GBP/EUR falls 4 cents in a week. GBP/USD also set to drop

Tuesday 28th July 2015
Sterling has fallen sharply against the Euro of late, and in the last week had slipped from €1.44 down to €1.40. As you can see from the chart below, the rate has recovered slightly this morning, getting back above €1.41: 




The main reason for the gradual slide in Sterling is partly due to renewed optimism surround Greece, but also the global economic picture. If you look at the global economy, you will see that the Chinese market is in turmoil, and there has also been a sharp drop in Commodity prices. This is giving investors serious doubts over the strength of economic growth worldwide, and in turn this casts some doubt over whether the Bank of England will actually raise interest rates at the turn of the year. 

The global picture means that the Bank of England may well have to tighten their monetary policy, and this has pulled Sterling lower against other currencies. 

This morning however, strong UK Growth figures have shown that the economy has grown by 0.7% in the last few months, which is an improvement over recent measures. This positive news has pushed the Sterling/Euro rate up by 1% comfortably over the €1.41 mark. 

Sterling/Dollar 

It is interest rates driving this currency pair too at the moment. Today, the US Federal Reserve starts a 2 day meeting, with an announcement due tomorrow. If they give further signals that interest rates are going to rise within the next few months, then expect the US Dollar to gain strength and pull rates lower.

 
Currently GBP/USD is trading at around $1.56. I don’t expect the level to remain at these levels. As the US are widely expected to be the first western economy to start pushing up rates, this could mean the USD strengthens. I still expect rates to drop below the key $1.50 mark by the end of the year. 

Do you have a currency transaction to perform? 

You can get in touch with me using the link below to obtain a quotation on your exchange. I usually have no problem beating rates from bank and other brokers, and even a small improvement in the rate can save you a significant amount of money. 


Why has the Pound/Euro rate fallen?

Thursday 23rd July 2015
Sterling/Euro rates have been threatening to fall for a week now, and today the market took a plunge pushing GBP/EUR rates down into the €1.41’s. After a quick look at the chart, I’ll go into more detail regarding what caused the rate to fall, and whether the Pound will go back up against the Euro. 



Why has the Pound fallen against the Euro? 

The first reason was Greece, which is becoming a regular and tiresome topic in the currency world! However it looks like things are getting closed to being resolved. They have taken a crucial step towards a bailout after its parliament passed a second set of reforms today, and this has given confidence back to the Euro. This is why the market initially started dropping this morning. There had been fears of a rebellion by Greek MPs, but the Greek Prime Minister Alexis Tsipras got the required support. This means that negotiations can begin on approving the terms of a third bailout. It looks like a final deal will be sorted out within the next 3 weeks, and if so I’d expect the rate to drop even further. 

The second reason for the decline was some very poor UK Retail Sales numbers this morning. The number was expected to show a rise of 0.4%, but actually sales dropped by -0.2%. As retail sales are seen as a good overall barometer of economic activity, the news sent the Pound lower, pushing rates even further from the 8 year high of €1.44 we’ve recently seen. 

Will rates recover?

Moving Forwards, longer term I think rates will continue to remain strong due to the UK economy performing well, despite today’s poor numbers. However in the short to medium term, if the ongoing Greek saga finally ends with a full €86bn bailout, expect the GBP/EUR rate to fall sharply as the Euro regains strength. 

Do you have a currency transaction to perform? 

You can get in touch with me using the link below to obtain a quotation on your exchange. I usually have no problem beating rates from bank and other brokers, and even a small improvement in the rate can save you a significant amount of money. 

 

Sterling gains on BoE MPC minutes

Wednesday 22nd July 2015 
Yesterday was not a good one for Sterling/Euro rates, with levels sliding all day from €1.44 to €1.42. The reason for the drop was renewed confidence about Greece, and in particular credit rating agencies increasing Greece’s rating as they felt there is now much less chance of them leaving the Eurozone. 

