Sterling Struggles As Predicted Due To Weak GDP So Is Another Interest Rate Cut On the Cards?

The pound dropped as anticipated yesterday following some horrendous UK GDP figures that will probably have George Osborne sleeping fitfully for some time.  With the wet weather curbing spending and floods costing both insurance and delaying build projects it was no great surprise to see GDP much lower than forecast.  Added to the extra bank holiday from the Jubilee which will have cost the economy much like the Royal Wedding, and the fact that our biggest trade partner, Europe, is slowing, then it is still difficult to see how the UK will get itself back on track to achieve growth in the near term.

The Bank of England have already pumped billions into the system and kept interest rates at a record low in an effort to kick start the economy.  Whilst the debate rages as to whether this process is working (some say it has meant the recession is a lot better than it would have been without QE, others say it has been a total failure), it looks as though more QE will be on the cards in the not too distant future.  More worrying though for anyone holding sterling are the rumours the Bank of England may cut interest rates by another 0.25% before the first quarter of next year, a move which would no doubt weaken the pound.

Why would they do this with rates so low already you may ask?  Well it is all down to the current GBP EUR levels in my view.  Whilst the government and BofE cant officially try and weaken sterling to gain a competitive advantage against other EU states, the idea of an export led recovery by UK manufacturers is largely being killed off by the problems in Europe.  The decrease in European spending (our biggest market) and the cost of the pound going up against the Euro, has meant it is much more difficult for UK companies to export to the rest of Europe.  Whilst the pound remains very weak against a whole basket of currencies, I disagree with many of my colleagues that GBP EUR will continue to rise much more.  Europe will no doubt have huge amounts of obstacles to overcome, and the Euro will obviously remain under pressure.  However,  the euro crisis should not distract people from the fundamental weakness of the UK economy- if the economy is not growing then the whole deficit reduction targets upon which the government has based its strategy will be completely out of kilter.  I wouldn’t be surprised to see an interest rate cut in another attempt to stimulate growth with a desired byproduct being a halt to the pounds recent surge to an ever weakening euro.

The future of exchange rates for the pound will depend on whether the Bank of England takes on board the recent data and makes a move sooner rather than later.  If you are looking to buy Euros from sterling it may be prudent to secure something in case the markets begin to price in the possibility of a UK rate cut.  For any more information please feel free to e-mail Colm at [email protected] and I would be happy to help.

Pound Sterling Forecast

Pound Sterling exchange rates have taken a hit today eradicating the small gains that were witnessed yesterday on the back of the higher inflation data.

This mornings data showed a surprise rise in the number of people claiming UK unemployment benefit. It was estimated that the figures would fall by 3000 people but we saw a rise in claims by 2300. This has led to some losses for the pound against a host of currencies straight after the data release but now the pound is clawing back some of the losses.

The worries for the UK now is that there are more signs that the UK economy following the U.S. for a sharp slowdown in economic growth. BoE Governor Mervyn King will likely mention today that cutting Britain’s deficit was essential but he would also leave the door open to further monetary easing if the economy falters.

Now that leaves me to beleive that although inflation is high the MPC would prefer to initiate Quantitative easing rather than put interest rates up at present. I would imagine that this would more than likely leave sterling exchange rates feeling the losses over the coming months.

Pound vs Euro: Will the GBP/EUR exchange rate reach 1.15?

Pound to Euro Exchange Rate: GBP nears 5-week high against the EUR as UK-EU Trade Deal Hopes Rise

GBP/EUR exchange rates are by some measures already at 1.15. Many sources of the headline ‘interbank’ exchange rate are rounded up, and with GBP/EUR trading in the mid to high 1.14’s for most of this week. Technically, the level has not actually breached 1.15 yet but it does seem highly likely.

GBP/EUR exchange rates: Brexit the key driver

Positive Brexit news is clearly the main driver for the pound with the market becoming excited that yes, finally, a deal on the UK’s exit terms from the EU is in sight. This week remains pivotal in delivering on this expectation and all the indicators are that we should have something more concrete soon.

Sterling should advance further on an actual confirmation this is to be the case, but it is not a straightforward yes or no answer. The pound will be driven by the news but much of the positivity does seem to be priced in to current rates. I think it is well worth pointing out it was only at the end of August when GBP/EUR exchange rates were below 1.10.

