Pound/Euro hits €1.36 - will it keep rising?

Friday 20th February 2015 
Sterling/Euro rates have broken through the €1.36 level today, which is a fresh 7 year high. It looks like for the moment the rate is now comfortable above the €1.35 barrier that it had struggled to break through in recent weeks. Now that it’s firmly above this level, it will become a level of support, meaning it’s likely to stay above this threshold and struggle to drop below it should the market fall. 

UK Trade Balance surplus


The Pound gained today partly due to this morning’s Public Sector Borrowing figures. UK government finances showed a surplus of £8.8bn in January, which is the highest for seven years. This better than expected number caused Sterling to gain.

Greece talks 


The main reason for the gains however we’re weakness in the Euro. The ongoing crisis in Greece is causing uncertainty which has been weakening the single currency. Today, Eurozone finance ministers are preparing for a 3rd meeting in order to solve the crisis over Greece's bail-out. 

The Greeks have proposed a 6 month extension of its Eurozone loan programme, as opposed to renewing its existing bailout deal, which would involve continuing harsh austerity measures. Earlier this week Germany rejected this, but I think there is a chance it will be agreed. Time is running out, as the existing bailout deal expires at the end of the month and Greece could run out of money without a new accord. 

There are lots of reports in the media about the possibility of Greece leaving the Eurozone, but personally I think this is unlikely. The most likely outcome in my view is an agreement to the extension the Greece is requesting. This could be seen as simply kicking the can further down the road, but I don’t think the Eurozone would accept Greece exiting as it would be bad news for all concerned. 

Once an agreement is made, how could it affect exchange rates? 


There are several things that could happen, but I think if an agreement is reached, it removes the uncertainty that has been weakening the Euro lately, and this could cause the single currency to regain some strength and bring GBP/EUR rates down from the currency 7 year high. 

Getting the best exchange rates 


In the current climate of uncertainty, the market is very volatile. For Euro buyers this has presented the best exchange rates for over 7 years. It could go higher of course should the Greek situation unravel further, but as I’ve stated above, an agreement could easily bring rates down. 

That’s where having a good currency broker like myself can help you. Unlike a bank I can provide much better rates of exchange, by as much as 5% which can save you thousands of Pounds. It’s not just better rates I provide however, as I can also offer various contracts like Forward Contracts (locking in the current rate for up to 2 years with only a 10% down payment), Limit Orders (placing an instruction to trade should the market hit a target level of your choice), and Stop Loss orders (your currency is bought at pre-agreed level, lower than the current rate, which gives you protection against a market drop while still allowing you to take advantage of further gains). 

These types of orders are very useful to ensure you get the best exchange rates, and banks don’t normally offer these sorts of tools. 

If you have a currency transaction to perform, would like a quote, or to simply discuss the market or anything I’ve covered above, contact me for a free no obligation consultation by clicking below.

Pound/Euro hits fresh 7 year highs after strong jobs data

Wednesday 18th February 2015 
Sterling has risen strongly this morning to fresh 7 year highs against the Euro. As you can see from the chart below, GBP/EUR rose from 1.3450 to 1.3560: 



Robust UK Employment figures boost Sterling 

The reason for the rise was 2 fold. Firstly we saw some very robust UK employment figures that were much better than forecast. Average earnings were higher than expected, and the number of people out of work in the UK fell by 97,000 to 1.86 million in the three months to December. Because the figures beat expectations, it boosted Sterling and caused the rate to rise.

Bank of England unanimous to keep rates at 0.5% 


Today the BoE minutes showed that all 9 members voted to hold rates at their currency level of 0.5. However although all nine members of the MPC voted to keep interest rates on hold, two members said the decision was "finely balanced", adding: "Given the outlook for inflation beyond the short term, there could well be a case for an increase in Bank Rate later in the year." This also pushed the Pound higher, and combined with the jobs data, Sterling has risen against most other major currencies this morning including the Euro. 

Will the Pound stay above €1.35 or drop back again? 


In recent weeks, we have seen GBP/EUR reach these levels several times, however each and every time it has always slipped back below this level within a day or two. The same could happen again, or this could be the time the gains are sustained and the rates stay above this level. It’s impossible to know what will happen. 

If you need to buy Euros however, you don’t want to lose out on the best rates since 2008. You could consider placing a ‘Stop Loss’ order which means if the rate does drop back, your currency is secured at a pre-agreed level. If the rate keeps rising however, you can still take advantage of any gains. 

Do you have a currency transfer to make?


If you need to convert currency at the best exchange rates, the rates I offer are also up to 5% better than available at banks and other financial institutions. If you need to exchange currency in the coming months, click here to send me a free enquiry and obtain a quote to see how much you could save.

Sterling/Euro exchange rate forecast

Tuesday 17th February 2015 
In today’s report I’ll take a look at the Sterling/Euro exchange rate forecast, and also what data releases the rest of the week has in store and how they could affect exchange rates. Today the Pound has fallen against other currencies due to the lowest inflation figures on record.

Sterling/Euro 


The Pound/Euro rate has been repeating its recent trend of rising above the €1.35 mark, only to drop back away within days. This has happened again this morning, with the rate falling from €1.3550 to €1.3450 over the course of this morning. What’s been going on? 

Continued uncertainty over what is happening in Greece has continued to weaken the Euro, and that’s what keeps pushing the rate higher However with very low UK inflation numbers this morning, the Pound has fallen back away which is why GBP/EUR exchange rates have dropped. To be honest I think sooner or later, the Greeks will reach an agreement with the EU regarding its debts, and when this uncertainty is removed, the Euro could gain back some of its losses and bring GBP/EUR even lower. I personally don’t expect rates to stay at the €1.35 level for long. 

Supporting that view was this morning’s UK inflation figures. The rate of UK Consumer Prices Index inflation fell to 0.3% in January, its lowest level since records began in 1989. 

On the one hand, this does provide a respite for consumers in the UK and increase spending power so it’s good news. On the other hand however, it means interest rates in the UK aren’t going anywhere, and so the Pound has weakened off. 

(Low interest rates usually weaken a currency and it’s this fact that’s keeping the Pound in check.)

If you need the best GBP/EUR rates, or indeed need to convert any international currency, click here to make a free enquiry on the commercial exchange rates I can offer you.

 

What else could move exchange rates this week? 


Tuesday 17th February 2015
 

This morning we had the latest inflation figures, and they were slightly worse than expected. This means it’s getting less and less likely that interest rates will be going up any time soon in the UK, and the Pound has fallen today by over a cent against the Euro. 

Wednesday 18th February 2015 

Today is an important one for Sterling, as at 09:30am we will see the latest unemployment figures, and the Bank of minutes. I expect the unemployment number to remain at 2.6%, but if it’s higher than this expect the Pound to fall and vice versa. The BoE minutes will be important as it will show if any of the Banks Monetary Policy committee voted to hike interest rates at their last meeting. I would expect this to show all members voting to keep rates on hold in light of the recent inflation numbers. 

Thursday 19th February 2015 

Nothing of note from the UK today, however the Eurozone has a monetary policy meeting and a consumer confidence release, that could affect GBP/EUR rates. The USA also has some important jobs and manufacturing numbers today, so we could also see changes in the Pound/Dollar rate. 

Friday 20th February 2015 

Today is another important one for Sterling as we have the latest UK Retail Sales numbers. I expect these to be around the 5.9% mark, and any deviation from this figure could cause the Pound to move against other currencies. Retail Sales figures are important as they are a good overall barometer of economic activity. 

To discuss your currency requirement and obtain a quote to compare with your bank or existing broker, click here.