely to follow these readings closely.

The trend since the start of 2023 has generally been a declining Pound when we compare it to other major currency pairs such as the US Dollar and the Euro.

In December GBP/EUR was trading close to 1.1700 and now the pair are just over 1.1250, and trading within thin ranges as mentioned earlier within this blog.

The US economy is stronger than many had expected it to be and the European Central Bank (ECB) begun hiking interest rates at a later date than the Bank of England (BoE) and this has put pressure on the Pound against both currencies.

How the UK economy performs, and the approach by the BoE is likely to drive GBP values moving forwards. If you wish to be updated regarding GBP exchange rate changes do feel free to register your interest with me.

You can email me directly on [email protected] to register your interest in receiving market updates, and we can also provide you with competitive quotes if you’re planning on making a currency exchange involving most major currency pairs.

Pound starts to recover against the Euro

By
Tom Holian
-
GBP EUR Exchange Rate: The Week Ahead June 26th 

The pound managed a surprising recovery during the week to the 10th February, against the Euro the pound managed to climb 1 ¾ cents from the week opening to the week close (1.1160- 1.1330). Against the Dollar the pound managed to claw back a similar amount with the week high topping out just under the 1.22 handle.

As previously mentioned in these reports, the week prior saw a heavyweight clash from the 3 central banks, where the doubt was cast over the future of the Bank of England’s rate hiking cycle.

It appears the bank are in their ‘sunset’ phase with one more 25 basis point rise heavily tipped in next months meeting. Thus causing the pound to weaken.

Looking ahead the Chancellor Jeremy Hunt is due to present his Spring Budget on the 15th March, he has given assurances to the market he will not be pulling any rabbits from the hat next month given the need to reduce inflation.

A point worth noting is the Banks meeting is not until the week after (23rd) last time after the Truss/Kwarteng saga the bank were forced to act on emergency bailout measures to put a floor under Sterling.

Friday saw the latest round of GDP numbers out for the UK. Gross Domestic Product (GDP) is the a monetary measure of the value of all goods and services produced by a country in a specific timeframe. It is one of the key indicators of Economic growth.

December’s reading came out at 0.5% which was deeper than the forecasted 0.3%. On Friday the reading came out that the economy grew 0% in the final quarter of the year, meaning the UK avoided a technical recession by the smallest of margins.

Remember for an official recession, there needs to be two consecutive quarters of negative growth.

Nevertheless, 0% growth is not something to shout about, the data only highlights what many market analysts have mentioned around the difficulty the UK economic is expected to face in 2023. GDP in 2022 increased by 4% in the UK, down sharply from the 7.6% increase in 2021.

The pounds gains throughout the week were down to an unwinding in last week’s sharp selloff where the pound was ‘shorted’ across the money markets.

In addition, a slight shift in global investor sentiment after softer US data and communication from the Federal reserve members.

The Euro trended lower throughout the week as support for the single currency was dented by economic data.

Retail sales in the euro zone fell by 2.7% in December, lower than the 2.5% forecast. This is the biggest decline since April 2021.

On Tuesday German industrial production came in at -3.1% another heavy blow for the Euro. However, some more positive inflation data came out on Thursday as inflation dipped to 9.2% in January. Down from the 9.6% recorded in December.

This has also raised fears that the European Central Bank (ECB) may need to alter their recent hawkish tone around rate hikes.

The Eurozone has benefitted heavily from falling gas prices, with prices falling around 85% from the highs recorded in August amid lower demands thanks to a above average winter temperature across the bloc. Out look across the Eurozone has improved vastly from 3 months ago when the situation looked a lot more difficult than now.

Analysts on wall street feel the bloc is far from being in the clear as they predict a shallow recession will materialise later this year. Eyes will be focused on how economic data records in the coming months, any weakness could cap the Euros upside potential.

This upside potential and greater outlook for the Euro has been remarkable, at the start of November EUR/USD was trading around 0.97.

Today EUR/USD is trading around the 1.07 handle but has peaked as high as 1.10 at the start of this month.

As EUR/USD is the largest traded pair globally it can often suffer at the hands of booming US data releases such as the latest round of Non farm Payroll data where the Euro lost 1.5 cent on the days trading due to the positive data set.

The dollar wavered through the past week where it was intermittently bolstered by a shifting market mood.

Concerns over the Chinese Spy balloon caused initial support for the safe haven dollar on Monday.

The support didn’t last long as the Federal Reserve chair Jerome Powell gave a Dovish speech.

Powell avoided any clear indications on the banks forward planning with just one short statement on the matter, ‘ the disinflationary process, the process of getting inflation down, has begun’.

Wednesday saw a rally for the greenback after hawkish comments from Fed governor Lisa Cook who said that ‘the bank are determined to bring inflation down to target, I think we are not done with raising interest rates’.

