Pound Sterling Forecast – What does the future really hold?

The U.K has a new Government, things appear to be on the up and the country’s confidence and indeed the Pound started to creep up directly following what appeared to be a reasonably solid budget to deal with our current economic situation.

My opinion on exactly what may happen going forward is constantly changing in line with data releases and different economic circumstances but below I have outlined a few factors that back up my current opinion that over the next few months the Pound may stay reasonably stable if not push up slightly as the mention of an increase in interest rates gathers more ground, however a little further down the line we may have once again a really rocky time.

An interest rate hike generally leads to positive movement for the currency concerned and a drop in rates generally has a negative effect.

The U.K is currently in 1.46 Trillion of debt – This alone is a serious problem and will take years and years of cuts and extra taxes to get this even close to acceptable again.

We are currently slowly lifting out of a recession and generally consumer confidence should be rising when an economy is on the way out of recession however in this case we are starting to see the opposite as people have had so much extra money to spend – mainly due to low interest rates and lower mortgage payments and now with the potential of rates going up towards the end of the year, higher VAT at the start of 2011 and huge job cuts in the public sector many residents in the U.K are becoming increasingly worried.

Over the past 20 years interest rates have averaged our at around 6% – just how much will this increase the monthly payments on your mortgage??? Not good news!

On top of the the VAT hike will lead to a rise in petrol prices and indeed this leads to higher food costs and inflation in general, everything will cost a lot more yet most people will be geting a lot less so I can forsee some extremely hairy times ahead for the U.K and the Pound throughout 2011, there may be a lot of defaults on mortgages and there is every chance unemployment may reach new highs again.

If you are considering purchasing abroad in the next two years there are options available to you, by means of a forward contract you can book out a rate for anything up to two years by merely sending over a small deposit (generally around 10%).

Obviously anything can happen in 2  years on the currency markets however if you are planning to emigrate why take the risk that your dream may just slip out of budget by the time you are ready to move on from the U.K?? This happened to dozens of my clients a few years back when we nearly hit parity – would you be able to find an extra 15% on a €220,000 property purchase?  That is over £32,000!!!!!

We are here to help, we cannot advise you however we can give our personal opinion based on years of market knowledge along with keeping you up to date with timely market updates.

If you are buying a property abroad, have business transactions to carry out or need to get money overseas for any other reason and want the best exchange rates, just fill in the form on the right hand side and one of the experienced traders that write on this blog will be in touch shortly.

Sterling losses continue as forecasts for double-dip resurface

The pound has made losses of almost 4 cents against the Euro, 9 cents against the  AUD and 5 cents against the Canadian Dollar in the last week.  The pound had spiked following the UK budget  on the 22nd June but was helped last week by news that MPC member Andrew Sentance had voted for an increase in UK interest rates.  This helped the pound as investors would receive a better return on funds if rates were hiked.

Unfortunately for anyone holding sterling it looks highly unlikely that this will happen during 2010.  With government spending cuts comingin to effect later in the year, it looks likely that inflation will fall (the main reason behind the potential for an interest rate hike).  Therefore it is unlike that we will see better sterling exchange rate due to GBP strength.

The only real hope for anyone buying the Euro is that the banking fears in Europe and Soverign debt issues come back into focus.  For anyone looking to purchase other currencies there is little to suggest the pound will increase in value from current levels.

The only silver lining is for GBPUSD, which has made gains of around 5%  in the last 6 weeks.  This appears to be due to USD weakness, as investors are currently favouring the Swiss Franc over the USD as a safe haven currency.

Pound Sterling forecast – will it gain strength this summer against Euro, Australian Dollar, U.S Dollar and all major currencies?

Good morning to you all!

Sterling has faced a rocky few years of late and as all of you will be aware has lost a huge amount of ground against various major currencies.

Many of my clients have been asking me of late whether or not this is the start of the turnaround? Well, in truth I think it is against the Euro and Australian Dollar yet we still have a battle on our hands against the U.S Dollar and Swiss Franc.

