GBP/EUR breaks €1.40 on strong UK Retail Sales

Sterling/Euro rates have today pushed through the €1.40 barrier again today, following stronger than expected UK Retail Sales data. This is the 3rd time in the last few months the pair has broken through the key 1.40 level: 

The much better than expected Retail Sales reflect a growing confidence in the UK economy, and as such Sterling has risen against other currencies. Also helping the Pound this week were the minutes to the recent Bank of England decision to hold interest rates. While all 9 members voted to keep rates on hold, it seems for 2 of them it was a finely balanced decision. This means that despite inflation turning negative this week, a 2016 interest rate hike could be on the cards, helping boost the Pound. 

Will Pound/Euro rates remain above €1.40? 

It’s impossible to predict of course, but looking at past performance it’s clear this level has been reached several times in the last few months before dropping back away. The only thing keeping the rate high is uncertainty over Greece’s next debt repayment. If they make progress in this respect then expect the rate to drop back away. If it looks like they will have difficulty meeting their commitments, the rate may be sustained above €1.40. 

Getting the best exchange rates 

If you have a currency transaction to perform, then get in touch for a quote and free consultation on the rates and service I can offer you. With rates up to 5% better than banks can offer, coupled with a range of contract types to protect you against adverse exchange rate movements, I could save you thousands on your currency transfer. I can help with bank to bank transfers for amounts £5k + and can source over 35 major international currency pairs including GBP, EUR, USD, AUD, NZD, CHF, CAD, HKD, SEK,NOK, DKK, HUF, TRY, PLN, CZK, SGD, THB, CNH, ZAR. 

Pound/Euro exchange rates May/June 2015

Tuesday 19th May 2015
Sterling/Euro rates continue to remain pretty volatile, and in the last 24 hours we have seen the pair rise from €1.3730 to nearly €1.40, which was due to weakness in the Euro. The gains didn’t last long however, and UK inflation figures this morning have weakened the Pound and knocked the rate down a cent, to around €1.3850 as the chart below shows. 

In today’s report I’ll explain what has caused the movements for Pound/Euro rates, and look at where the GBP/EUR exchange rate may move in May & June 2015. 

Euro weakness causes GBP/EUR to rise to nearly €1.40 

Greece has another large debt repayment to make on the 5th of June. Whether they will make it or not is having a big impact on the value of the Euro. The IMF think they don’t have much chance of meeting the payment, and their acknowledgement of this yesterday caused the Euro to weaken, pushing GBP/EUR rates up from 1.3750 to 1.3850. 

The weakness in the Euro continued this morning when European Central Bank officials said the bank could take further action, and pump even more money into the economy than they are doing already, in order to quash euro zone bond yields and boost inflation. If they increase their QE program and the amount of Euros their pumping in, then it will weaken the Euro. More of anything means it’s worth less, and that was the reason for this morning’s GBP/EUR push up to almost €1.40. 

UK inflation figures pull rates back down 

The rates only got to this level for 20 minutes or so, and then the UK released its latest inflation numbers. This showed that inflation turned negative for the first time in over 50 years. So why did this cause the Pound to drop? It’s because of interest rates. With inflation negative, there is no chance of a rate hike anytime soon. Because rates are going to stay low for a long time to come, there is little incentive for investors to buy the Pound, so that’s why the rate dropped back away. 

Where next for Sterling/Euro rates 

You can see from the chart that there is a steady line of support and resistance at around the €1.3850 market where it keeps settling back down. I think that whether the GBP/EUR rate goes up or down depends on what Greece is expected to do. Quite simply, if they don’t make their next payment or it looks like they won’t, the Euro could weaken further and push rates back towards €1.40. This is a key technical level so unless anything else unexpected happens I don’t think it will break through this. 

Alternatively the Greeks could just be delaying in order to re-negotiate the deal they are getting. If payments are made or an agreement is put in place, then the Euro could gain strength, pulling rates back down again as the single currency becomes more expensive to buy. 

Getting the best exchange rates 

Rates are very volatile at the moment, moving very quickly. In order to get the best possible rates you need to have a good currency broker who can monitor the market for you, explain the options you can consider on when to fix a rate, and get you a much better rate than banks will offer. The worst thing you can do is just watch the rate and hope itwill move your way, or use the bank to convert your funds. 

Why not give me a try? The rates and service I provide are exceptional, and with over 10 years’ experience helping personal and business customers with their currency requirements, it may be prudent to see if I can do the same for you. Send me a free no obligation enquiry today by clicking below. 

Pound soars back to nearly €1.40 after Conservative Majority

As I said in my last post just over a week ago, the blog was going to be quiet while I took a short holiday. Much has happened since I’ve been away! As most readers will already know, the Pound has surged higher against the Euro as Sterling posted its largest gains against the Euro in years. As exit polls showed that the Conservatives would take an overall majority, GBP/EUR rose 4 cents, and touched the €1.40 level several times as the chart below shows: 

Why did the Pound gain so much on a conservative win? 

The Pound had fallen sharply before the election, due to political uncertainty for investors who had expected a hung parliament. Most polls had again and again shown the two main parties neck and neck, with neither expected to secure a parliamentary majority. The overall majority for the conservatives while not popular with everyone, is certainly very good news for the UK economy. As such, investors rallied to buy the Pound, helping to push it up against other currencies. 

Will the Pound/Euro rate get back to €1.40? 

I personally don’t think so. You can see the resistance GBP/EUR has at €1.40 in the above chart, and the currency pair seems unable to break through this. Indeed this week we’ve seen the rate drop back to the €1.38 level. I think the Pound/Euro rate could now fall again, and I’ll explain the reasons why… 

  • The Conservatives now have a majority, they can implement much tighter monetary policy than they have done under the Con/Lib Dem coalition. This means that the Bank of England may now keep monetary policy easy and keep interest rates low, which would weaken the Pound, which could take some of the wind out of sterling's sails. 
  • Cameron has pledged to hold a referendum on membership of the European Union within two years, and the uncertainty this will generate will also keep investors wary and limit any further gains.
  • The Spotlight is now back on the EU and Greece, and actually recent figures suggest the European Central Banks stimulus program is having the desired effect, and the economy in Europe seems to be recovering. 
  • Greece (which incidentally is where I have just been on holiday!) seems to be playing ball and, for the moment, is meeting its debt repayments. The Euro is weak at the moment due to Greece, and if this gets resolved, it could regain strength and become more expensive to buy. 

What should you do if you need to buy Euros this year?

I can’t predict what the rate will do, nobody can. What you can do however is speak to an expert currency broker like me to ensure you have an understanding of the options available. For example if you are worried about the rate falling, you can lock in the rate now for up to 2 years with a Forward contract. If you want to gamble on rates going higher, then you can use a ‘Stop Loss’ order to fix a rate should we see it plummet below a particular level, so you’re not exposed. Or, you could hedge your bets and fix a rate on half your requirement now, and see what happens later in the year with the remaining funds you need. 

Do you need to achieve the best possible exchange rates? 

The above is just an example of how I can help you if you’re looking to buy or sell currency. I can source you rates of exchange that are very close to the mid-market level you see published online and if you are converting a large sum, the savings could be thousands of Pounds. If you would like a quote on the exchange rate I can provide, or would like to discuss your options in more detail regarding when to fix a rate, then click below to send me a free no obligation enquiry today.