No change in GBP/EUR after ECB Draghi Speech

Thursday 24th April 2014 
Sterling remains well supported today, however rates haven’t risen any higher following the press conference by ECB member Mario Draghi.

Sterling/Euro remains at €1.2150 

As highlighted in previous posts this week, there was a chance that Pound/Euro rates could have risen today. 

The ECB president Mario Draghi has been warning against a strong Euro, and in recent speeches he has given little hints about further monetary easing to stop the Euro getting too strong. He gave a press conference this morning, during which he could well have talked about the Euro being overvalued if he had chosen to do so, and if he had hinted at some sort of easing I would have expected GBP/EUR to make gains. 

In the event it had no real effect. He did say that the ECB could make asset purchases to ward off the threat of disinflation, and mentioned that undue tightening of monetary conditions could lead to negative deposit rates, but didn’t really add anything to what he has already said previously. Read all his comments here if you so wish!

So rates did climb a little from 1.2130 to 1.2150, where they remain at the time of writing. We saw a slight dip in rates before his speech but as the chart below shows, with nothing new on offer in his words, the market returned to its starting point. 

We now look ahead to tomorrow morning’s UK Retail Sales. I’m expected the number to show growth of around 3.8%. As Retail Sales are a good overall barometer of economic activity, it could push Sterling higher if the actual number surprises to the upside. 

Sterling/Euro close to a 14 month high 

The current levels are within 1 cent of the best they have been since January 2013 so it does seem to be a favourable time to buy Euros with Sterling. 

If you have an upcoming currency requirement, then why not get in touch to see what rate I can offer you, those with large volumes to convert may be surprised at the difference even a slightly better rate of exchange can make.

Alastair Archbold

Pound/Euro rates fall after BoE Minutes

Wednesday 23rd April 
We’ve had good news and bad news about the UK economy today, but the bad news won the day and as a result we have seen the Pound fall, as I suggested that it would in my post yesterday, and it was for the reason I predicted, the Bank of England minutes. I’ll give you the good news first after a quick snapshot of today's Pound/Euro movements:

The good news: 

At 09:30am this morning we actually had some very positive UK data – figures showed that Public Sector borrowing by the government was much less than expected. Markets expected a number of £9.1bn, but the actual figure was only £4.86bn. This was very good news, however failed to make any impact on the value of the Pound as everyone waited for the Bank of England minutes. 

The Bank of England's Monetary Policy Committee (MPC) has increased its UK economic growth forecast for the first quarter of the year, from 0.9% to 1%. There was further good news for the economy from a survey by the CBI, which indicated strong growth in orders for UK manufacturers. 

The bad news: 

Now for the bad news, and this is what affected the currency markets today. Focus today was always going to be about the Bank of England minutes. These showed that there is no real consensus within the Monetary Policy Committee, and they highlighted a growing debate between policymakers about slack in the economy and the medium-term inflation outlook. 

The markets took this as a sign that an interest rate hike in the UK is some way off, and as the chart below shows we saw the Pound/Euro level drop from 1.22 down to 1.2130 where it settled. 

What next for Pound/Euro 

I actually think this dip may be short lived. The next main data is tomorrow’s speech by the ECB president Mario Draghi. As I outlined yesterday, he may hint at monetary easing, such as Quantitative Easing, to stop the Euro getting to strong. If he does hint at this in his speech at 11am tomorrow, then expect GBP/EUR to bounce back. 

Those with Euros to sell should therefore consider taking advantage of the dip we have seen today. Euro buyers should hold off for gains, but place a Stop Loss order to protect you in case he says nothing about easing and the rate drops further. 

We also have UK Retail Sales on Friday which I think could be better than many analysts expect, so I don’t think we’ll see the rate drop much further in the short term. 

Do you have a currency transaction to make and want the best Euro rates? 

I can help in a number of ways. Firstly I can source excellent exchange rates, so why not get in touch for a quote to compare with your bank or existing broker. I could get you a rate up to 5% better than you can elsewhere.

I can also discuss what is moving the market to help you to decide when to lock in a rate. I also offer various types of currency contract designed to protect against adverse market movements, and target rates above the current market. 

Whether you are buying or selling property abroad, or need to move one currency to another to pay for goods overseas, I can help you. 

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Sterling/Euro exchange rates likely to move this week

Tuesday 22nd April 2014 
Good afternoon, and welcome back to regular currency updates after the Easter break. 

It’s been a quiet start to the week with no major data releases, and Sterling/Euro remains quite close to €1.22, with Sterling/Dollar hovering a little above $1.6800. 

Will Pound/Euro rates go up or down this week? 

There are 2 key things happening this week that I think will affect exchange rates. I’ve listed the week’s data at the bottom of today’s post, but I will also go into a little detail about the main releases that I think could change Pound/Euro rates. 

In effect we have the central banks of the UK and Europe pulling in different directions, and this will likely have an impact on which way the Pound/Euro currency pair could go in the coming weeks and months…. 

Bank of England could cause GBP/EUR rates to fall 

Tomorrow morning we have the latest minutes from the BoE meeting, and this will show what was discussed with regards to interest rates. I expect they may well hint that they will now be looking at a broad range of factors that will determine when they will raise interest rates. 

If this hints that rates won’t rise until well into 2015, then the Pound may weaken off and erode the gains we saw last week. 

European Central Bank could cause GBP/EUR rates to rise 

On Thursday, the European Central Bank President Mario Draghi is scheduled to give a keynote speech. He recently made clear the euro's strength is a possible trigger for the central bank to ease monetary policy. Very weak inflation in the euro zone, due partly to the strong exchange rate, has raised pressure on the ECB to further loosen monetary policy to stimulate growth. 

In the past few weeks Draghi has brought the currency into focus and warned that any further strengthening could lead the euro zone's central bank to use unconventional tools such as asset purchases. If he expands on this further, the Euro could weaken and GBP/EUR rates could rise. 

So as you can see, we could see rates move either way this week due to the above. To discuss your requirements in more detail, or if you would like a quote on the best exchange rate I can get for you, click here to send me a free enquiry today. 

The rest of this week’s economic data 

Wednesday 23rd April 2014 

The important data today is the Bank of England minutes, which show what was discussed in their recent interest rate meeting. They could well hint that a rate hike is some way off, which would weaken the Pound and cause exchange rates to drop. 

We also have Inflation data from the Eurozone, Home Sales data from the United States, and an Interest rate decision from New Zealand. I think they will raise rates, which will cause GBP/NZD to fall if they indeed choose to do so. 

Thursday 24th April 2014 

There is nothing of note from the UK today, but as I mentioned in my introduction, we have a speech by the ECB president Mario Draghi. He could hint at monetary easing, which would weaken the Euro and cause GBP/EUR rates to go up. 

Stateside we have Jobless claims numbers, so GBP/USD could be affected. 

Friday 25th April 2014 

We end the week with UK Retail Sales and mortgage approvals, and a consumer sentiment survey from the USA. 

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