US employment data remained historically low on Thursday, further supporting the dollar.

Global market sentiment deteriorated towards the end of the week with the Dow Jones (0.17%) and Nasdaq 100 (2.47%) both down and the FTSE falling by 0.24%.

The markets haver again began to realign themselves to what the federal reserve are planning to do with rates.

There are some suggestions traders are starting to price out US rate cuts by the end of the year following the strong Nonfarm data.

Keep a close eye on US CPI data this week, it is estimated to clock in at 6.2% down from the previous 6.5%. Any variation could cause volatility on the currency markets.

Market data this week-

UK

Mon- Average Earnings data, claimant count and unemployment rate

Tues – CPI data & Retail price index

Fri- Retail sales

Eurozone 

Tues GDP Q4

Weds Industrial production.

US

Tues- CPI data

Weds- Retail sales

Thurs- Building permits, Initial jobless claims, Philadelphia Fed manufacturing Survey

For further information or a free quote reach out to me directly Tom Holian [email protected]

Sterling remains robust despite the IMF downgrading UK growth prospects

By
Joe Wright
-

The UK is in the financial headlines for the wrong reasons this morning, after the IMF (International Monetary Fund) released a report downgrading the UK’s economic growth prospects.

Of the G7 economies, the UK is the only member whose economy is expected to fall into recession this year. The prediction is for a drop of 0.6% through 2023, which is almost a 1% drop from the previous prediction which was released as recently as October.

The reason for the downgrade is being attributed to increasing interest rates, high energy costs and tighter government spending. Last week within my blog I highlighted that there is little hope that the Chancellor of the Exchequer, Jeremy Hunt will be able to offer many surprises packages or bonuses during the Spring budget.

After a strong year of growth in 2022 the UK is facing quite a sharp correction according to these predictions, and this could impact GBP exchange rates moving forward.

Fortunately for GBP sellers so far this morning the Pound has remained robust, and it remains in the 1.23’s against the US Dollar and the Pound to Euro exchange rate is still testing the 1.1400 level.

The GBP/EUR exchange rate has remained very rangebound over the past few weeks, spending most of the time sitting within the 1.13 to 1.14 range.

This morning’s disappointing forecast from the IMF has done little to impact Sterling exchange rates so far, but there are further updates this week which could influence the Pound’s value.

On Thursday the Bank of England is expected to raise interest rates for the 10th consecutive time. A 0.5% hike is expected which will take the base rate of interest up to 4%.

This will be the highest rate since the 2008 financial crisis which will limit the spending power of the UK public which is likely to have a negative impact on the UK economy.

If you wish to plan around this week’s interest rate change please feel free to get in touch. We’re happy to offer our insight’s and offer competitive exchange rates to try and help you save money when making currency exchanges.

You can contact me directly on [email protected] with an outline of your transfer plans.

Could UK Inflation Data Influence GBP Exchange Rates This Week?

By
Joe Wright
-

The Pound begun the week in an uneventful fashion after trading within thin ranges throughout Monday’s trading session.

The Pound to Euro exchange rate remains quite rangebound at the moment, mostly trading between 1.1250 to 1.1300 with no signs of a breakout from this range at the moment. This morning is a good example of this trading pattern, with the pair hitting exactly 1.1250 before rising slightly.

Jobs data released this morning has done little to influence GBP exchange rates although perhaps tomorrows inflation data could have a greater market impact. In the early hours this morning UK labour market data showed that the unemployment rate remains unchanged at 3.7%. Job vacancies declined slightly, although it remains at a historically high 1.16m. Despite there being a high number of job vacancies, the drop in vacancies shows the jobs market is easing. Pay growth on the other hand showed signs of climbing and this may put pressure on the Bank of England to continue to hike interest rates.

Looking forward, tomorrow mornings Inflation data for the month of December will be followed closely for clues regarding the Bank of England’s monetary policy moving forward. The BoE has hiked interest rates at their last nine opportunities, and further hikes are expected. The inflation data tomorrow is expected to show a slight drop on the previous figure, although it is expected to remains in the double digits which is well above the BoE’s target. Inflation figures are likely to continue to drive the BoE’s monetary policy and this can impact the Pounds value so this release is worth monitoring tomorrow morning. Do register your interest with us if you wish to be notified regarding any major changes in the Pound’s value.

Aside from the Bank of England’s monetary policy, UK property prices could also influence the Pound’s value this year. A drop in prices is expected, and the UK economy can be heavily influenced by property prices due to the wealth of Brits generally shrinking.

If you’re planning on making a currency exchange involving the Pound and would like to discuss exchange rates along with market insights, please feel free to register your interest with me (Joe) on [email protected]

We can also set up rate alerts and offer a number of currency exchange contracts which may help you make the most of your currency transfer.

