GBP exchange rates climb despite warnings regarding the UK economy

GBP AUD Consolidates with UK Employment Due

The Pound begun the week in a volatile fashion yesterday, and traded in over a 1-cent range against the Euro after testing the 1.1650 handle once again.

We have now seen the GBP/EUR exchange rate test trading levels around 1.1650 at least 4-times in the last 3 months with yesterday being the latest example of this pattern. Yesterday morning during the earlier hours of trading GBP rebounded from the 1.1650 once again demonstrating that there is resistance at this level, so if you’re planning on making a transfer involving GBP/EUR, it’s worth keeping an eye out for this particular rate.

Sterling has also climbed recently against the US Dollar, which is based on a combination of Sterling strength coupled with US Dollar weakness.

As risk sentiment globally has increased recently, the US Dollar has cooled off after benefiting earlier in the year from concerns of economic downturn.

There is also uncertainty as to how much higher the FED Reserve plans on hiking interest rates, which could be another reason for the dip in the Dollars value.

This morning’s focus on the strengthening Pound may come as a surprise for some of our readers as just last week there were warnings regarding the UK economy over the next year. The OECD (Organisation for Economic Cooperation and Development) last week reported that the UK will suffer the biggest downturn in economic growth out of all the advanced economies.

Of the G7 group of countries, both the UK and Germany are predicted to contract but the UK is expected to contract by the greatest amount of all 7 countries. For reference, the G7 is made up of the US, UK, Canada, France, Germany, Italy and Japan.

Next year the UK economy is expected to drop by 0.4% followed by an increase of just 0.2% in 2024.

Last week the OBR (Office for Budget Responsibility) also predicted an economic contraction for the UK next year. The OBR’s prediction is for a steeper drop of 1.4% so the Pounds strengthening late last week and yesterday morning may be short lived should the UK economy show signs of shrinking at a greater level than the current predictions.

If you wish to discuss an upcoming transfer involving the Pound and would like to discuss timings and exchange rates do feel free to get in touch with me (Joe). You can email me directly on [email protected] with any questions you may have regarding our currency exchange service also. We can also set up rate alerts and automatic orders if you’re targeting particular trade levels along with other useful tools.

Sterling Hits Fresh Highs! Will the pound continue to rise this week?

GBPEUR Forecast – Internal Market Bill Drives GBP Lower

The pound has reached fresh highs against both the Euro and the US dollar in the last week, as weeks of general malaise and negativity for the pound seem to evaporate. The key question for many will be, is this going to continue?

GBPEUR levels have risen to three-week highs of 1.1582 in the last 24 hours, where we had seen a low of 1.1326 two weeks ago. The move on GBPUSD is more impressive, with the near 1.20 hit recently, the highest since August, a three-month high.

The pound was weaker as many of us will know because of many issues, most fundamentally the policies of the Liz Truss and Kwasi Kwarteng administration in the UK which led to markets rejecting the pound in protest.

Sterling had clawed its way back as the Bank of England made clear they would be there to manage inflation through higher interest rates, although the prospect of interest rates rising too sharply was also sterling negative, in creating uncertainty and fear over the damage interest rates being too high would cause to economic growth.

Looking to the last couple of weeks, Rishi Sunak and Jeremy Hunt’s plans seem to be much better received although there is still plenty of caution. Rather than everything suddenly being rosy, it is more that their more measured and careful approach to public finances has calmed markets, where the previous Prime Minister and Chancellor combination scarred them.

Looking to the reasons behind the rise for the pound, we can return to some of the earlier points in my post, namely the big rise for GBPUSD. The US dollar accounts for over 60% of globally traded foreign exchange, and where we see large movements and changes in sentiment on the US dollar itself, it can influence movements on other USD pairings, including GBPUSD, which can then influence that paired currency against other currencies, ie GBPEUR.

The pound has therefore risen against the Euro and other currencies in part because of a broad weakening of the US dollar, which has dragged the pound up against other currencies, leading to its rise against other currencies like the Euro.

In answer to the question will the pound keep rising, it may well do. But it can be argued the UK fundamentals are the same they were a week or so ago, when the pound was weaker. The UK is still likely headed for a deep recession, the Bank of England has predicted that this could last for much of 2023.

