Forecasts unclear following A mixed day for the pound

GBPEUR rate remains steady as markets await the Autumn Budget

Sterling performed well against the Euro and Danish Krone following on from Wednesday’s positive movement. However the large gains against the AUD and USD from yesterday were reversed a little today. In my opinion there is still a lot of uncertainty in the market because of the upcoming election and the lack of understanding about how the government would deal with the national debt problem.

In saying this I can see a sterling spike, and potentially prolonged sterling strength in the future once the election has taken place and a clear policy is announced.

Sterling Exchange Rate Forecast

GBP Exchange rates

After a welcome turnaround for sterling exchange rates yesterday I believe that today’s trading could reverse all the gains that the pound saw yesterday.

There is a whole batch of data releases out for the UK. Firstly the market will look to the minutes of the latest BoE meeting which are expected to show a decision to leave policy unchanged was unanimous. However the markets can always throw up a surprise. If the vote is not unanimous then expect to see the pound weaken if there are comments that QE may be extended in the future.

Plus we have Unemployment data out which is expected to see a small rise. If however the rise is more than expected then be ready for the pound to weaken by end of trading today.

USD Exchange rates

Last night The Federal Reserve left its interest rate unchanged at 0.25% and reiterated that interest rates would remain low for “an extended period.” The USD weakened against nearly all major currencies on the back of the announcement as it seems that the FED are having trouble deciding when to initiate the first rate hike just like their UK counterpart.

Sterling has lost around 6% against the USD since January. This morning we have already seen the USD start to reverse its losses from yesterday and I would not be surprised if we hit levels of 1.50 in the not to distant future.

If you would like any info on the above please email me directly at bma@currencies.co.uk and quote PSF.

Sterling report and forecast – what will happen to the Pound?

GBPEUR rate remains steady as markets await the Autumn Budget

Sterling report and forecast 16th March 2010 – Daniel Wright (Associate Director)

 

This report is written for current and potential clients of Foreign Currency direct to provide important information on Sterling and a basket of major currencies, alongside providing vital information on upcoming data releases that may affect the cost of sending money overseas or bringing money back.

 

Monday’s movements

GBP-EUR (-0.38%) GBP-USD (-1.11%) GBP-AUD (0.84%) GBP-NZD (0.95%)  

 

This report will include the following

 

  • Federal reserve interest rate decision
  • Bank of England minutes
  • Media quote ahead of minutes
  • What else may move exchange rates this week

 

Fed interest rate decision tonight

 

Tonight sees the release of the Federal Reserve interest rate decision which has the potential to be a big market mover for those with U.S Dollar or Arab Emirate Dirham interests. Especially as purely on the rate movements yesterday, a £100,000 transfer to Dollars at the end of the day instead of the morning achieved clients a whopping $1600 less for their moneydon’t be caught out yourself this week, let your account manager know what you are looking to do and he can keep you informed of market movements to avoid a nasty surprise.

 

No change in rates is expected however the Fed have been known to surprise in the past (most notably of late when they raised their Fed funds rate completely unexpectedly) this action led to rapid and major Dollar strength.

 

Also investors will be keeping a keen eye on any comments regarding the U.S economy and how it is faring and with data looking slightly better of late across the pond it wouldn’t surprise me to see Dollar strength overnight tonight.

 

Bank of England minutes & media quote

 

The Bank of England minutes released tomorrow morning are also due to be a head turner as we get to see how many members of the MPC were in favour of reigniting the Quantitative Easing flame for the U.K.

 

Should it evolve that it was a close vote out of the 9 members for example 5-4 or 6-3 then it suggests there still is scope for QE at the next decision and you may see Sterling lose ground accordingly, on the other hand a clean sweep and 9-0 against QE should bring Sterling strength.

 

If you are concerned about how these two decisions may affect any upcoming transactions you have be it buying or selling currency why not do what many of my business clients are doing of late and place a limit or stop order ensuring that you are protected from adverse market movements and can budget for your purchase accordingly. 

‘The minutes could lead to a shaky day for the Pound tomorrow. Should QE become the main focal point again investors may run like the wind from Sterling as it tallies up yet another reason to steer well clear of it.’

 

What else might affect exchange rates this week?

Obviously those readers that have bought or sold currency before are fully aware many surprises can pop up on the markets, however the following data is also out this week that may affect exchange rates for Sterling against the Swiss Franc, Canadian Dollar and the U.S Dollar.

 

17th March – Swiss Trade Balance data

18th March – Inflationary data for both the U.S and Canada

19th March – Canadian Retail Sales data

 

Buying or selling Euros? Greece is still a factor!

 

Those of you with Euros still to buy or sell should also be extremely wary of any further releases regarding the economic situation in Greece and how the Euro Zone are planning to attack it.

 

A decision is now fairly imminent and which way the market goes is all dependent on how it is taken by investors – once again another reason to consider the various options available to you inclusive of forward contracts, stop losses and limit orders to protect yourself from adverse 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 contact form and I will be in touch with you shortly.

Sterling Euro Dollar Forecast – The week ahead

This daily report focuses on key current considerations affecting the foreign currency markets, and how this may vary exchange rates which can have a big impact on the overall cost when you purchase currency and are sending money overseas.

• Dollar remains positive
• Possible strong Euro finish in March
• Creation of a European Monetary Fund gains support

What Are The Prospects For The Euro

Greece has been threatening to play its trump card by asking for assistance from the International Monetary Fund. This would at worst call into question the whole economic foundation of the EU and at least be seen as highly embarrassing for the EU as it as unable to resolve the situation internally. 

