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Sterling remains in the balance – will growth figures strengthen the pound?

By
Richard Nugent
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Sterling remains in the balance – will growth figures strengthen the pound?

Sterling exchange rates have remained relativity balanced this week. The pound was boosted against the dollar last week following a ‘dovish’ hike from the Federal Reserve. The Bank of England also raised rates which helped support the pound against the euro. Following the latest release of services and manufacturing PMI data, GBPEUR has been range bound between 1.1340 – 1.14. Cable (GBPUSD) has been a little more positive for sterling sellers reaching highs of 1.2360 but remaining within the 1.22 – 1.2360 range.

The economic calendar is busier later today and tomorrow with several key events to look out for. Eurozone consumer confidence could cause volatility for pairings involving the single currency. EURUSD is the most traded currency pair globally meaning significant shifts in value can affect other pairings. US growth (GDP) data could provide support for the dollars value if the reading is higher than expected.

For the UK and GBPEUR, tomorrow could prove important for exchange rates moving forward. Quarterly GDP figures will confirm whether the UK’s economy grew or shrank. A negative reading here would surprise markets and weaken the value of the pound. A positive reading could push sterling higher and out of its current range.

Eurozone inflation data will be watched closely by the European Central Bank. The ECB like many other central banks have been raising interest rates in attempt to bring inflation under control. They raised rates by 50-basis points this month which lent support to the euros value. If inflation is falling, the ECB will be under less pressure to raise rates again. If it is elevated, then they will likely continue their current rate hike cycle. A lower reading could be seen as negative for the euros value and therefore provide a boost for GBPEUR.

If you want to be kept up to date with developments and achieve market-leading exchange rates please contact me directly on [email protected].

GBP exchange rates climb after positive comments from BoE Governor Bailey

By
Joe Wright
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GBP exchange rates have begun the day on the front foot after some positive comments from Bank of England Governor Andrew Bailey yesterday evening.

He stated that hiking interest rates again remain a tool at the Bank of England’s disposal to tackle rising inflation.

Last week it emerged that UK inflation levels surprisingly remain above 10%, when markets had forecast a fall below this threshold for the first time since August last year. This pushed GBP exchange rates higher as the chances of additional interest rate hikes increased as a result of the surprisingly high inflation levels.

The comments from Governor Bailey last night tie into this expectation, so his comments underlining the potential for additional hikes have unsurprisingly pushed the Pound slightly higher.

Governor Bailey also reiterated his faith in the UK banking system and claimed that it’s ‘resilient’ and that this will allow the BoE’s monetary policy to focus on tackling the high inflation levels. The BoE’s target is 2% so the current rates above 10% are in focus, especially as the cost-of-living crisis has become such a talking point when discussing the UK economy.

There are no major economic data releases due out today for the UK although Friday has the potential to be a busy day, due to the raft of economic data releases due out. UK GDP figures will be released early in the morning, along with German Retail Sales figures and Employment data. EU Inflation will also be released at 10am which could influence GBP/EUR exchange rates, and in the afternoon there will be some data releases out of the US so it could be a busy end to the week for currency markets.

If you would like to discuss an upcoming currency exchange involving the Pound, please feel free to get in touch with me (Joe) on [email protected]

We will be happy to offer quotes and explain the different contract options our currency brokerage offers, and look into the upcoming economic releases which could impact the currency markets.

Will the Bank of England help or hinder sterling exchange rates?

By
Richard Nugent
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GBP EUR Rallies After Bank of England Rise in Interest Rates

Will the Bank of England help or hinder sterling exchange rates?

Last night the US federal reserve raised interest rates by 25-basis points against a backdrop of financial instability in the US banking sector. US interest rates are now at the highest since 2007. At the start of the week many had expected the Fed to hold rates at their March meeting. The SVB banking failure caused concern throughout the sector and further interest rate rises could inflict more pain on troubled banks.

Cable (GBPUSD) benefitted following the Fed’s announcement and immediately rose to 7-week highs presenting a great opportunity for dollar buyers. EURUSD also rose to a 7-week high amidst the expectation that there will be no further rate hikes from the Fed. Some commentators are expecting the Fed to start cutting interest rates in the latter half of 2023 which is piling pressure on the dollar.

