Showing posts from June, 2009

Sterling Euro Outlook & Exchange Rate Forecast

Sterling to Euro
With the Interbank breaking through the 1.18 barrier for the first time this year, June has been a testing time for the Euro. The overall trend is upwards and is predicted to remain that way, however the Currency Markets are some of the most volatile in the world, so be sure to discuss Limits and Stops.

The Current Euro performance can be mainly attributed to the overall weakness of the Eurozone Economy. Each week key data is released that shows how the Eurozone or key Economies within are performing. Clearly good news can strengthen the Euro and conversely poor data will see the current trend continuing.

Upcoming data releases we will be watching this week include the German Unemployment Statistics on Tuesday followed on Wednesday by the German retail sales figures. Thursday sees the release of the Euro Unemployment figures and the European Central Banks interest rate decision. Any of these releases can affect investor confidence in the Euro. To ensure you know how the…

Sterling recovers and gains against Euro

The pound has gained agaisnt the Euro this afternoon as the forecasts for world growth for the Eurozone are bleak.

UK Growth
The Organisation for Economic Cooperation and Development (OECD) has revised down its forecast for the UK economy in 2009 today. It warns that the UK is in a very sharp recession with output set to contract by more than 4 percent this yest, worse than its previous forecast of a 3.7% fall. The OECD predicts no growth at all in the UK economy nest year and says the UK budget deficit will hit 14% of GDP next year. Its UK forecasts are worse than those the Treasury made during the Budget.

However, we all know that the forecasts made by the treasury this year were about as realistic as my forecasts for my gym attendance, which fell below my ambitious expectations. Hence, the news has done little to dampen the recovery of the pound today back close to 7 month highs.

The OECD also said that the world economy is near the bottom of the worst recession in post-war history, bu…

Sterling Euro Rates 2009

Throughout 2009 so far, Sterling exchange rates have been very volatile, but the general trend is that the pound is slowly strengthening. Against the Euro it's gained by 15%, and against the US Dollar its risen by 18%. So, very good buying levels compared to where it has been earlier in the year.

Despite this general upwards trend we are still seeing sharp corrections here and there, which is what happened yesterday. The GBPEUR rate dropped almost 3 cents, however has now started to recover and rates climb back up. It's these spikes up and down that make it difficult to decide when to fix your rate. If you have all the time in the world, then you may wish to gamble on the continuation of the upwards move. If however you need to purchase in the next 3 months and either buy or sell currency, then the volatility could cost you. Yesterdays report looks at some of the options available to you.

Let's have a look at yesterday's movements:
Sterling edged lower against the do…

Sterling makes gains, then plummets.

The pound made good gains yesterday, before plummeting this morning showing how volatile the currency markets are at present. First we'll look at the gains, then the reason for this mornings correction.

Sterling Exchange Rates Gain
Sterling extended it's rally yesterday, hitting its strongest since early December against the euro, which came under pressure ahead of the European Central Bank's first one-year refinancing operation.

Gains against the euro helped sterling to a seven-month high against a basket of other currencies as investors feel that all the bad news about the UK economy is for the most part priced in.

The pound fell against the US Dollar though as renewed concerns about global growth boosted demand for the USD and curtailed demand for currencies perceived as higher risk. (As mentioned in yesterdays report, when the markets are jittery, speculators move funds from currencies like the pound to the US Dollar.)

There is uncertainty before the ECB's fir…

Pound regains strength and exchange rates recover.

As we correctly predicted here on this blog, despite some big drops last week the pound has recovered the losses last week, and have returned to roughly 7 month highs against both the Euro and the US Dollar.

First we'll look at why they fell in the first place, then as usual for a Monday morning we'll take stock of this weeks data releases and what this may mean for exchange rates.

The pounds fall last week
Sterling struggled after a surprisingly big fall in UK retail sales figures on Thursday gave traders more incentive to book profits. This followed sterling's gains in the past few weeks, when solid data had raised hopes for an improvement in the economy. The figures helped to take the steam out of sterling's climb to the year's high against the euro and a currency basket early this week. This had been due to firmer-than-expected inflation data and a forecast by an industry group that UK economic growth would return in 2010.

