GBP/USD falls as FED announce end to QE

Thursday 30th October 2014 
Sterling/Dollar has plummeted overnight, following the FED’s expected decision to end its Quantitative Easing (QE) programme. This also had the effect of weakening the Euro, pushing GBP/EUR rates higher. The charts below show the currency movements: 

FED announce end to QE 

The US Federal Reserve has announced it is ending its quantitative easing (QE) stimulus programme, saying that it was confident the US economic recovery would continue, despite a global economic slowdown. The central bank, which also said it would not raise interest rates for a "considerable time", has gradually cut back QE since last year. 

While the decision was expected, it did have the effect of strengthening the US Dollar, bringing rates down below the $1.60 mark, however this morning GBP/USD recovered to around $1.60. The main reason the rate fell is their hawkish tone on interest rates.

Pound/Euro rises 

As investors bought the Dollar, they sold the Euro which caused the single currency to weaken, pushing rates up above €1.27. This has happened several times over the last few months, so I expect rates to dip back off again in the coming days and weeks as has been the trend of late. 

Getting the best exchange rates 

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GBP/EUR gains unlikely as UK interest Rates set to remain low

Wednesday 29th October 2014 
Pound/Euro rates have slipped slightly in the last 24 hours, bringing the mid-market rate down to €1.2647. While a little lower than the recent 6 year high, it’s still a very attractive buying level for Euros given that last summer rates were as low as €1.14. 

GBP/EUR gains unlikely as UK interest Rates set to remain low 

Part of the reason the Pound has failed to go any higher against the Euro is the fact interest rates are no longer expected to go up any time soon. Reinforcing this view was a speech this week from the Bank of England (BoE) deputy governor Jon Cunliffe. 

In it he said that interest rates can be kept at their current record low level for longer than first thought, saying that weak pay and lower inflation, coupled with slower UK growth and slowdown in the global economy meant the BoE should remain "cautious". 

So with rates now set to remain at their record low of 0.5% for quite some time, it’s hard to see what would push Sterling exchange rates higher. Those that need to buy Euros should therefore consider locking in a rate now while it is still close to the 6 year high. 

Those selling Euros however should be cautious. While the Pound is unlikely to gain, a deterioration of the EU economy could weaken the Euro, meaning less Pounds for those that are converting the single currency back to Sterling. 

If you need to convert Pounds to Euros, or Euros to Pounds, click here to get a free quote and find out more about the foreign exchange services I offer. Rates I source are up to 5% better than banks can offer, so you could save thousands of Pounds by comparing the rates I offer. 

Pound/Dollar set to drop? 

GBP/USD has been on the way down for a few months now, dropping from $1.72 to $1.60. Currently rates hold firm around $1.6140. However the US Federal Reserve is expected to announce the end of its quantitative easing (QE) programme later, and this could strengthen the Dollar, make it more expensive to buy and pull the GBP/USD rate down further. 

The FED has been gradually cutting back the scheme, which began in 2008, since late last year. The end of QE, assuming it does indeed come, will nonetheless be an important milestone in the repair of the US economy and likely strengthen the Dollar. 

Whether it makes a difference to the GBP/USD rate however remains to be seen. As it’s widely expected to happen, it will be priced into the rate already, but it’s impossible to know by how much. I wouldn’t be surprised to see rates drop below the $1.60 level throughout the rest of 2014. 

If you have a requirement to buy or sell USD, click here to send me a free enquiry to see how I can assist you in getting the best possible rates.

What next for Sterling exchange rates?

Monday 27th October 2014 
Good afternoon. The Pound is currently trading at the top end of its recent range against the Euro, sitting at a mid-market level of €1.27 at the time of writing. The European Bank stress tests over the weekend were quite poor, which has weakened the Euro slightly making it cheaper to purchase. Against the US Dollar, the Pound is also up slightly at $1.6135. 

Which direction could Sterling take this week? 

As I often point out, it’s impossible to predict the market. However, with a good knowledge of economic data and recent trends, it is possible to make an informed choice as to when to fix your exchange rate. You should also consider taking advantage of a free consultation with me if you need to get the best possible rates of exchange. Below I will list all this week’s economic data that I think will have an effect on exchange rates. 

Be aware if you are buying Euros, that the rate has reached these levels many times recently before dropping back away. Given we’re at the top end of the recent GBP/EUR trading range, get in touch today to get a quote and find out how to take advantage of these rates, even if you don’t need your currency right now. 

I’m afraid we only deal with bank to bank transfers for amounts of £5000+, we do not deal in cash or holiday money. If you need to exchange currency for a property abroad, topping up your Euro account, or if you buy or sell goods overseas, I can help you get exchange rates up to 5% better than banks can offer. 

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This week’s economic data releases. 

Monday – This evening at 7.30pm, one of the Bank of England (BoE) members gives a speech. Any clues as to future interest rate movements could affect the value of the Pound. 

Tuesday – Most data today is from the USA – Durable goods orders and consumer confidence, both of which could affect GBP/USD exchange rates. Later in the evening at 6.30pm we have another BoE member giving a speech. 

Wednesday – Germany has a bond auction today, and the UK releases Net lending data, so we could see changes in the GBP/EUR rate. There is also yet another speech by a Bank of England member. We also have Business Confidence data from New Zealand, in addition to their latest decision on Interest rates, so GBP/NZD could change. Over in the states we have a statement by the FOMC, and their interest rate decision. 

Thursday – Yet another BoE member gives a speech today! Other than that Nationwide House prices is the only UK release. In Europe we have Spanish growth data, and German unemployment figures. Stateside, FED chair Yellen gives a speech, and the latest unemployment figures are also released. 

Friday – Nothing of note from the UK today. In Europe we will see German Retail Sales, French Spending, and inflation estimates for the Eurozone, all of which could affect the GBP/EUR rate. In the USA we have Employment data, Personal Spending, and inflation numbers. 

For more information on how the above could affect your currency requirement, or to get an exchange rate quote to compare with your bank or existing broker, click below to send me a free enquiry now. 

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