The reason behind my thoughts are as follows…. The Euro Zone is finally showing the major cracks they have managed to smooth over for the past few years and with one central bank dealing with such a variety of economies in my opinion this only spells trouble going forward.

The Australian Dollar will more than likely still make the odd comeback along the way against the Pound however I think the main strength has now disappeared as they bring in the super tax for the mining industry and the potential (be it further down the line) of a hung Parliament will keep on holding it back – remember what happened to the Pound during our election?!

The U.S continue their fears of a double dip recession however the common saying is that when the U.S sneezes the U.K catches a cold which leads me to believe that this will hold us back from major gains for the time being, the problem is every time they show a poor data release investors will be wary of what is to come further down the line for the U.K.

The Swiss Franc appears to be going from strength to strength… the currencies reserves have increased four-fold in the past year and it is apparently now the most favourable currency for investors at present, this is mainly due to it being a ‘safer have’ compared to currencies of many other major economies now perceived as generally quite risky.. I know given the choice of the Euro Zone or Switzerland exactly where I would look to shift my funds with their current banking situation!

If you are buying a property abroad, have business transactions to carry out or need to get money overseas for any other reason and want the best exchange rates, just fill in the form on the right hand side and one of the experienced traders that write on this blog will be in touch shortly.

Daniel Wright

Sterling forecast for interest rate decision and trade balance figures

It is a busy week for the pound with the UK interest rate decision on Thursday and the UK trade balance figure is released at 09:30 on Friday. I don’t expect to see any movement in interest rates, so for me, the trade balance figure is the major factor for sterling this week. A poor release could lead currency speculators to question the UK’s ability to address national debt and the budget defecit.  If this does happen I would expect sterling exchange rates to fall around 3 cents.

Important day ahead for the Pound Sterling – Will the budget be taken well?

Today we see an extremely important day for the Pound against all major currencies and although we may not see any instant movement it will show a good indication as to what may happen going forward throughout 2010.

The budget is due to be out at 12:30pm and the new coalition Government will have to get the balance between aggressive cuts in order to combat the deficit and not going too over the top and pushing the U.K back into recession just right.

My personal opinion is that they will get this right and it will take time but the Pound will gain ground over the course of the summer once the dust has settled from the original release.

Have you budgeted for the budget? What will happen to the Pound?

I hope you all had a great weekend?

For those of you with upcoming transfers to make be it buying or selling foreign currency with the Pound this week is seriously important for you – especially with tomorrow’s emergency budget looming.

This could have an instant impact on the value of the Pound against all major currencies and should already have an agreement in place to purchase a property overseas it could make it a lot more expensive.

To be honest it is hard to call exactly what kind of effect the budget will have on the markets until it is fully released but do be prepared for some volatility, if you want me to keep you up to date with what is going on then fill in the contact form on the right hand side of this page as I have one eye on the market throughout the day and can jump on the phone should there be any rapid movements for or against you.

What will happen to Sterling after the budget?

The Pound has remained reasonably stable leading up to the budget due to come out on the 22nd of this month.

Many clients calling in are now asking me just what I think will happen after the budget….. The truth is I don’t know until it is released however the general feeling is that the Pound may take a minor dip immediately after the release due to cuts being extremely harsh, however in the longer term we should see the Pound start to slowly gain strength as this can eventually only be seen as positive with a plan finally in action.

This morning sees the release of mortgage approvals data, money supply and public sector net borrowing all out at 09:30am and this may set the scene for the day ahead… personally I can’t see any huge swings on the market today but then and again there are always surprises popping up in the current climate.

If you are buying a property abroad, have business transactions to carry out or need to get money overseas for any other reason and want the best exchange rates, just fill in the form on the right hand side and one of the experienced traders that write on this blog will be in touch shortly.

Pound Forecast V’s Euro and Dollar

We are currently trading close to an 18 month high for the pound against the Euro, so if you are considering buying the single currency in the next few months, now may be a good time to secure funds on spot, or lock into a forward contract. 