Whilst Brexit news is more positive, there is a growing concern over the UK economy with the all-important Services data for October posting a 7-month low. Services is the largest component of UK GDP (Gross Domestic Product) so this is rather worrying.

Nevertheless, sterling was unfazed by this news earlier this week and this just highlights the importance of the Brexit news in determining the strength of sterling.

GBP/EUR exchange rate outlook

GBP/EUR exchange rates do seem very likely to reach higher but we have had numerous false dawns on Brexit. Plus, agreement this week will lead to an EU Summit where the matters must be approved by the EU before a parliamentary vote in the UK.

Brexit is not going to be magically solved in one day and clients expecting a smooth path ahead on GBP/EUR rates should be very aware of all manner of possible outcomes, which do remain on the table.

Thank you for reading and I would be delighted to hear from you and share some of my thoughts and insights on the direction the GBP/EUR exchange rate could now take.

GBPEUR Biggest SPIKE OF 2016

Sterling exchange rates have started to climb once more at the end of this week. Some good news at last for the euro buyers who have seen a terrible start to 2016 with losses of over 8% since the beginning of December.  These losses have been down to a number of reasons including the pushing back of any interest rate hike in the UK until 20017, the fall in commodity prices and indeed the continually improving economic picture in the single Currency.  We are now trading buying euros almost 3 cents higher in comparison to only yesterday morning.

If you want to take advantage of what will probably be a short term opportunity rather than a change in trend please contact myself STEVE EAKINS at [email protected] or on 01494-787-478

The reason for this climb has been down to a turn in speculators and in commodity prices. Generally what we have seen is the traders who have been speculating on the markets falling, who have mad e a lot of money doing so are selling their positions to recognise their profits. This change in demand as we see inflated sell positions have pushed rates up, however this is probably short term I think 1.40’s are long gone for maybe the rest of 2016 to be honest, certainly for the next 6 months.

Moving forward into next week there is a mixed view but what I am certain of is that in the next 7 days we are unlikely to see the kind of large swings we have seen in the markets through December already. There are a lot less data releases over next week which is why I can predict that with some comfort.

The next data release of interest is next Thursday, this is the first prediction of the UK GDP figures for Q4 of 2016.  This will be very interesting as up until December the economy was doing rather well. We will get the latest market predictions for this on Monday so if you want this information first, register your interest by sending an email to [email protected]

Moving forward I expect GBPEUR rates to stay range bound within 1.28-1.31, if you want some assistance in timing your trade, or access to our award winning exchange rates please contact myself, STEVE EAKINS via email at [email protected] or on 01494-787-478

Pound Sterling Forecast – Data out tomorrow (Daniel Wright)

GBP USD Exchange Rate: The Week Ahead October 24th

A busy start to the week for economic data brings us quite an interesting Monday for those looking to buy or sell Australian Dollars, Euros, Canadian Dollars or U.S Dollars.

Firstly overnight tonight we have Australian New Home Sales data which may lead to the Australian Dollar moving swiftly before we get onto the trading floor so if you are looking to buy or indeed sell Australian Dollars this may kick start your week if it falls the right way for you. We are currently hovering around what I feel is a pivotal point at 1.80 and with this pairing being extremely volatile day and night it may be prudent to set up a limit order or stop loss to take advantage of any spikes in your favour or to protect you from adverse market movements while you are asleep. Email me directly on [email protected] for a more detailed explanation of how these handy and free contract types work.

First thing in the morning we have U.K mortgage approvals data, which with thanks to the help to buy scheme here in the U.K have been fairly healthy lately and could put the Pound in favour right at the start of the day should this continue.

A little later at 9am we have some key European inflation data where we may see a minor drop, I feel this could be Euro negative but it is certainly one to watch.

At lunchtime we have Canadian GDP (Gross Domestic Product) figures which will show Canadian growth- After seeing a negative figure last time around they will hope that growth in January what this is for has improved otherwise it could give the Canadian Dollar a tricky week and it may weaken again.

Later in the day we have Janet Yellen speaking along with a flurry of data throughout the afternoon. With Yellen’s recent comments being fairly positive and leading to Dollar strength I feel they may be reiterated and the Dollar could have a strong end to the day.

All in all tomorrow is certainly one to watch and could finish off the month with quite a bit of movement, we also have month end flows which could lead to sharp currency movements without any prior warning so make sure you keep one keen eye on the markets.