Sterling exchange rates against Euro and Dollar this week

By
Daniel Wright
-

As we entered the new year, sterling ended a turbulent week on the up against both the euro and the dollar after a wave of data across the continent and the pond was released. The pound finished the week over 0.5 cents higher (1.1360) than where it started (1.1290) against the euro and at similar levels to where it started (1.2060) against the dollar. The pound managed to recover over 2 cents alone against the greenback on Friday after early week losses.

The cause for sterling’s recovery after the new year on Friday came from the U.S ISM Services PMI read at 49.6 in December, 5.4 points below the reading of 55 that the market was expecting and a significant drop from November’s 56.5. The ISM or Institute for supply management services PMI measures the change in production levels across the U.S economy.

Any score below 50 shows a contraction in the largest sector of the U.S economy. If this drops below 50 creates expectations of an economic slowdown to take hold in the coming months for the states. Viraj Patel (Strategist) of Vanda Research states “US Services was one of the last shoes to drop before a recession. That shoe has now dropped”, meaning that the end of the interest rate hikes from the Federal Reserve are now expected.

Thus, giving investors a pro-risk outlook in their trading. Pro-risk is positive news for the pound; the pound benefits from markets rising and after this data release stock markets rebounded giving sterling the support it needed to make up for the weeks earlier losses.
The ISM report capped off a data heavy week for the dollar and the Federal reserve, with the labour market data and non-farm payroll figures also being of significant note.

Non-farm payroll data showed a positive figure of 223k more jobs being added, up from the expected 200k and a drop in unemployment rates to 3.5%. The expectation of another 50-basis point hike by the Fed has now moved to 25 in February.

Previously the European Central Bank warned that in the new year two more 50 basis points hikes were to come after December’s meeting, providing a 3-cent shift in the euros favour over the Christmas period. This trend of weakness was extended earlier in the week when core CPI data for the bloc came out at 5.2% year on year in December, up 0.2% from November.

This underpins December’s message from the ECB that the eurozone was not done with their inflation tapering strategy. Due to this we saw GBP/EUR fall to near its lowest levels since shortly after September’s disastrous mini budget falling to a low point of 1.1280.
Following Friday’s recovery can sterling break back above the 1.21 mark against the dollar and 1.14 against the euro?

The week coming, 9th January is a less data heavy week for the dollar and the euro but a more significant one for the pound towards the end of the week, with Friday brining Growth figures along with Industrial and Manufacturing production too.

Should you have a currency exchange to carry out in the coming days, weeks or months ahead and you would like the assistance of a proactive and competitive broker feel free to contact us here by emailing [email protected] and we will be happy to discuss your specific situation.

What to expect from GBP exchange rates in 2023?

By
Joe Wright
-
GBP EUR: Halifax Sees Signs of Housing Slowdown

Looking back on 2022, GBP exchange rates had one of the most volatile years on record especially against the US Dollar.

After such a bumpy ride for the Pound you may expect to see less volatility for GBP exchange rates but with economic growth set to drop this can never be ruled out, especially at the beginning of the year.

To recap 2022, GBP/USD experienced its worst annual performance since 2016 which was an exceptional year owing to the unexpected Brexit vote which caught the currency markets off guard. GBP/USD also hit its lowest level in history last year when the pair almost traded as low as parity when cable (GBP/USD) dropped to 1.0350 in early September.

There were major falls for GBP exchange rates around this time due to the disastrous Mini-Budget. At the time Liz Truss was Prime Minister and Kwasi Kwarteng were the Prime Minister and Chancellor of the Exchequer with both having been replaced since. These changes (Rishi Sunak is now PM and Jeremy Hunt is the Chancellor of the Exchequer) have been welcomed by financial markets but the UK’s problems are far from over.

Sentiment towards the UK coming into 2022 had been positive as the Bank of England was the first major central bank to hike interest rates has inflation was steadily rising towards the end of 2021.

Inflation is now a very hot topic as the current rate exceeds 10% which is over five times that of the Bank of England’s target rate of 2%. This is forcing the BoE to hike interest rates to counter the increasing inflation levels, but this comes at a time of a cost-of-living crises and a prolonged recession being forecasted so 2023 could be another busy year for the Pound.

I predict that how the UK economy performs with year along with global sentiment is likely to influence the Pounds value moving forward. Improvements in global sentiment often boosts the Pounds value, and vice-versa.

Should you wish to discuss and plan a currency exchange involving the Pound, or any other major currency for that matter, please feel free to get in touch with me for insights and competitive exchange rates. We can also set up rate alerts for you too. You can contact me directly (Joe) at [email protected]

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