Friday, 28 April 2017

GBP/EUR falls as single currency strengthens

Pound/Euro starts to fall

This morning the Pound/Euro rate looked like it was going to have another good run, touching €1.19 vs. the Euro. However economic figures released this morning have halted the decent run the pair had been having, pulling rates down to €1.18.

The catalyst for the drop was the release of the latest preliminary GDP figures from the UK. These were lower than expected indicating that the economy is not performing as well as thought. This started pulling the Pound lower. Half an hour later at 10am this morning, the EU released it's latest inflation figures. These were better than expected, and with inflation rising in the EU it's more and more likely that they will end their stimulus programme and start raising interest rates. Higher rates strengthen a currency due to the higher return on offer. The stronger Euro therefore became more expensive, pulling GBP/EUR lower as you can see from the chart below.  With the French elections a week away, it's likely we'll see further Euro strength if Macron wins the presidency. For this reason, Euro buyers may wish to consider a Forward contract, where you can freeze the rate now and protect against a further drop.

Pound/Dollar riding high

It's a different story for GBP/USD however. We often see the EUro and Dollar move inversely, so that when the Euro strengthens as it has done this morning, the Dollar weakens. This is illustrated in the chart below showing the rise in Pound/Dollar rates that are now pretty close to $1.30. This is a huge rise considering the pair was nearly at $1.20 a month ago. Given the 6%+ rise in this pair and the fact the USA are likely to raise interest rates several more times this year, I don't think the pair will break $1.30 any time soon though.

Do you need to exchange currency?

If you need to buy or sell foreign currency, to buy or sell property abroad or pay an invoice, then get in touch to find out what we can do for you. We offer much better rates than bank and other brokers usually offer, and have a range of contract types e.g. a Forward contract that lets you freeze the currency exchange rate for up to 2 years by paying a small deposit.

Make an enquiry by clicking here

Have a great bank holiday weekend. I'll be back in action on Tuesday morning.

Thursday, 27 April 2017

Best exchange rates when purchasing overseas property

How we can help you get the best exchange rates 

If you're reading this blog then there is a good chance you're interested in getting the best exchange rates. We are a commercial foreign exchange brokerage, and can help anyone looking to convert one currency to another on a bank to bank transfer basis. We trade every major currency pair (GBPEUR, GBPUSD, GBPAUD, GBPNZD, GBPCAD, GBPCHF, GBPDKK, GBPHKD etc.). We don't offer cash or holiday money; only foreign exchange for those that need to convert £5k+ and have their currency wired to a bank account, perfect for things like overseas property purchases. The kind of transactions we can help with are:

  • Buying or Selling property abroad 
  • Topping up a bank account overseas 
  • Businesses that need to pay for goods in a foreign currency 
  • Regular monthly payments e.g. pensions 
  • Businesses that import/export 

We offer very competitive rates of exchange that are around 3% better than banks or other brokers may offer. On a typical transfer of €250,000.00 we could save you up to £6000.00 compare to using your bank. It's commission free with no hidden charges, and we're fully authorised by the FCA in the UK. We have been trading for over 10 years and have helped thousands of clients get the very best rates of exchange. 

If you think you would benefit from our foreign exchange services and would like to have a quick chat about how the service works, or simply get a quick quote, click here to send a free enquiry today or complete the contact form below.

Pound/Euro stable at €1.1850

Sterling/Euro rates remain supported and have risen a little further today in to the mid €1.18's. The rate had dropped away following the French election result, but recent polling for the UK general election seems to support the view that Theresa May will win a huge majority. This has helped to strengthen the Pound a little further.

Today there was an ECB announcement and initially the president, Mario Draghi, caused the Euro to strengthen and the Pound/Euro rate dropped. He said that the EU economy has continued to improve and faces fewer dangers, and added that downside risks have diminished. GBP/EUR dropped to €1.18 as a result of his comments. However the rate quickly recovered back up to about €1.1850 again when he added that if the EU economy started to slow, they would continue and perhaps even increase their Quantitative Easing measures, which put things back to where they were. This shows how simple comments from leaders of central banks can have an immediate impact on exchange rates.

Will the Pound/Euro rate go up or down this week?

The main thing that will affect GBP/EUR rates for the rest of the week comes tomorrow when we have UK GDP figures released at 09:30am. These are expected to show Britain's economy grew by 0.4% in the last quarter. If the actual number is higher than this, then the Pound will rise further. If it's lower, then expect the Pound to drop.

The current levels to buy Euros are close to the best they have been since the EU referendum last June and have risen by around 5% since last month. Many clients want to know if rates will continue moving higher. It's impossible to predict, but as I pointed out in my last post we have seen GBP/EUR get to these levels several times over the last 9 months however it's always dropped back away again. For this reason it's certainly worth considering fixing a rate if you need Euros in the next 6 months. Once the French elections are out of the way and Brexit negotiations begin, there is a good chance the Pound will come under pressure and exchange rates may drop back away. Given how much it's gone up since March, Euro buyers should be wary of holding out for an inch, and risk losing a yard. If you need to buy Euros then get in touch today for a free quote.