Yes, the pound has risen, and yes, this might well continue. But it should be noted that the move higher is not because all of a sudden markets are much more positive over the UK’s economic outlook, it is also to do with more global factors. The risk of a move lower is therefore very present, and a majority of the FX forecasts we had surveyed did predict this over the coming months.

Understanding fully the reasons behind movements in the FX markets can lead to better information and in principle better more informed decisions. We can provide guidance as to what is happening, and in combination with a range of tools and options, help ensure you can approach the FX markets and any payments you need to make, with more confidence.

To discuss any strategy relating to a currency exchange and what lies ahead next for the UK and the pound, please contact me directly on [email protected]

I have worked as an FX dealer for 13 years, and helped thousands of private individuals and businesses plan and mitigate their foreign exchange risk.

Sterling remains rangebound, but could tomorrow’s economic data releases cause a spike?

Oil Price Volatility Expected to Continue, Could GBPCAD Break Through 1.80 Barrier?

Sterling exchange rates traded within a think range during yesterday’s trading session, with the GBP/EUR exchange rate trading within a range of just half a cent.

Since breaking above the 1.15 threshold the GBP to EUR exchange rate has mostly hovered between 1.1500 and 1.1550 and that’s where the pair are trading at the time of writing.

After quite a volatile month or two, especially in the wake of the Mini-Budget almost two-months ago, the markets seem pretty calm. This may continue throughout the week as the markets could quieten down even further on Thursday and Friday this week.

As it’s Thanksgiving in the US this Thursday US markets will be closed, and the Friday following Thanksgiving is likely to also be very quiet due to no economic data releases out of the US. As a result, trading volumes could be thin towards the end of the week.

This could result in Sterling exchange rates continuing to trade within it’s current thin ranges. Alternatively, there can be swings in the exchange rates when trading volumes are thinner if there is buying/selling pressure in one direction so it’s worth being aware of this if you’re planning on making a currency exchange towards the end of the week.

As a quiet end to the week is expected in terms of data releases, the markets will towards tomorrows PMI data releases are there is an abundance of them. PMI releases are an indicator of the economic situation in the area of releases and figures above 50 indicate health and growth. Figures below 50 indicate a contraction in the sector the sector they’re covering so markets often look to this data releases for indications of the heath of the economy.

There will be PMI releases for Manufacturing and Services in the UK, with the services sector being the UK’s most important. The same area’s of the EU economy will also see data releases and then in the afternoon the same figures will be released from the US.

Wednesday could be the busiest day of the week for currency volatility due to these releases.

If you’re planning on making a currency exchange with us you can contact me (Joe) on [email protected] directly. I will be happy to offer you a quote and explain how our service may help you save money when making currency exchanges. We also offer rate alerts to help keep you informed regarding price fluctuations.

Will the Pound recover its recent losses against the Euro?

GBP EUR Exchange Rate: The Week Ahead June 12th

Despite the rate of cable (GBP/USD) climbing as a result of US Dollar weakness, the Pound has been slowing softening against the Euro throughout November so far.

Between the middle to late October the Pound remained a good few cents above its current trading levels against the Euro, and even climbed above 1.1650 at one point offering Sterling sellers a good opportunity to make their GBP/EUR currency exchanges.

The climb in the Pound last month was a surprise as Sterling climbed by almost 10-cents from the annual low the GBP/EUR pair traded at in late September, in the fallout from the disastrous mini-budget outlined by former Chancellor Kwasi Kwarteng.

The Pound has since begun a slow decline, beginning at the start of this month with mid-market rates of 1.1350 now being tested., which is a 5-week low.

This week the currency markets are looking forward to the Autumn Statement which is expected to focus on a number of spending cuts and tax rises. The statement carries the capacity to move Sterling exchange rates so it’s worth following if you plan on making a currency exchange involving the Pound.

Wage rise does little to boost the Pound

Some better-than-expected economic data regarding the UK economy this morning has done little to help the Pound recover the recent losses it’s faced against the Euro.