The Fed’s dovish statement is positive for sterling and future exchange rates against the dollar and other dollar-based currencies; however, a lot will depend on the tone of the Bank of England this afternoon. The BoE have their March meeting and expectations are for interest rates to rise by 25-basis points.

GBPEUR has begun to lose value in the lead up to this meeting and is trading close to 2-week lows as of this morning. This could be a window of opportunity for euro sellers.

If the bank takes a similar dovish tone to the Fed, then we could see further pressure on the pound. UK inflation is still extremely elevated at 10.4% which suggests the banks previous hikes have not yet had the intended impact. Future interest rate rises may be needed in the UK to bring inflation under control and markets will be looking for any suggestion on this from the bank.

Tomorrow morning is packed with significant economic data releases. PMI data from the UK, Eurozone, and US along with UK retail sales and US durable goods orders.

If you want to be kept up to date with developments and achieve market-leading exchange rates please contact me directly on [email protected].

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

By
Joe Wright
-

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]

UK Economic Data Alert : Will the Pound Rise or Fall on the Budget?

By
Jonathan Watson
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Pound to Euro Gains After Weaker German Retail Sales

Whether the pound will rise or fall on the budget is a good question for such a key economic announcement, particularly with this year’s coming at such a poignant moment.

History will surely judge these ‘interesting’ economic times as the UK narrowly avoids recession but is experiencing record high inflation and serious labour force unrest, as a result of a cost of living crisis which looks likely to be a key factor in the anticipated change at number 10 come the next election.

Expectations can be high for movement on exchange rates around the time of a budget, and of the many column inches often dedicated to the release, there can be a focus on the pound. Historically however, budgets don’t typically see anything too volatile for exchange rates.

This is because much of the news is leaked in advance, and with the changes brought about being fiscal tweaks of tax and expenditure by the government, do little to fundamentally change monetary policy, ie the raising and lowering of interest rates, which would usually have greater bearing on a currency.

Nevertheless, policies which promote or stifle economic growth, in the market’s eyes, can be taken on by investors, and may contribute to some currency movement. Looking at the headlines, Jeremy Hunt could be expected to promote some pro-economic growth measures which in principle might be mildly supportive for sterling exchange rates.

Tomorrow is a key day too because we have the latest Eurozone Interest Rate decision. This might actually carry more influence, certainly on GBPEUR exchange rates. Whilst the predictions of a 0.5% hike from the European Central Bank seem fairly locked on, the potential for volatility and adjustments on such days stems from the ECB Press Conference following the decision.

Market participants will be looking for clues as to future policy decisions ahead, but with the spread between UK and Eurozone interest rates narrowing, as well as US and Eurozone interest rates, there does open up potential for swings on both GBPEUR and also EURUSD exchange rates.

Let us not forget too the significance of the Silicon Valley Bank news this week, what was potentially looking like the beginning of a global run on banks last week has settled now as regulators step in, but reminds us of the sometimes inherent fragility and interconnectedness of financial markets, and how a sense of uncertainty can soon spread and trigger unforeseen consequences and reactions elsewhere.

Our forecast assessments on GBPEUR indicate a mixed range of 1.12-1.15 over the coming months, whilst our GBPUSD analysis shows a slight sterling bias (USD weakness) over the same period.

We consult a range of detailed financial information, to provide a comprehensive analysis of the market and your situation, to offer an informed and intelligent assessment of what strategies are available to you so you can make good decisions.

Thank you for reading and please contact me to learn more.

Jonathan

[email protected]

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

By
Joe Wright
-

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.

Sterling loses positive gains – will the pound continue to weaken?

By
Richard Nugent
-

Sterling loses positive gains – will the pound continue to weaken?

Sterling exchange rates plummeted during yesterday’s trading session as negative sentiment surrounding the UK’s economy continues to weigh on the currency. Less than 24 hours prior, the pound was trading at 4-week highs against the single currency.

The pound had been boosted by the announcement that the UK and EU had reached a deal over trading arrangements in Northern Ireland known as the Windsor framework. Since the Brexit vote in 2016 the pound has lost considerable value against the euro and dollar. Sterling has often gained value when agreements have been reached with the EU, perhaps unsurprisingly given that the bloc is by far the UK’s biggest trading partner.

The Windsor framework is positive for the outlook of trade in Northern Ireland and therefore positive for the UK and the pound, however, the deal needs to be ratified in Westminster and may face criticism from back-bench tory MP’s and the DUP amongst other unionist parties in Northern Ireland.