It is also worth bearing in mind that we have the first budget for the new coalition Government, with spending reductions and increased taxation expected.  This could affect the pound depending on how the budget is received by the financial markets.  If the markets feel that the new austerity measures go too far, and that this could have negative effect on the economy, Sterling exchange rates could fall.  So if you do have any requirements, fill in the form on the left askinf for Aidan and I will be able to run through the options open to you.

On the US Dollar side of things, anyone looking to sell the Greenback may also want to get in touch; we are not far off a 13 month high at present.

Sterling reaches 19 month high against Euro rate forecast for this week for Pound against all majors

GBPEUR Rejected by 1.17 Price Level Again

Sterling reached a 19 month high against the Euro last week, This has presented those looking to buy Euros with an exceptional opportunity compared to levels we have seen recently – If buying a property abroad or making business transactions this could save you a fortune!

The long term view is for further gains and I would anticipate to be above the 1.25 levels by the end of the year due to the severe debt crisis plaguing European Governments.

But the issue of debt also affects the UK shores and the short term outlook as we announce our own Austerity measures via the emergency budget on the 22nd June, could spell a temporary dip for the Pound.

Also worth noting is a report out today from the OBR (Office of Budget Responsibility), anticipated to scale down predicted growth figures.

There are a number of different data releases due out this week not just for the U.K but various other economies that will have an effect on the cost of you buying these particular foreign currencies.

These are as follows:

Tommorow – Reserve Bank of Australia meeting minutes, this will give an overview as to how they came to their latest interest rate decision and give indications as to how they may deal with their economy going forward. We also see the Bank of Japan interest rate decision (no change in rates is expected).

For the U.K we see CPI (Consumer Price Index) data out which is a measure of inflation and could lead to market volatility.

Wednesday – Wednesday is key for the U.K with key unemployent figures being released at 09:30am – any change to expected figures could lead to major market movements.

Thursday –  This will be another busy day with releases of note being Retail sales for the U.K in the morning, the Swiss announce their interest rate decision and in the afternoon we see the U.S take their turn to announce CPI.

Friday – A quiet day expected on the markets however as regular traders will know there are always surprises popping up so if you have a transfer to make ensure you are in close contact with a currency specialist who can keep you up to date with market movements.

If you are buying a property abroad, have business transactions to carry out or need to get money overseas for any other reason and want the best exchange rates, just fill in the form on the right hand side and one of the experienced traders that write on this blog will be in touch shortly.

Sterling strength Euro weakness – Why is it happening? How long will it last?

Good afternoon and sorry for the lack of posts lately….. with the GBP – EUR rates breaching the 1.20 mark and staying over and above it the other traders and I have been rushed off our feet with those looking to lock into rates and make that dream purchase abroad a little cheaper.

So, why has the Pound gained so much?

Against the Euro it has been more a case of Euro weakness than Sterling strength as the Greek problem still hangs around like a grey cloud and Spain appear to be following suit with rapid pace along with numerous other economies.

This in turn creates one huge problem….. With only one set of fiscal policies just where do the European Central Bank turn next? Obviously this has led to low confidence in the Euro Zone and whispers of the Euro not even existing going forward.

My personal opinion is that the Pound may well creep up a little more in the coming weeks as more and more cracks appear in Europe and the Pound just subtly continues creeping up.

Against the Australian Dollar the great recovery appears mainly down to the fear of a hung Parliament over there – remember what tht did to the Pound???

The election is not for months so should this become even more of a possibility then expect the Pound to make further gains against the AUD.

Sterling has seen large gains against the SEK,DKK,ZAR and numerous other currencies whilst staying reasonably flat against the Dollar and making slight losses against the CAD.

 If you are buying a property abroad, have business transactions to carry out or need to get money overseas for any other reason and want the best exchange rates, just fill in the form on the right hand side and one of the experienced traders that write on this blog will be in touch shortly.

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