GBP exchange rate spike short lived

Yesterday retail sales for the UK were released yesterday and were very positive.  This enabled the pound to make good gains against a number of major currencies. However, any hopes of a good spike in exchange rate were dashed when the Euro zone announcement for a bailout in Greece was announced.  Therefore, despite the strong retail figures the pound still lost ground against most major currencies. I believe that this is indicative of the fact that any longer term any sterling recovery will be sluggish. The main reasons for this are: 

  • The Bank of England may carry out further QE
  • Interest rates are likely to remain low for an extended period in the UK
  • Uncertainty surrounding a hung parliament and how the national debt problem may be dealt with
  • The UK is expecting huge public spending cuts
  • Continued poor economic performance – the UK is a service driven economy and reduced demand for our services is damaging the pound

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 – will the pound remain weak?

GBPEUR rate remains steady as markets await the Autumn Budget

As many readers will be aware the GBP has lost value against a host of major currencies in the last 18 months.  So while this is great news for anyone holding a foreign currency and looking to buy back in to sterling, for anyone who needs to buy foregin currency this is really bad news.  Unfortunately it does not appear that there is any respite in the near future as the forecast is for the GBP to continue to remain weak over the next few months in the lead up to the election.

The main reasons for this are:

  • Continued poor performance in the UK economy – decreasing demand for the pound
  • The UK is a service driven country and reduced demand for our services is reducing demand for sterling
  • The Bank of England may carry out further Quantitative easing
  • Interest rates are likely to remain low for an extended period in the UK
  • Uncertainty surrounding a hung parliment and how the national debt problem may be dealt with

Could the pound recover after the election?

In my opinion the short answer is yes.  There are many reasons behind this, but I believe the key issue is that uncertainty is really holding the pound back.  Because the markets dont’ know who will be in government, or if we may see a hung Parliament, they are nervous.  Add to this the fact that we don’t know how the new Government will deal with the national debt and budget deficit problems and the markets are twice as nervous.

All this uncertainty and nervousness is really holding the pound back which does make a very good investment at present in my opinion.  Once the new government is in power and the uncertainty is removed I would not be at all surprised if we see sterling move up in to the 1.20‘s against the Euro and push back into the 1.60‘s against the USD.

Whether you are buying or selling GBP an experienced currency broker will be able to save you money on your currency transfer.

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 and report – the week so far and looking forward

GBPEUR rate remains steady as markets await the Autumn Budget

The Pound started of the week poorly then managed to have a fantastic few days of gains and positive data which has bought up some great buying and selling opportunites so far.

Unemployment data came out much better than expected for the U.K which led to large Sterling gains over the course of the following 24 hours.

It is not surprising to see data releases coming out much better leading up to an election…. i’m sure the figures were spot on however that element of doubt always creeps in as the Government are battling to regain their position.

Today the Pound has lost ground following comments from one of the members of the Bank of England Andrew Sentance saying the following:

“You have to recognise there is some risk of a double dip, but that’s not the central forecast”

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.

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!

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