Through July, August and September wage growth increased by an annual rate 5.7% according to The Office for National Statistics (ONS). This is an improvement on the previous figure of 5.4% for the previous 3-months, and the figure released this morning was above the expectation of 5.5%. Despite the positive news the Pound remains down against the Euro, trading around 1.1350 as previously outlined.

Perhaps the muted reaction to the news was due to the unemployment rate climbing to 3.6% during the same timeframe, as the number of people in employment dropped by 52,000.

The Bank of England has predicted that a long lasting, shallow recession is already underway and that unemployment could hit 6.5% during this time so there could be further pressure applied to the Pound if the data released continues to disappoint.

If you wish to discuss an upcoming currency exchange with us you can contact me (Joe) on jo[email protected] directly. I will be happy to offer you a quote and explain how our service may help you save money when making currency exchanges. We also offer rate alerts to help keep you informed regarding price fluctuations.

Will the Pound fall further due to recession fears?

GBPEUR Looks Vulnerable but Data Will Decide

Despite trading within a thin range against the Euro last week, the Pound experienced a pretty significant drop against the US Dollar as the week progressed, making the cost of buying US Dollars with Pounds a lot more expensive.

Sterling saw a fall of 3% over the week’s trading, and this was the biggest drop for the Pound against the US Dollar since late September. At the end of September the former Chancellor of the Exchequer gave the disastrous mini-budget which saw the rate of cable GBP/USD) drop below 1.10 and some financial commentators believe the rate could drop below this level once again in the not too distant future.

Last weeks drop comes at a time when both the Bank of England, and the US Federal Reserve Bank both opted to hike interest rates by 75 basis points.

The base rate of interest in the UK is now 3% and the decision to hike by 0.75 percentage points was the biggest hike in 33 years.

Normally, aggressive interest hikes could see the underlying currency strengthen as the currency becomes more attractive to hold funds in. This doesn’t appear to be the case this time and much of the reason behind this was the wording used by Bank of England members in recent interviews.

Due to the UK expected to enter a recession, some predicting the longest recession on record, the Bank of England has signalled that it won’t be hiking interest rates as much as some economic analysts are expecting.

The choice of words used by members of the BoE and the forward guidance offered could be key for the Pound’s value moving forward, against all major currency pairs so it’s worth looking out for these speeches if you’re interested in the Pound’s value moving forward.

If you wish to discuss an upcoming currency exchange with us you can contact me (Joe) on [email protected] directly. I will be happy to offer you a quote and explain how our service may help you save money when making currency exchanges. We also offer rate alerts to help keep you informed regarding price fluctuations.

Will Liz Truss lead the Tories into the next election and how will this impact the Pound?

GBP USD Exchange Rate Falls to Two-Year Low Amid Political Uncertainty 

Despite being appointed as Prime Minister just over a month ago on the 6th of September 2022, Liz Truss is already coming under pressure and there is speculation regarding her remaining in power already.

The Pound has traded in a more speculative fashion over the past month than it has done for years after a disastrous mini budget which sent shockwaves throughout financial markets, and saw the Pound trade against the lowest level against the US Dollar in recent history.

Truss appointed Kwasi Kwarteng as Chancellor in an ill fated move and he has already been replaced by Jeremy Hunt who has chosen to reverse almost all the tax breaks declared by Kwarteng. The Pound climbed off the back of his announcements and demonstrates the disarray the current government is in, and now Truss is coming under increasing pressure.

In the wake of new Chancellor Jeremy Hunts announcements, Liz Truss apologised for the mistakes that have been made so far.

She also made it clear that she’s not willing to give up and declared that she will lead the Tories into the next election and highlighted that by appointing a new Chancellor, she has restored economic stability.

Moving forward I think there could be further volatility for the Pound relating to speculation regarding the job security of the current PM, especially due to the Tories trailing Labour in the voting intention polls which increases the pressure on the PM. Political instability often has a negative impact on the underlying currency, so if you’re interested in the Pound’s value this is a key topic in my opinion.

Economic data releases today are light so politics will continue to drive the Pounds value today. GBP/EUR has dropped off this morning and lost over 1.5cents since the announcements from Hunt yesterday.