If you are looking to buy or sell foreign currency for a bank to bank transfer then I can help you both in terms of getting award winning exchanges rates and a high level of customer service. The company I work for specialises in saving clients money over the banks or other brokerages and I would be happy to add you to my list of satisfied clients. I help with transfers ranging from just a thousand Pounds to multi million Pound transactions. Feel free to email me directly if this is of interest to you and I will be happy to get back to you personally. You can email me on [email protected] – I look forward to hearing from you.

Will an interest rate rise in the UK help or hinder the pound?

As a rule of thumb when an economy raises its interest rates you often tend to find that the currency in question strengthens. For years I have explained this to clients and one reason why the pound has been so weak over the last couple of years is due to the all time low interest rates. Here is a question for you to ponder over though. 

Could an interest rate rise in the UK do more harm than good for the sterling exchange rates? 

Simple economics would lead us to believe that the pound would gain on a rate hike. However I feel that the pressures that are on the UK economy are not like we have seen in the past. Inflation is rising at a rate of knots, this week figures came out at around 4%. This is double the Bank of England’s target. A reason to raise interest rates would be to combat this. But where I now feel that we are in a different situation to previously  is that we are so dependent on overseas pressures like rising oil and commodity prices which seem to be going up in price by the day. If we raised interest rates now this would not bring down inflation on its own. Instead it could seriously hamper economic growth and potentially send the UK back into a recession. So i feel an interest rate rise could in fact end up weakening the pound and not strengthen it like we may have thought. 

It may better to ride out the next 6 months to a year and wait for commodity prices to stabilise and then raise interest rates because if we do raise them to early things in the UK could spiral out of control. 

If you are waiting for interest rates to rise to try and bolster your pounds be very cautious as things do not always go to plan. With sterling exchange rates at pretty decent levels against a host of currencies don’t get caught trying to gain an extra cent or two and then actaully trading at three to four cents lower than what you could have initially traded at.

If you would like to speak with us regarding forward contracts to safe keep your rate we would be happy to explain the mechanics of trading with us. Just fill in the enquiry form on the side of the page and either myself, Dan or Aidan will be in contact.

Sterling falls against the Dollar owing to positive US inflation data (Tom Holian)

Pound to Dollar forecast: Sterling continues to decline against the US Dollar

The Pound has fallen by over 1% during yesterday’s trading session against the US Dollar as the GBPUSD exchange rate has now dropped to its lowest level since mid-August.

US inflation showed a rise to 1.1% year on year compared to the expectation of 1% and this could put pressure on the Federal Reserve to look at raising interest rates at next week’s meeting.

This year the US economy has continued to show signs of positive growth, strong levels of unemployment and high inflation which are all indicators that an interest rate hike could occur.

With the US elections only a few weeks away it would be difficult for the Fed to change policy at this critical point but to me they are clearly ready to raise interest rates if desired.

This has seen the Pound fall towards 1.30 at the end of the week and I wouldn’t be surprised to see GBPUSD rates fall below 1.3o during next week which could give Dollars sellers a fantastic window of opportunity to buy Sterling.

Indeed, UK inflation has fallen this week and this could lead the Bank of England to look at cutting interest rates when they next meet in November and this is another reason for Sterling’s demise during the course of the week.

Therefore, if you need to buy US Dollars it may be worth organising this early in the week and if selling US Dollars to buy Sterling it may be worth seeing what happens on Wednesday night when the Federal Reserve make their decision.

If you have a currency transfer to make and want to save money on exchange rates compared to using your own bank then contact me directly for a free quote. Tom Holian [email protected]

Having worked in the industry for 13 years I can also make sure the process of transferring currency is stress free.

I look forward to hearing from you.



Greek Bailout Keeps Affecting Exchange Rates – ( Andrew Bromley )


The Cypriot Finance Department have raised the limit of Euros that you can withdraw from the Island – from €20,000 to €50,000

When to BUY Euros??

The world is still waiting for a solid decision from the Eurozone Finance Ministers, as Greece is still very much at the forefront of investors minds. We seem to be edging closer and closer to an update / outcome, with the most expected decision probably an extension to the current loan repayment date. Greece are due to repay a vast figure on 28th February so time is very definitely running out! I personally feel that the key Eurozone members (including Angela Merkel of Germany) wish to keep the entire single currency intact. The fallout from a Greek exit from the single currency could be catastrophic, meaning a potential return to their former currency ‘The Drachma’. This could cause a huge recession and potentially bankrupt the country – a grave prospect!