Pound back to 7 month highs
Will little m…

Sterling GBP Euro EUR Outlook Forecast

We'll take stock of this weeks currency movements in a moment, and where things may head into next week. First let's take a quick look at what happened in the currency markets yesterday:

Pound takes a hit on Retail Sales
Sterling plummeted yesterday morning after the 09:30am data showed UK retail sales unexpectedly fell, raising doubts about economic recovery. Retail sales volumes in May were 0.6% lower than in April and 1.6% lower than in the same month a year ago, and we were only expected a yearly fall of 0.1%. As the figures from the office for National Statistics were much worse than expected, we quickly saw the pound fall. The credit crunch-driven nature of the slowdown so far appears to have primarily hit spending off the High Street.

However, as we forecast, the fall was fairly short lived, and the pound regained much of it's losses throughout the day. At one point Euro rates were as low as 1.1620, however things have improved. At the time of writing Sterling rates ar…

Pound falls, but likely to recover

As outlined in yesterday afternoons update post, Sterling fell sharply against the euro and the dollar yesterday due to profit-taking. This follows recent sharp gains and after Bank of England policymakers remained very cautious on the UK outlook despite encouraging signs of economic recovery.

A 1.5% fall in UK equities and drops in the FTSE also dampened sentiment towards the pound as doubts whether the recent increase in optimism surrounding the UK was justified.

As I said yesterday, figures showing a much smaller than expected rise in UK unemployment failed to provide more than a very short-lived boost to sterling. In fact many currency blogs incorrectly said it was this rise in unemployment which caused the pound to fall. This was not the case, and Sterling actually rose slightly as the figures were not as bad as thought.

Any gains were short lived however, and the pound quickly tumbled to lows against the dollar and euro. It's a mixture of the lack of confidence, and als…

Security of Funds

Is it safe to use a currency broker, and is my money safe?

Yes – but check that they are registered with the FSA as an Authorised Payment institution. The industry became regulated by the Financial Services Authority on the 1st November 2009.

Not all brokers are registered however. You will be able to check this on the FSA site to see if the companies you plan to deal with are on the FSA’s list. Foremost Currency Group was one of the first brokers to be granted authorisation as an Authorised Payment institution.
What does this mean?
This means that all Directors and key staff are fit and proper to continue trading. Client funds are held in nominated, segregated client transaction accounts thus safeguarding them, and we have ring fenced sufficient capital to comply with the new legislation.

We have been fully vetted and are expected to maintain strict standards relating to capital requirements, safeguarding of client funds and the fitness and propriety of senior staff.

With regards to secur…

Why has Sterling fallen and the pound (GBP) dropped?

A quick update on developments for the pound since this mornings post. Sterling yesterday hit the highest level against the Euro for many months, and topped out at 1.1864. Today however the rise was halted and rates have dropped back - currently rates are 1.1730.
So why the fall? Unemployment figures this morning showed that UK unemployment rose to 2.261 million in the three months to April, which is the highest in 12 years. The total jobless rate rose to 7.2%, the highest since July 1997. However, these figures while bad were actually much better than forecast, and the pound actually made some gains.

The actual reason for the fall is profit taking from clients that speculate on currency markets. Sterling was particularly weak against the euro as market participants used the opportunity to take profits after it jumped to another 2009 high yesterday. So, this big sell off of Sterling has flooded the market hence the weakening of the currency. Simple supply and demand.
"We've ha…

Pound gains on Inflation data / Best rates for holiday money

Sterling rises on Inflation Data
The pound climbed to its highest level in 7/8 months yesterday after much better than expected inflation data.

The Consumer Price indec fell to 2.2% last month which is bigger than analysts' forecasts for a fall to 2.0%. The news encouraged the belief that the defaltion risk for the UK economy is now very low indeed. It also followed a raft of UK data which has boosted belief that the economy is on the road to recovery.

So, this is what has caused contined gains for the pound, however this morning some of those gains have been paired back. News that US industrial production fell more than expected in May dampened optimism that the global economy is over the worst. Also, profit taking by traders has caused a slight fall this morning, probably also due to anticipation of the UK unemployment figures today (see below).

So far this month the pound has gained 3% over the Euro, leaving it on course for a quarterly gain of more than 8 percent -this would be t…

Exchange Rates Currency Forecast 2009

Good Morning

Let's take a look at where currencies moved yesterday and the end of last week.

The Euro again fell to a 2009 low against Sterling, as a combination of internal member state stresses, banking sector fears and concerns that the Euro zone might lag the UK in recovery weighed on the single currency.

The latest economic data also suggested that the Euro zone recession could be more protracted than previously envisaged; industrial production plunged a record 21.6% in April from the same month a year earlier, in stark contrast with other economies where there have been encouraging signs that the worst of the recession might have passed.

