Wednesday, 29 June 2016

Pound continues to rise for second day

Sterling has continued to strengthen, rising to €1.2150 vs the Euro and $1.35 vs the US Dollar. Here are this week's chart's showing the Pound's recovery so far:

     GBP/EUR:

     GBP/USD:

Why has the Pound gone up?


The gains have probably been caused by investors realising that the Brexit vote last week is not Armageddon. Share prices have also risen today, and the FTSE has already recovered all the losses we saw last Friday. Markets are a little calmer, and the fact that the UK won't be triggering article 50 of the Lisbon treaty any time soon have also calmed things a little.

Will it keep rising?


There is still no way to know if this is the start of a proper recovery though. There is still a huge amount of uncertainty, but for the moment this is mostly political uncertainty rather than economic. Cameron is leaving the hard decisions to his successor, whoever that might be (maybe Boris, but perhaps the sensible option would be Theresa May). The opposition is in complete disarray with Corbyn refusing to step down. So all in all the UK has little in the way of political leadership at the moment. The economic uncertainty could well come after the political mess is sorted out.

Will there really be a Brexit?


There are lots of noises about another referendum, but I don't think that's going to happen. Sure, there are petitions, and lots of angry posts on facebook unhappy with democracy as it didn't go their way. But, those of you that voted will have noticed that the question was "Should the United Kingdom remain a member of the European Union or leave the European Union". That question was answered. What it didn't specify was what would come after a vote to leave. Retaining access to the common market is a given, but the problem is politically to get that you also have to retain free movement of people. The political wrangling's have only just begun. My view is that we'll probably end up negotiating free access to the market, free movement of people, goods and services. We'll have to make contributions to the EU, and accept most of their laws. In other words, we'll spend the next few years negotiating to get what we had this time last week anyway!

Looking for the most competetive exchange rates?



In the meantime, the currency markets will move exchange rates will go up and down. Those that have currency to exchange may wish to contact me to find out more about the foreign exchange services I offer. Exceptional rates of exchange are available to clients looking to move between £5k and £10m on a bank to bank transfer basis. We are fully authorised by the FCA, and so your funds are always safe and secure.

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Tuesday, 28 June 2016

Sterling makes gains, but will it last?

Today the Pound has managed to claw back some of its losses against the Euro and US Dollar, but the question is, will the Pound keep going up, or is this a temporary spike?

Today has seen GBP/EUR climb to €1.21, and GBP/USD to $1.34. Normally you would think this is a pretty decent rise, but when you compare it to the sharp falls we saw last week in the wake of the EU referendum, it's not a huge recovery although it is positive. There hasn't really been anything in particular that has caused the rise. I think it's mostly due to the fact that things have now calmed down a little, and perhaps the 'Brexit' won't be the end of the world after all. It's looking increasingly likely that once negotiations start, there will be a real push to make deals that suit both the UK and the EU, in terms of trade, movement of people, and agree to something that's favourable for both sides. Also, as nobody expects 'Article 50' of the Lisbon treaty to be invoked any time soon, this will give the markets time to calm down.


No need to panic over Brexit


I thought that comments by the old BoE governor Mervyn King summed things up pretty well when he said there is no need to panic. "Markets move up, Markets move down. We don't yet know where they will find their level, and the whole aspect of volatility is that there is a trial and error process going on before markets discover what the right level for exchange rates are" This is what we've been seeing over the last couple of days.

He also added that he was struck by the scaremongering tactics throughout the campaign, saying that people didn't like being told that if they voted leave they would be idiots. As he correctly surmised, if you say to someone "you're an idiot of you don't agree with me" you are not very likely to bring them to your direction.  He added that the Remain campaign went well beyond what they should have said in terms of what the effects might be to the economy. So regardless how you chose to vote, this is where we are now, and the world is still spinning.

Will the Pound fall further?