This morning, Sterling has fought back slightly after the release of the Bank of England (BoE) minutes from this morning’s Monetary Policy Committee (MPC) meeting. The full minutes can be read here.  

The key phrase I noticed was “the decision between holding Bank Rate at its current level versus a small increase was becoming more finely balanced”. This means that despite all 9 members voting to keep the interest rate at the record low of 0.5%, it shows that they are going to start leaning towards finally raising rates towards the end of this year. The next meeting is in 6 weeks’ time, and we may start to see some of the members voting for a hike in rates. 

This has given Sterling a boost, as the rumour of an interest rate rise usually does. The same effect has been seen on the US Dollar this week. 

View live currency graphs here

Today’s Data 

All eyes were on the Bank of England and the inflation report this morning, and at 10am there is a parliamentary inflation report. For the remainder of today, the only data of note is an Interest Rate decision and policy statement by the Reserve Bank of New Zealand. Their inflation is very low at the moment, and the NZD is very weak due to the low commodity prices (See my post about commodity currencies to learn more). I think there is a chance they will cut interest rates to try and boost the economy. If they do, then expect GBP/NZD rates to go higher. 

Getting the best exchange rates 

If you want to get the best possible exchange rates, then contact me for a quote. I provide commercial rates of exchange to private and corporate clients looking to trade £5k+. You can send me a free enquiry using the link below, and I will get in touch personally to discuss your requirements, explain how the service works, and discuss the different options you can consider to help you get the best rate of exchange possible. 

 

GBP/EUR, GBP/USD, GBP/AUD currency forecast

Tuesday 21st July 2015 
In today’s post I’ll take a look at what’s been happening with Sterling/Euro, Sterling/Australian Dollar & Sterling/US Dollar, including where rates may head in the coming months. (If you would like to discuss your currency requirement and obtain a quote on the best exchange rate I can provide, get in touch by clicking here.)

Sterling/Euro 

GBP/EUR rates started the week at new highs of €1.44. This was due to comments from the Bank of England, hinting that interest rates may finally start to rise at the end of the year. This strengthened Sterling pushing it higher against other currencies. 


Today however we’ve seen the rate drop back steadily throughout the day by 1% at the time of writing, as you can see from the chart above. Renewed optimism due to Greece starting to repay it's debts, and the fact they may soon secure a proper bailout, is starting to strengthen the Euro and make it more expensive to buy. Tomorrow, we have the Bank of England (BoE) meeting and minutes on their discussions on rates. If these show that 2 or more of the BoE’s Monetary Policy Committee (MPC) vote for a hike (or even discussed the possibility of it) the Pound may gain further. 

Sterling/Australian Dollar  

GBP/AUD rates are very high at the moment, as you can see from the chart below: 

 
Current levels are at 2.11 which are around the best they’ve been in 8 years. The reason is that China, Australia’s largest trading partner is slowing down, and there is less demand for commodities. Commodity prices are very low at the moment, weakening currencies such as the CAD, NZD, ZAR as I touched on in a recent post.  

Late tonight, the Aussies release inflation data, and there is a speech by their central bank governor. If he hints that interest rates will be cut again, then we could see GBP/AUD go even higher. 

Sterling/US Dollar  

GBP/USD rates have been dropping of late. This is mainly due to the fact US interest rates are expected to rise in a few months’ time, the first major western economy likely to start pushing rates up. The higher return potential means USD is in demand and getting stronger. 


I expect the US Dollar to continue gaining strength in the coming months, and wouldn’t be surprised to see GBP/USD rates back at $1.50 or even below this by the latter part of 2015. 

Getting the best exchange rates 

If you want to get the best possible exchange rates, then contact me for a quote. I provide commercial rates of exchange to private and corporate clients looking to trade £5k+. You can send me a free enquiry using the link below, and I will get in touch personally to discuss your requirements, explain how the service works, and discuss the different options you can consider to help you get the best rate of exchange possible.