Tuesday, 25 April 2017

Will Pound/Euro rates go up or down?

GBP/EUR spent most of last week getting very close to €1.20 without managing to sustain a breakthrough; a trend we’ve seen on 6 separate occasions since last summer. It was never very likely that we would see rates breach this level due to it being such a key level of resistance. After the French election result we saw a relief rally in the markets, strengthening the Euro and pushing rates lower. This morning GBP/EUR sits in the mid to high €1.17’s.

If the result was as expected then why did it affect the rate so much? 

It wasn’t really much of a surprise. The polls said that Macron and Le Pen would get through with Le Pen getting knocked out in the second round and so far that’s exactly what happened. There had been fears the polls would be wrong, but as the result was exactly in line with what had been forecast, it caused the Euro to strengthen as a wave of relief swept across financial markets that have now cast aside any chance of Le Pen winning.

Given that rates to buy the Euro had risen by more than 5% since March, it was always likely to be a matter of when, and not if, we would see a correction downwards. The signs were already there last Friday when figures showed worse than expected Retail Sales figures, however these were largely ignored while the Pound rode the wave of optimism following Theresa May’s snap election surprise, and were distracted by what the weekend would have in store for France.

That distraction has evaporated and with the French elections now seemingly decided (if the polls are to be believed) I think that market focus will now swing back to how the UK economy is performing. Politically, nobody really expects anything other than a landslide victory for the Conservatives so I think it’s unlikely the initial campaigning will affect the Pound that much. Rather, the markets free of the fear of upsets in the EU can now firmly put the UK back in its sights for clues as to how the upcoming Brexit negotiations may affect the economy. So, after a period of welcome distraction where we’ve been able to focus on elections both home and abroad, I think it’s now back to business as usual, and that business is Brexit ‘uncertainty’.

Politics still to affect the Pound

Of course politics is still going to play its part. As the last year has shown, nobody can trust opinion polls. Who knows, perhaps Le Pen will win and GBP/EUR will rise to €1.25. Perhaps the Conservatives will lose and it will be Labour that forms a coalition. Imagine a world in which Brexit negotiations are to be conducted by Corbyn, Diane Abbott and Shami Chakrabati – without being partisan I think we can safely say the markets would not see it favourably and the Pound would fall significantly! While unlikely, the point is that nobody knows what will happen, either politically or with regards to which way exchange rates will go.

Will Pound/Euro go up or down?

Ultimately the Pound is likely to be driven by economic data, and the Euro will be influenced by any polls showing how the second round in France may go. In simple terms, the more likely it is that Macron will win, the lower Pound/Euro will go. Any surprise swing towards Le Pen would have the opposite effect and push rates higher, but nobody really thinks she’ll win, so based on all the information available at the moment, it’s more likely exchange rates will fall in the coming weeks than shoot back up to €1.20 again. Cast your mind back to March when rates were in the €1.13’s however and you can see that the current levels are actually still quite attractive.

For this reason, if you need to make a currency transfer in the next 6 months therefore, you should be getting in touch to discuss how we can help protect you against the rate moving the wrong way, and also provide you a free quote to compare with your bank, or existing broker, to see how much you can save.

Click here to get in touch today

Monday, 24 April 2017

Pound/Euro falls after French Elections

Pound/Euro rates fell sharply on Sunday following the first round of the French Elections. For once the pollsters seem to have got this right, with the result going exactly as expected. Le Pen and Macron will now face each other in the final round of voting in 2 weeks time.

As you can see from the chart below, as soon as markets in the far east opened, the rate dropped 2 cents from €1.1950 to €1.1750. This morning it's climbed back to around the €1.18 level:

Why has the Pound/Euro rate fallen?

There were fears that the polling would be wrong and that Le Pen might win the election. She's through the first round, but the reason the rate fell so much was because the result was as the polls had expected. This has eased market worries a little and means that if the polls are right, Le Pen won't win the next round. This strengthened the Euro significantly and made it more expensive to buy, pushing rates lower.

Will the rate recover?

We did warn last week that with rates touching €1.20 it would be wise to put some protection in place. Clients that put in place 'Stop Loss' orders were protected against the sudden drop. Look at the bigger picture though and the Pound/Euro rate is still attractive and is back to where it was this time last week before the UK election announcement. In March the rate was down in the €1.13's so the current levels are still attractive. Indeed if a client still needs to buy Euros, this weekend's movements could be an indication of what we'll see in a few weeks. If the polls are right and Le Pen does not win, expect the Euro to gain even more strength and GBP/EUR rates to fall further.

If you need to make a transfer, then get in touch for a free quote to make sure you are getting the best possible exchange rates. We also offer a free consultative service for clients with large transfers to make. We can explain your options and give our view on which way rates are heading, so that you can make an informed choice as to when to fix a rate of exchange.

Click here to get a free quote today.