Moving forwards, some banks are forecast that rates will drop further, as investors fear a recession. Time will tell if that will happen. What is likely is that the Euro is also likely to suffer due to a fall in demand and fears that other EU nations may voice their intentions to hold their own referendums. Personally I think that the BoE will need to now cut interest rates before the end of the year, so I expect the Pound to remain weak in the short to medium term, but it may now have found its feet against the Euro.

Worried about exchange rates?


If you need to buy currency with Sterling, or indeed convert a foreign currency bank to Pounds, we can help. We don't deal in the cash or holiday money side of the market, but are well placed to help clients that need to achieve the best possible exchange rates, and have their currency wired to a bank account.

Our typical clients are those buying or selling property abroad, businesses that deal in foreign currencies, and expats looking to move funds on a regular basis from the UK to Euro accounts. We achieve exceptional rates of exchange, and even if you already use a broker, why not make an enquiry to get a quote and find out how much you could save.

 

Monday, 27 June 2016

Pound continues to fall in wake of 'Brexit'

The Pound has continued to take a hammering in the currency markets today, falling to below €1.20 against the Euro, and to $1.31 against the US Dollar:



The decline started in trading in the Asian markets yesterday, and continued when London opened at 8am this morning. It's all to do with the uncertainty, both political and economic. George Osborne has said that the UK is ready to face the future from a position of strength, in an effort to calm the markets.  However the fact is that the Prime Minister has left his successor to pick up the pieces, and we won't know who that is until October. The opposition is in complete turmoil, with many shadow ministers being fired or resigning. Their replacements that were announced earlier have now also resigned, which leaves the UK in a bit of a political void.

Markets hate uncertainty, and that's what we're likely to have quite a lot of in the coming months. That's why the Pound has fallen. It seems to have stabilised around the €1.20 level against the Euro.

We were accepting trades from clients from 05:30am until late on Friday, and continue to offer rates of exchange that are usually much better than banks or other brokers would offer. Those that need to buy or sell currency need to get in touch now to find out their options, and help limit any further losses. HSBC have warned GBP/EUR could drop as low as €1.08, so those needing to buy Euros may wish to consider biting the bullet, and getting something done now to protect against a continuing decline in the value of the Pound. 

Click here to make an enquiry, get a quote, and find out more about how we can help you. We can assist any clients looking to convert £5k+ on a bank to bank transfer basis. We trade over 35 international currencies, but I'm afraid we don't deal in cash or holiday money.  

Friday, 24 June 2016

Leave Wins... Sterling tumbles to lowest levels since 1985, but has since recovered slightly

In a shock result that the city and the bookmakers didn't see coming, the UK has voted to leave the EU. The Pound has fallen twice as far as on Black Wednesday, hitting it's lowest since 1985. The Pound has since recovered some of it's losses however.






Sterling/Dollar was up at $1.50 last night, and dropped to as low as $1.32. Sterling has managed to recover nicely however, and GBP/USD currently sits at $1.3715, with GBP/EUR at €1.24. So while it's lower, it's not a complete disaster.

However you voted, and whatever your currency requirements, we can help you navigate these turbulent markets to achieve an exchange rate much better than banks or other brokers can offer. Those with Euros to sell may well wish to take advantage of the weakness.

If you would like to find out more about what is happening to the market, and to get a quote for your exchange, click here to send me a free enquiry today.

There will be further repercussions in the coming weeks and months and these are certainly remarkable times.....

Get in touch.

To put this into perspective, here are the top 4 moves for the Pound since WW2 from the BBC, and today's fall was about 10%:

  • 1971 Pound moves 3.4% after Nixon Shock -- cancellation of the direct international convertibility of the United States dollar to gold.  
  • 1 November 1978 4.3% "Winter of discontent" shakes global investors confidence in UK's economy. 
  • 16 September 1992 4.29% when the UK exited the exchange rate mechanism. 
  • 20 Jan 2009 Pound slides 3.9% at the peak of the financial crisis following the demise of Lehman Brothers.