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

By
Joe Wright
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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?

By
Joe Wright
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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 [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?

By
Joe Wright
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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?

By
Joe Wright
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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?

By
Daniel Wright
-

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?

By
Joe Wright
-
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?

By
Jonathan Watson
-

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

By
Daniel Wright
-
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.

Why Are Sterling Exchange Rates So Low? Why Is The Pound Dropping?

By
Daniel Wright
-

Sterling exchange rates have taken another huge hit overnight as the trend of weakness for the pound continued straight at the start of the open on the Asian markets last night.

The Pound dipped all the way down to the 1.02s against the Dollar and the 1.07s against Euro as investors and speculators rushed to drop the currency and this caused a great deal of weakness.

So why are Sterling exchange rates dropping?

Since the announcement of the mini-budget and Kwasi Kwarteng’s plans to cut taxes we have seen sterling exchange rates lose value quite significantly, the reason behind this is that investors do not fully back the plans and feel that the sheer level of Government borrowing required will cause damage in the future.

They believe that this approach isn’t sustainable and that we could find ourselves in some pretty hot water as an economy in the months and indeed years to come with the plans that have been out in place.

If you then couple this with the Bank of England being much slower and less aggressive regarding interest rates compared to other Central Banks around the world there is a feeling of fear that this time around the Government and Bank of England may have got their choices wrong.

Mr Kwarteng has added further comments over the weekend that this is not the end of the cuts and that he actually plans more, which has quite frankly spooked the markets further. Government bonds jumped by their highest increase on record on Friday, and with Sterling exchange rates dropping but Government bonds rising it presents quite a nasty recipe.

The lower the pound goes the larger the cost of living crisis for consumers in the UK too. We are great at services here in the UK and a large portion of our economy is made up from the service sector, financial services as an example, however, what that also means is we import a lot, with the pound now substantially lower than it was even a few weeks ago, the cost to buy in these goods and indeed a lot of our energy and fuel heading into the winter is spiraling out of control.

So we are faced with costs going up for business’s, consumers without that extra spare cash in their pockets and an expectation of a fairly long and challenging recession which is likely to last through 2023.

The Government have tried to stem this by putting more money into people’s pockets, but the expectation is that this could be like putting a plaster on a very deep cut, it likely needs a lot more care and attention than that, and just borrowing more and more is not going to be sustainable.

We have an extremely interesting week ahead and the markets could swing wildly just off the back of comments from members of the Bank of England, Politicians or anyone with direct involvement in this crisis, so you need to be fully prepared to act swiftly if you have an exchange to carry out.

Strangely, and to add a positive to this report we have had news that house prices are still rising in the UK with a 0.7% month on month increase reported by Rightmove today, the strongest pace in four months, so one area is still performing ok.

Later today we have Christine Lagarde testifying to lawmakers and being the Head of the European Central Bank we may see further indications on their plans to tackle inflation and what their next move will be on interest rates, so for anyone with an interest in Euro do expect some movement of the back on this.

If you are looking to make a large currency exchange in the coming hours, days, weeks or months and you would like to talk through the current sell off and what it means for you/what your options are, feel free to contact us here at Pound Sterling Forecast today.

You can email me (Daniel Wright) directly on [email protected] or you can click  this link and one of our team will get in touch in due course. Should you prefer to set up daily rate updates or to set a rate alert then feel free to do that within this site too.

I hope you have a great day, its going to be a volatile week!

Pound Sterling Weakness – Why Is The Pound Dropping So Much?

By
Daniel Wright
-

Sterling exchange rates have taken a huge hit over the course of the days trading, as the new chancellor Kwasi Kwateng’s mini-budget appears to have knocked the pound totally out of fashion.

The pound has lost over 350bps against the Dollar sitting in the 1.08 territory, whilst dropping to 1.12 against the Euro and hitting the lowest level against the Swiss Franc since 1974 sitting in the 1.06s.

There is now talk of an intervention and whether HMT will make an attempt late on Sunday night ahead of the Asian markets opening to stabilise the currency, should this not happen or not have the desired effect the Bank of England may need to step in again and look at an emergency interest rate hike less than a week after they raised rates by 50 basis points, which in all honesty wouldn’t look great.

Sterling really is taking some big blows out in the financial markets and it is tough to see how the pound will fight back, the lower Sterling exchange rates go, the more costs will spiral and the bigger the potential problem, so we are stuck in a really tricky situation of late.

I like to monitor the pound against a basket of major currencies and today was the biggest drop I can remember since the referendum, with a loss of over 10% in value against a basket of major currencies.

So where does this leave you if you have a large purchase to make be it personally or for your business overseas? The key in the coming weeks is being agile and ready to act.

We could still see a bounce back should we have an intervention or a rate hike, but you must also exercise caution that if this trend continues and you keep holding on it could be an extremely expensive decision.

If you have foreign currency to exchange back through sale of goods with your business or a personal property sale then you are probably reading this feeling pretty happy as your foreign currency has just become worth a lot more, but do be cautious not to get caught in the vicious circle of waiting and waiting then finding it bounces back and it is too late, this is a common occurrence with people in my experience.

I have been helping people move money around the world for 15 years now, if you would like to discuss the pound’s sudden loss of value or chat about a potential trade you need to carry out then feel free to email me, Daniel Wright on [email protected] and I will be happy to get in touch with you personally.

You can also set rate alerts, follow the markets, request quotes and view graphs/charts here on Pound Sterling Forecast so feel free to take a look around the site and we hope it is helpful.

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