Inflation data will be released early tomorrow morning, so if you wish to plan a transfer around this economic release, please feel free to get in touch. As a currency specialist we have access to a number of different trading options and very competitive exchange rates.

You can contact me directly on [email protected] if you wish to discuss any of today’s topics in further details, and you can also set up rate alerts using our trading systems.

Pound set for another eventful day – Will the Pound rise or fall?

The Pound is set for a fairly volatile trading day again today, with politics being firmly in focus over the course of the day.

The latest Chancellor Jeremy Hunt is due to release an emergency statement on the mini budget at roughly 11am today, which may involve further U-turns, tax hikes and changes to the plans laid out by Kwasi Kwarteng merely a few weeks ago.

That mini-budget sent the markets into turmoil and dented the pounds value significantly, his exit and a U-turn recently have given the pound a bounce back.

All eyes and ears will be on Hunt’s statement, and depending on the contents and messaging it is likely investors and speculators will be ready to move so the pound could see some swift volatility just before, during and after the statement.

Economic stability and political certainty are two of the key components of the value of a currency, and it is pretty fair to say both have been pretty tragic for the UK in recent weeks.

Today will no doubt be key for both where the pound heads next but also for Prime Minister Liz Truss, it looks on the face of it that she is clinging on to power however most of the press have expectations that it will be unlikely she survives past the end of the year.

Clearly, another change at the top would lead to further uncertainty, so it is key that the messaging today lands right. There is a huge black hole in the UK economy and questions need to be answered to settle the markets, Hunt is seen as a safer pair of hands, so should he put together a statement and plan that is taken well by investors and speculators then the Pound could have a really good day.

On the contrary, another poor day for the Conservative party and not only could it be curtains for the Prime Minister, but it could also be a challenging day for Sterling exchange rates too.

Jeremy Hunt speaks in the commons mid afternoon and will also face questions on his plans, so we have plenty of opportunities for pound sterling volatility today.

If you have a currency transfer coming up involving buying or selling the pound, and you would like our assistance, then we can help in terms of rates and also being your eyes and ears on the market.

Feel free to email me directly on [email protected] and I will be happy to get back to you to discuss your transaction personally.

 

Will Sterling continue to lose value despite the Bank of England’s efforts?

GBP AUD Moves Higher with a UK GDP Boost 

Sterling exchange rates have begun the week on the back foot despite efforts from the Bank of England to support the currency and the UK economy as whole.

After hitting an all-time low against the US Dollar two weeks ago, and an over 18-month low against the Euro at the same time, the Pound begun a fightback thanks to some backtracking by Chancellor of the Exchequer Kwasi Kwarteng after a disastrous first mini-budget.

Those of our readers hoping for a stronger Pound will also be aware that the Bank of England has waded into the UK’s inflation issues and aimed to boost the struggling Pound over the past week. Yesterday morning the Pound saw a slight boost after the Bank of England announced that it intends to step up measures to buy long term debt and protect pension funds from further strain.

There were rumours that large pension funds were at risk which applied additional pressure on the Pound two weeks ago.

Despite these efforts, and a strong recovery for the Pound against the Euro last week and also for cable (GBP/USD) to a certain extent, Sterling weakened yesterday afternoon and this downward trend has continued this morning.

Data released this morning from the Office for National Statistics (ONS) shows that UK workers have suffered an almost 3% hit to real wages owing to increasing inflation. Negative economic updates could put further pressure on the Pound as it’s under heavy focus at the moment after such a volatile few weeks of trading.

Moving forward, tomorrow’s GBP estimate (11am) could result in further market movement for the Pound so do feel free to register your interest with us if you wish to be updated regarding market movement for the Pound.

You can set up rate alerts if you wish to be updated regarding the Pounds value, and if you would like a free quote when planning on making a currency exchange please feel free to get in touch directly on [email protected]

Will the pound weaken again in October?

The pound suffered some particularly volatile movements last week, with GBPEUR rising and falling 7 cents, and GBPUSD 9 cents. This relates to around 6% worth of movement on GBPEUR and 8% on GBPUSD.