This elicited a series of supportive statements from France and Germany last week which caused a Euro rally which is unlikely to be undermined by the ZEW Current Situation survey (which gives an indication of German investor sentiment on Wednesday). 

The actual form this support will take remains vague however discussions have started regarding the formation of EMF (not the 1980’s band pictured here but instead a European Monetary Fund (a European version of the IMF the international lender of last resort) whilst this will be too late to help Greece now it indicates a recognition of the considerable strengthening of European ties required to rebuild sustainability in the Eurozone.

This will be a complex process but the willingness now to tackle it will provide increased long term strength to Euro value further challenging the pound and maybe challenging the US dollar as a world currency in 2011.  Today’s Eurozone employment change figures may stimulate an exchange rate spike if the forecast -0.5% fails to materialise.

Dollars Remains Positive

Wednesdays US interest rate decision is unlikely to increase interest rates but the dollar continued its inexorable rise on the back of US job figures which may indicate that the recovery in the US may be sustained and with Friday’s growth in retail sales from an anticipated 0.1% to an actual 0.3% the number of positive indicators are growing for the US.

Strong US results are creating demand for goods with Japan and China who are using an undervalued yen and renminbi to supply it with imported goods much to US annoyance. 

Resource rich economies like Australia are noticing increased demand for their raw materials, many of which are priced in US dollars and on the back of this demand their economy is growing and their currency is strengthening.
 
One life line that may be provided to sterling may be the housing market, a surge in demand could pull the UK economy back on track by stimulating spending however this morning’s Right Move House Price Index, based on a sample of residential property, came in below expectations at 0.1% for March

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 contact form and I will be in touch with you shortly.

Have a great day and thanks for reading!

Daniel Wright

Sterling stable in morning trading

The Pound has remained reasonably stable in early morning trading today and on a relatively thin day of data for the U.K exchange rates for the Pound against a basket of major currencies will be reliant on their data releases.

These are namely Industrial production for the Euro Zone at 10:00am and retail sales plus unemployment data for the U.S and Canada in the afternoon.

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 contact form and I will be in touch with you shortly.

Pound Outlook

Sterling exchange rates have taken a hit over the course of the UK trading session weakening against all major currencies. It seems that the uncertainty about the general election and the possibility of a  hung parliament outcome is not helping the UK exchange rates at present.

It seems that the longer it takes for Gordon Brown to call the general election the longer it will be before the Pound starts to strengthen again. If we do end up with a hung parliament then it may be well into 2011 before sterling exchange rates do revise on the up.

With all the problems that are surrounding the PIGS of the Euro Zone at present we have to ask ourselves if the pound can not strengthen on the Euro now what are the chances once Greece implements their strategies to reduce their massive fiscal budget deficit?

I feel that the longer the UK’s political instability continues the once great British Pound will be the only loser!!!

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 contact form and I will be in touch with you shortly.

Sterling forecast – The week ahead

The Pound faces yet again another rocky week no doubt with a number of releases of note due out for the U.K in the next few days.

Firstly, we still have the dark cloud of a hung parliament hanging over our heads which has been one of the main factors holding Sterling back of late – this is likely to continue holding the Pound back in the lead up to the election.

Overnight tonight sees the release of retail sales data and house price balance data at 00:01am – any change to the expected releases may lead to volatility overnight for Sterling.

Tommorow morning will bring trade balance data for the U.K – I personally feel we may we this come out slightly better than expected due to the recent drop in value of the Pound which can only improve exports one would imagine.

Wednesday am brings industrial  production and manufacturing production data in early morning trading followed by the fresh GDP estimate from the NIESR (National Institute of Social and Economic research).

Both releases may lead to market movements – The last production release was actually better than analysts expected so should this be on the up again further Sterling strength may be seen.

The NIESR estimate could potentially throw the cat amongst the financial pigeons should they estimate that the U.K GDP figures are due to dip again leading towards a potential double dip recession… should this be the case the Pound may drop dramatically.

On top of all the data releases the currency markets are there to surprise us too, so be wary of any mention of QE by the Bank of England, any speeches from Alistair Darling or issues surrounding Greece over the course of the week.

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 contact form and I will be in touch with you shortly.

Have a great day and thanks for reading!

Exchange rate forecast GBP EUR USD SEK CAD CHF ZAR JPY and more!

Bank of England to decide fate for the Pound today – Sterling forecast

Today at midday sees the Bank of England interest rate decision and although no change in interest rates is expected the focus appears to be on whether or not further QE will be put into place.

The BOE seem to like mentioning QE as a tool to talk down the value of the POund which in turn keeps our exports up and this has certainly worked in their favour again over the past week or so with the losses we have seen.

The losses as mentioned previously are due to a potential hung parliament, a large deal with Prudential and mortgage approval data being absolutely dire at the start of the week, add to that our revised GDP figures from Friday and things do not look great for Sterling.

Greece place new measures which brings minor confidence back to the Euro and minor strength – Euro forecast

Yesterday Greece announced details of their plans to conquer their huge budget deficit plans and how they would be supporting European assistance.

This was taken reasonably well for the Euro Zone and led to minor Euro strength but I am sure we have not heard the last of it.

U.S Unemployment figures set to lead to market volatility

Later this afternoon sees the release of unemployment figures for the States and it is a coin toss as to whether or not we will continue to see a further increase in jobless claims as we saw nearly 500,000 new claims in January.

The services sector appears to be improving in the U.S however whatever comes out of today’s unemployment figure is bound to cause some volatility.

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