Pound/Euro hits €1.35 forecast for 2015

Wednesday 28th January 2015 
In my last post at the end of last week I explained that the European Central Bank (ECB) announcement of a Quantitative Easing (QE programme) had weakened the Euro and pushed the GBP/EUR exchange rate to €1.32. 

I’ve been away from the trading floor on holiday for a few days, but the currency markets have continued to show volatility, with the Pound/Euro rate climbing and briefly touching an incredible new 7 year high of €1.3500 before dropping back away due to growing uncertainty over what the result of the Greek election means for the EU economy.

Greek election causes Euro to weaken further 

At the weekend the Greek Syriza party came to power, and this has caused significant weakness in the Eurozone. You can read a good overview on what’s been happening here on the BBC website.

As far as exchange rates are concerned, the news has caused the Euro to weaken and become cheaper to buy. At one point we briefly saw Sterling/Euro rates hit €1.35 before dropping back to around €1.33 / €1.34. 

Effectively the Syriza party have won because they succeeded in selling an illusion that Greece can stop paying the debt, and still stay in the euro. This is impossible. It’s one or the other, and either option will have further implications to the Euro economy. The Greek people don't seem desperately grateful for the €240 billion they have received in bailouts and are trying to renegotiate their debt. Unless compromise is made there is a real chance Greece could leave the Eurozone, and abandon the Euro to return to the drachma. This would cause massive disruption. There will a government default, corporate defaults and bank defaults. 

In essence it is the uncertainty over what will happen that is causing Euro weakness, and this has presented great buying opportunities for those that need Euros. Rates have climbed to their best in 7 years. To put the recent gains into perspective, this month alone a €250,000 property in Europe is nearly £9000.00 cheaper due to the rise in exchange rates.

Will rates climb higher or drop back towards 1.30? 

It’s impossible to predict exchange rates. However if you need to buy Euros, do consider taking advantage of what are the best rates in 7 years. It may go higher of course, but equally given it has risen by 5 cents already this year alone, it could easily fall back. If you want to hold our for more, then you should have a 'stop loss' in place to cover you should the market go the other way. Get in touch with me today to discuss how these type of contracts work.

I think all the bad news surrounding the Euro has now happened and is therefore reflected in the current rate of exchange. Indeed many in the market believe that a Greek exit from the Eurozone could actually be a good thing for the Euro, so should this become more likely, we may actually see GBP/EUR rates fall. 

It’s also worth noting the Pound isn’t particularly strong. Interest rates are now not l expected to go up for some time and this could hold the Pound back. Also, recently figures showed the best annual UK growth for years, however the rate of growth slowed significantly at the end of 2014, so the Pound is actually a little on the back foot. It's only weakness in the Euro that has caused the gains in the rate, and not any particular strength for Sterling.

Do you have an upcoming currency transaction? 

Whether you’re buying Euros with Sterling, or converting Dollars back to Pounds, whatever your currency needs, I can provide a very competitive quote to compare with your bank or existing broker. I also offer free consultations to discuss which way the market is moving, to help you decide when to fix your exchange rate. In addition, I can explain the various tools and options you can consider to make sure you don’t get lower exchange rate than necessary. 

So if you need to convert one currency to another and are looking for the best exchange rates, click below to make a free enquiry with me today, and take the first step to making the most of your currency. 

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Pound/Euro hits €1.32 after QE announced by ECB

Thursday 22nd January 2015 
The European Central Bank (ECB) today announced its Quantitative Easing (QE) package, outlining over €1tn of stimulus for the economy. It’s been the main driver of exchange rates in recent weeks and today it became a reality. You can read a very good outline of the measures and how they work here on the BBC website. 

What has it meant for exchange rates? 

The Euro has weakened as markets expected it would. As you can see from the chart below, Pound/Euro rates have risen to a new 7 year high of €1.32, so fantastic rates for Euro buyers: 

Will it go higher or drop back down? 

I can’t see rates going that much higher, and given the GBP/EUR cross is now comfortably above the €1.30 benchmark, I think it will stay at this level. For this reason anyone that needs to buy Euro soon should consider fixing a rate while it’s so good. If you want to gamble on the hope of higher rates, then you should place a ‘Stop Loss’ order to protect against rates going back down. 

Euro sellers don’t have much on the horizon that could improve things. This weekend’s election could cause further uncertainty for the beleaguered Eurozone, and so if you need to sell Euros, consider cutting your losses and getting something done sooner rather than later. 

Getting the best exchange rates. 

If you have a currency requirement for any major international currency, and need to have funds wired between bank accounts, I can help you achieve excellent rates of exchange. Whether you are buying or selling property abroad, or are a business that sends and receives payments in foreign currencies, I can save you up to 5% on the exchange rate, which is considerable when moving a large sum. 

Even if you already use a currency broker, it costs nothing to compare the rates that I can offer. 

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Pound/Euro exchange rates drop back below €1.30

Wednesday 21st January 2015
Today we have seen economic data that has pushed the GBP/EUR rate back below the key €1.30 level. Let’s take a look at why the Pound has fallen against the Euro, and which way the currency pair may move in the coming weeks. 

UK Unemployment and Interest Rates 

At 09:30am this morning the latest UK Unemployment figures were released, showing a drop to just less than 2 million, which is the lowest level for more than six years. However there are signals that growth in employment may be easing, as this drop is the smallest since the three months to September 2013. 

Also this morning we saw the Bank of England keep interest rates on hold, as expected, but what was surprising is that all 9 members voted to keep the status quo. Martin Weale and Ian McCafferty, who since August had called for a hike in rates, seem to have changed their mind. As all 9 members voted, it now looks like interest rates won’t be going up in the UK until mid-2016, and as a result the Pound has weakened off. 

ECB to conduct QE 

2 European Central Bank (ECB) officials today said that they will indeed pursue a Quantitative Easing programme, to the tune of €50bn per month for the next 2 years. The actual announcement is tomorrow and is widely expected to happen, but today’s comments have caused the Euro to strengthen, and coupled with the UK news I mentioned earlier, pushed GBP/EUR rates below €1.30: 

So why has the Euro strengthened if QE is going to happen? 

The market had already priced in the expectation of QE. The actual announcement however goes further than analysts had been expecting, as most thought that a 1 year programme would be announced. As today’s comments hint at a much longer QE programme, it seems that the market has taken this as a positive sign as the Euro has gained strength across the board this afternoon. It could also be the case that the expectation had been overly priced into the market and now the reality is here, there has been a correction and the 7 year GBP/EUR high seems to have been short lived. 

What next for Pound/Euro? 

We could see further movements tomorrow when the markets react to the actual announcement, however while in general I expect the Pound to keep outperforming the weakening Euro, I can’t see any further significant gains given most of Sterling’s recent strength was on the expectation of interest rates going up , which is now unlikely to happen soon. 

 So with the GBP/EUR rate at the key €1.30 level, it’s a good time for those that need to buy or sell Euros to take stock of their requirement and decide when to fix a rate. Click here to send me a free no obligation enquiry today, and I can get in touch to provide you a quote on the rates I can provide, and discuss the options you have to protect against the rate moving against you. 

Click here to send a free no obligation enquiry today.