Such movements just highlight how volatile currency can be, and indicates why any clients looking to buy or sell the pound should be very conscious of the current market, and some of the particular attributes and behaviour of a currency, that can influence such sharp rises and falls.

This week the Conservative Party Conference will see Liz Truss deliver the closing speech on Wednesday which could be a market mover. Whilst investors were forewarned and had some expectations of the ‘mini-budget’ that took place the Friday before last, the extent of the volatility did appear to take many by surprise.

In a sign of the less than coherent narrative coming from Downing Street, Kwasi Kwarteng has this morning announced he will be reinstating the 45 p, top rate of income tax. This is following a series of public displays of concern from MP’s and cabinet members alike.

Kwasi and Liz have shown they are willing to listen to their own party, and also the public, but does this not also display a weakness and uncertainty over the confidence they supposedly had in their economic agenda?

The pound has been weaker because of the economic uncertainty over the new government’s plans. The huge increase in public spending, via tax cuts is widely seen as an ill move considering the delicate nature of the economy at present.

Investors are concerned that the UK is taking too big a risk with the tax cuts, and a more sensible approach on fiscal policy, to help balance the books is preferable.

Only time will tell, but with the Bank of England being forced to react to the potentially inflation boosting tax cuts, there continues to be a loud conversation around not only the conflict the government now has with the Bank of England, but also whether the government has got the UK on the right path.

Can we rule out further sterling weakness? For now, we definitely cannot as the currency markets react to the unfolding of this ever changing situation.

As well as the Liz Truss speech, we could expect other comments from government or MP’s this week, any of which might influence sentiment towards the pound.

We also have a whole host of new economic data as it is the beginning of a new month. A key piece of news this week will be the latest ‘US Non-Farm Payroll’ data, and unemployment report.

The US dollar has a big influence on the pound and also the Euro, and movements on the back of this news can influence EURUSD rates, which in turn often affect GBPEUR and GBPUSD levels.

Are you planning any currency purchases in October, buying or selling the pound? Will the pound weaken in October is a very valid question, and we can share with you the latest news and sentiment to help with any decision making over your FX payments.

For more information and to discuss strategy for any transactions you are considering, please contact me Jonathan on [email protected]

Thank you for reading and we look forward to hearing from you.

 

 

 

 

Pound hits record low against the US Dollar, and drops significantly against the Euro

GBPEUR UK election: Why haven't pound to Euro exchange rates fallen?

Yesterday was a very difficult day for the Pound as financial markets appear to have lost faith in both the Bank of England’s monetary policy and the new cabinet’s mini budget.

Last Thursday the new Chancellor of the Exchequer, Kwasi Kwarteng announced his mini-budget outlining plans for a raft of tax cuts. Then over the past weekend he pledged further tax cuts in order to try and reinvigorate the UK’s stalling economy and attempt to counter the increasing inflation rates not seen in decades.

His plans and comments have undermined confidence in the UK, and early on Monday morning the Pound dropped by almost 5% hitting an all-time low of $1.0327. There was also a significant drop for the Pound against the Euro, with the GBP/EUR rate dropping as low as the 1.08’s which is over a 6.5% drop in just the past month.

The drop against the Euro has left the GBP/EUR rate trading at the lowest levels since December 2020.

Will the Pound rebound from its current levels?

After such a drop financial markets and investors will wonder whether the Pound can recover from its current levels. Some financial forecasters believe the Bank of England will be forced to make an emergency interest rate hike to try support the Pound’s value.

Yesterday the BoE warned that it could hike by as much as needed and these comments appear to have given the Pound some support for now, with the selling off of the Pound halted for now.

Economic updates are likely to take a back seat whilst the pressure mounts on Kwarteng so soon into his new role. Political commentators also believe that the errors from Kwarteng and pressure on the Pound could seriously damage the Conservative Party’s chances of winning the next election.

Further political instability could potentially undermine the Pounds value as we’ve seen recently.

If you are looking to make a currency transfer either from or into the pound in the near future and you would like to talk through the options with me then feel free to get in touch. You can email me directly at [email protected] and I will be happy to have a chat with you about your specific situation.

You can also set rate alerts and sign up for daily emails via this site should you wish to be kept informed of the latest movements.

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