Pound/Euro forecast between €1.24 and €1.27

Tuesday 21st October 2014 
In the week since my last post, we have seen significant volatility in Pound/Euro rates. As you can see from the chart below, we have seen highs touching €1.27, and lows or nearly €1.24: 


What is causing the volatility in GBP/EUR rates? 

The movements in the exchange rate over the last week have been very large indeed. In the last 7 days alone, the cost of buying a €250,000.00 property has differed by nearly £5000.00 purely due to fluctuations in the exchange rate. This clearly illustrates how important your timing is, in addition to having a good knowledge of what can move the exchange rate. 

The Pound fell last week on data and comments from the Bank of England, which suggest that interest rates are going to remain low for up to a year. This has taken the wind out of the Pound’s sales and caused exchange rates to drop. 

The fall was short lived however, as data from the Eurozone doesn’t exactly inspire confidence. Various EU economies are not performing very well, and this has weakened the Euro helping the rate to recover. 

Will Pound/Euro rates go up or down in the next 6 months? 

I personally think that the Pound’s strong run has come to an end and all the good news surrounding the UK economy is now largely priced into the rate. The only thing I can see that would cause rates to rise would be a further deterioration of the EU economy. 

Indeed I think it’s likely the European Central Bank will have to create money to pump in to the economy, which taken on its own could weaken the Euro and push rates up. 

What’s hard to quantify however, is what the knock on effect of an EU slowdown would have on the wider global economy, particularly the UK. The EU is our largest trading partner and as Europe slows, our growth is also at risk. So a weakening of the Pound could also be a result of a weakening in the Eurozone. 

In the short term, tomorrow’s Bank of England minutes showing how keen they are for an interest rate hike is the main event this week that will affect Sterling exchange rates. 

Get in touch to find out how to get the best exchange rates 

When you need to buy or sell currency, to buy property abroad for example, the exchange rate can make a huge difference to the cost. 

Getting the best exchange rates is paramount, as is timing your purchase. Often a property purchase or sale can take several months to complete, during which time your return could be severely affected by changes in the exchange rate. 

If you need to buy or sell currency for any reason then it’s worth getting in touch with me to discuss your requirements. I can provide you a quote for you to compare with your bank or existing broker. I can also explain what is happening to the exchange rate including helping you decide when to fix a rate. Also, I have various tools and contract types to protect you against the market moving against you, and ensure you don’t get a worse rate than is necessary. 

It’s free to make an enquiry, doesn’t obligate you in any way, and like thousands of clients that have contacted me through my blog, you could save thousands of pounds. 

Pound falls further on low inflation

Tuesday 14th October 2014
Sterling has fallen by a further cent today against the Euro, with rates dropping down into the €1.25’s. Against the US Dollar, rates have dropped by 1.5 cents bring rates down into to around $1.59. What has caused the Pound to fall? 

It is due to very low UK inflation numbers. Figures this morning showed that UK inflation fell to a 5 year low of 1.2%. The reason this has caused rates to fall is that these new low inflation numbers meant that an interest rate rise in the UK is very unlikely in the short term. I expect the Bank of England will now hold off well into 2015, probably after the general election. 

On the one hand, the UK economy is the fastest growing in the developed world, and this would normally mean a rise in interest rates. Indeed it’s this speculation that has been driving the Pound up in recent months. However these latest figures change all of that, so it looks like the Pounds run has come to an end for the time being. 

In my most recent report I warned that this could well be the case, and that rates were unlikely to go higher. That has proved to be true and rates have now tumbled away, repeating the trend as I suggested would be that case. 

If you need to buy or sell Euros, click here to make a free enquiry. 

What else could affect exchange rates this week? 

Tomorrow is a key day for Sterling/Euro rates, as we have the latest Unemployment figures for the UK In addition to this we have 2 speeches by the ECB president Mario Draghi at 8am and 7pm respectively, and his comments could cause a change in the value of the Euro. 

For Sterling/Dollar, watch out for a host of economic data from the states such as Retail Sales, manufacturing, Unemployment and House data. Also on Friday we have a speech by FED chair Janet Yellen. If these figures are impressive as recent US data has been, then we could see the US Dollar strengthen and GBP/USD rates drop even further. 

Are you looking for the best exchange rates? 

If you have a currency transaction to conduct in the coming weeks or months, then get in touch with me to see how I can help. I can provide excellent commercial exchange rates that are usually significantly better than banks and other brokers. I can also explain what is likely to move exchange rates in the coming weeks to help you make an informed decision on when to fix a rate. 

I have worked in financial services for over 15 years, specialising in commercial foreign exchange for the last 10. Why not take advantage of my free consultative service to see if I can save you money on your currency exchange. I look forward to hearing from you. 

Click here to send me a free no obligation enquiry today.

Pound at risk as Euro crisis weighs on UK

Thursday 9th September 2014
After falling earlier this week, GBP/EUR rates recovered slightly yesterday due to a weaker Euro. Let’s first look at why rates fell. It’s all to do with inflation, and the impact this has on when the Bank of England (BoE) will raise interest rates.  As regular readers will know, the speculation on interest rates going up has been the driver behind the Pound’s appreciation this year, as higher rates strengthen a currency due to the better return on offer for investors.

However inflation in the UK is now e
asing which could allow the central bank to keep interest rates low. This is what has cause the Pound to drop away this week. Indeed yesterday the BoE’s Monetary Policy Committee (MPC) decided again to hold UK interest rates at a record low of 0.5% which was not a surprise. Nor was their decision not to extend its quantitative easing programme beyond the £375bn already spent. In two weeks, the Bank will reveal how members of its rate-setting committee voted on the rates decision. Last month, two members voted for a rise.

Yesterday afternoon the European Central Bank’s (ECB) president Mario Draghi gave a speech which you can read in full here. There was nothing new in his comments however, and due to this there was little to no market reaction. 

Will Pound/Euro rates go up or down?

It is of course impossible to predict market movements, but looking at the pattern over the last few months, Euro buyers should give serious consideration to fixing rates while they are still close to a 6 year high. There is nothing to suggest rates will break higher given they have failed to do so for many months. Supporting this view is Peter Kinsella, currency strategist at Commerzbank who said yesterday that "A lot of the good news has already been priced into the pound," indicating many analysts think the Pound has run as high as it can. Chancellor Osborne also warned yesterday that Britain’s recovery is at risk from a new EU recession.

FED Comments weaken US Dollar

GBP/USD rates have dropped from $1.72 to below $1.60 in recent months; however this week has clawed back some losses as the chart below shows, settling comfortably above the $1.62 market. The pound had surged more than 15 percent against the dollar in the year to mid-July on expectations the BoE would raise interest rates before its peers in the United States and Europe.
But it has fallen almost 7 % in the last three months as expectations of a rate hike by the end of 2014 faded.

The latest nonfarm payrolls released last Friday had led me to believe the Fed might hike interest rates sooner rather than later, however recent FED minutes this week quashed any chance of that, and suggested the central bank was in no such hurry. This weakened the USD slightly pushing rates higher.


Getting the best exchange rates

When converting large sums, small differences in the rate can have a huge impact on your return. I have various tools and contracts available to protect against rates falling, ways of targeting higher rates not available, and a robust understanding of the currency markets and what can move them.

Click here to send me a free enquiry and get a quote.