If you have Euros to buy, I would be inclined to take advantage whilst the levels are at ‘there or there abouts’ 7 year highs. Brussels look to meet tomorrow evening to discuss the extension, so markets may move during the weekend, or out of standard trading hours. During yesterdays trading we saw markets touch 1.36, not seen since pre Financial crash in 2007. The Eurozone Central Bank release their Monetary Policy Statement today, their first since the introduction of Quantitative Easing. This may assist Euro Buyers achieve their last hurrah prior to markets correcting. I personally feel that up to two Cents of the GBP EUR rate is Greek uncertainty, potentially dropping an exchange rate of 1.35 down to 1.33.

USD Exchange Rate Forecast

The US Federal Reserve last night cooled expectations of an imminent interest rate hike, buy indicating in their minutes that a hike was ‘unlikely’. The US Economy has gone from strength to strength over the last 6 months, with the Greenback taking a good influx of funds from global uncertainty. I don’t think that it will be too long before markets push 1.50 again, so USD buyers may wish to take advantage of these favourable levels.

AUD pushing 2.0

Once again GBP – AUD is closing in on the 2.0 levels, as again we are in the 1.99s. The AUD gained strength from the Interest Rate minutes released on Monday, giving Australian Dollar sellers a window to take advantage of. If you do have Australian Dollars to buy, feel free to get in touch to be ready to take advantage of rates hitting 2.0!


If you do have an exchange requirement, however big or small feel free to get in touch. We are able to assist you with timing your exchange at potentially favourable times, plus assist with setting up currency equivalents of ‘safety nets’ etc.

Direct line to the trading floor (please mention this blog) 01494 787 478

Direct email – [email protected]


Sterling New Zealand Dollar close to 6 month high following earthquake – GBP high against most majors as investors look to pull funds back into safer havens.

Good morning readers,

Terrible news over in New Zealand has led to an extremely volatile market this morning, especially regarding GBP – NZD – Rates had touched 2.16 at one point however right this second appear to have stabled out.

Overnight we saw a shift of 1.6%  – A difference of nearly NZD7000 on a £200,000 purchase which is huge.

Should you have NZD to purchase and want to take full advantage of this, contact us today – you can even secure a rate on a forward basis for just a small deposit should you not have full acess to your funds.

UK Interest Rate Decision – Could we see new record lows?

GBP EUR Exchange Rate: Weekly Review July 16  

Pound Forecast

Mark Carney the head of the Bank of England (BOE) has come under scrutiny following the decision to cut interest rates shortly after the electorates vote to leave the EU. The BOE has been criticised for what some consider to be a knee jerk reaction, personally I think the initial fall out could have been worse and the decision to drop limited damage.

The rate decision at 13.00 today will be keenly watched as there is the possibility of a further cut to a new record low of 0.05%. If this occurs expect the pound to suffer. Some argue that a lower pound will encourage more domestic spending, I would argue that we are too heavily reliant on exports particularly consumables and it won’t be the big boys who will be taking the hit. It will be the consumers and I expect a rapid rise in inflation over the coming months.

I think another rate cut is too soon and there would be a lot of criticism should a cut occur. It is one also one of the last tools in the BOE’s arsenal, where do you go once we hit 0.05%, negative interest rates in the UK? Never.

If you do have a requirement selling the pound it may still be wise to move before the decision. If you look at risk reward. The risk there is a cut? Sterling falls several cents in value. No change? little gains for the Pound. Looking forward I do not think there is much chance of a pound rally against any major currencies unless out side factors come into play. Apart from GBP/USD , if Trump gets in expect the  pound to strengthen. Trump’s wild ideas on curbing trade with China and immigration would write trillions off GDP.

If you would like my assistance with your currency requirements I would be happy to help. I will be prepared to provide a free trading strategy to suit your individual needs  and also provide a no obligation quote against your current provider, I am rarely beaten. I can be contacted at [email protected]. Thank you for reading my blog and I look forward to hearing from you.

Daniel Johnson

Executive Dealer – Foreign Currency Direct



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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.