Positive flash PMI data released on 21st February is another development that has recently improved the outlook for the pound. The data suggested that both the manufacturing and services industries are performing far better than expectation with the UK services sector expanding.

Does this mean the UK could avoid a recession in 2023?

The final reading for services PMI data is released tomorrow morning. If the data is strong once again then we could see a boost for the pound. Strong PMI data is not conducive to a recession so if this data continues to improve the UK may avoid a recession in 2023. UK GDP figures are next released on 31st March and will confirm how the economy is fairing.

Sterling remains under pressure despite the recent positivity for the UK and is trading within range of the 5-month low against the euro and within range of the monthly low against the dollar.

PMI data released from the UK and EU tomorrow could be a driver for rates moving forward. Later this morning there is a key release of Eurozone inflation data. A stronger than expected reading could further strengthen the euro against the pound.

If you have any upcoming requirement involving any currency, and wish to speak with a specialist, please feel free to reach out directly on [email protected].

The Pound holds onto yesterday’s gains, but where to next for GBP exchange rates?

By
Joe Wright
-

Sterling exchange rates saw a small relief rally yesterday after news broke that the Northern Ireland Brexit deal has been agreed between the UK and the EU.

After recently dropping below 1.20 against the US Dollar, which is a key threshold the GBP/USD pair broke back above this level with the Pound climbing by roughly 1% against the US Dollar. There were also gains for the Pound against the Euro although not to the same extent. GBP/EUR remains in the 1.13’s with the pair remaining rangebound over the past week.

The Brexit deal relating to the Northern Irish protocol has been a key topic for some time now, and with this new agreement there are hopes for more positive cross-border trade in future. The president of the European Commission Ursula von der Leyen was in the UK and met with UK Prime Minister Rishi Sunak to help get the deal over the line.

Brexit talks had taken a back seat in terms of financial headlines more recently, but yesterdays market movement shows that it still carries the potential to move markets, so as ever it’s worth following any key updates whether positive or negative.

There has also been some economic updates this morning in regards to the increasing inflation data within the UK, although the Pound remains quite subdued despite some concerning figures being released.

Research from Kantar suggests that the cost of food and drink is rising at a rate of 17.1% compared to figures from this time last year. This is the highest rate since their records begun in 2008.

Households now face an increased £811 increase in shopping bills if they keep the same shopping habits, and the data also showed that one in four households are struggling financially.

Increases such as this could force the Bank of England to act in regards to monetary policy moving forward, which can impact GBP exchange rates so these kinds of data releases are worth following.

If you would like to be alerted to any major market movements relating to the Pound, or would like to obtain competitive quotes from an industry leading currency brokerage, please feel free to register your interest with me. You can contact me (Joe) on [email protected] with an outline of your plans, and I’ll be happy to offer you some insight along with quotes.

Will the Pound continue its recent run of form next week?

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

Pound vs Euro remains strong this week

The Pound Euro is close to its best rate to buy Euros in a few weeks after a solid start to the week.

The Purchasing Manager’s Index helped to demonstrate that the UK economy is faring a little than many may have expected including myself.

After having recently avoided a recession in the UK there are a few bright shoots appearing at the moment.

However, with inflation still causing a huge problem for consumers at the moment there are still a number of big hurdles ahead for Sterling exchange rates.

Food inflation is above 20% and fuel at the petrol pumps still remains relatively high.

When I walk downstairs to glimpse at the smart meter I close my eyes and then turn it round to face the wall as I consider ways to reduce my energy bills.

Energy prices still remain high and until we really start to see wholesale prices fall this will continue to impact upon inflation.

The Bank of England are clearly committed to keeping inflation under control by increasing interest rates.

We have seen 10 consecutive interest rate hikes by the central bank since December 2021  and although expectations are for them to slow down we could see another few more coming in the near future.

Over history when a bank raises interest rates then this would often cause that particular currency to strengthen.

However, we have also seen the European Central Bank come to the table with their own recent change in policy to begin their own rate hiking cycle.

Therefore, any gains that we may have seen by the Pound has been eroded by the strength gained by the Euro following the rate hikes.

If you would like a free quote when buying or selling currency then contact me directly.

I have worked for one of the UK’s longest established brokers for 20 years so please contact me and I look forward to hearing from you.

Tom Holian [email protected]

 

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