The GBP/EUR rate closed today 3.5% higher than that of a week ago at 1.1837, from 1.1437 a week earlier, benefiting those converting Sterling into Euros.

The German ZEW think-tank's survey of German economic conditions and Euro zone inflation data, both due to be released on Tuesday, will be the focus of attention this week. The Euro coul…

Sterling rates climb to new highs

In trading Wednesday afternoon, rates for the Euro got close to 1.17, which is the highest level since November last year.

Sterling jumped to its highest level of the year against the euro on Wednesday after positive UK industrial output data helped to reinforce the belief that the economy may be emerging from the worst of the recession.
Sterling's rise was also partly a result of heavy initial selling of the dollar after Russia announced a plan to cut its share of U.S. Treasuries in its reserves and buy International Monetary Fund bonds.
Some analysts said that sterling gains were capped after Bank of England policymaker Kate Barker said UK interest rates could stay low for some time and that it was still not clear whether the current pick-up in the economy would be sustained. So, it may go higher, or it could tumble as it did last week!
Analysts nevertheless believe the pound will continue to benefit from signs the UK economy is finally emerging from a deep recession, with some poin…

Sterling Euro rates close to 6 month high

Pound Gains
Sterling rose sharply against a broadly weaker dollar and gained versus the euro on Tuesday, helped by further signs the UK housing market is stabilising. The pound was also buoyed by a calmer UK political vista, with Labour Party parliamentarians on Monday offering their support to Prime Minister Gordon Brown.

"Sterling is better bid. It got a boost from housing data falling less than expected and from Gordon Brown gaining some support from MPs," RBC currency strategist Christian Lawrence said.

Bank of England Deputy Governor Paul Tucker warned on Tuesday, however, that although surveys have pointed to some improvement in the British economy, the medium-term outlook remained "highly uncertain".

Pound to Euro
Rates here climbed and levelled off just above 1.16 - back almost to the 6 month highs of last week. Partly this was due to the above, partly it was due to weak German data that weakened the Euro and cause rates to rise.

German exports fell 28.7% in Apri…

Sterling Exchange rates recover

Sterling has climbed and recovered some of its losses following the political uncertainty at the end of last week. At the time of writing, rates are as follows:

GBP/EUR 1.1592
GBP/USD 1.6164
GBP/AUD 2.0370
GBP/NZD 2.5936
GBP/JPY 158.60

The main reason for the gains are two fold. Firstly the cabinet re-shuffle seems to have settled the ship in government, at least for the time being. The chances of a general election this year are very slim, and so the renewed stability has renewed investors confidence in the pound. There was relief too that the political troubles facing Prime Minister Gordon Brown appear to have calmed for now, with Labour Party members offering their support to his leadership on Yesterday.

Secondly, and more importantly there is renewed confidence in the UK housing market, which has really boosted the pound this morning.

UK Housing Market
A survey by the Royal Institution of Chartered Surveyors showed house prices in England and Wales falling at their slowest annual pace in…

Pound falls on Political uncertainty

Last Weeks trading
After some weeks of continued strength for the pound, this all came to an end last week as rates dropped away again. On Wednesday last week, rates had hit 6 and 7 month highs against the Euro and US Dollar respectively. The main reason for the sudden decline Thursday and Friday was continues political uncertainty in the UK.

We had many cabinet ministers resign, following by rumours that Gordon Brown was going to resign, rumours which were quickly rubbished by number 10. Poor showings for the government in both the local and European elections have also put pressure on the pound.

The uncertain political situation encouraged investors to sell the pound, particularly as they were unsure how long it would hold on to gains of nearly 10 percent it racked up against the dollar last month -- its biggest monthly gain since 1985. This sell off of Sterling is what caused the value to slide.

"The pound is suffering broad weakness due to political uncertainty," said Ne…

GBP falls suddenly

Pound Plummets
Earlier this week, the GBPEUR rate hit a 6 month high of 1.1650, based on renewed confidence in Sterling, and also US Dollar weakness causing further buying of the pound, which pushed the currency higher. This has proved to be very short lived however, as the pound plummeted dramatically in trading early yesterday afternoon. First we'll take a look at the main economic data yesterday, the interest rate announcements. Then we'll take a look at why the pound has fallen so much.

BoE and ECB rate decision.
As expected by analysts, both the UK and EU left their interest rates on hold at 0.5% and 1.0% respectively. I did go out on a limb and predict the EU may cut, however they did indeed left rates unchanged for the time being. We now look for an EU cut next month.

As discussed yesterday, the main focus was not on the actual rate movements, but rather whether either zone would extend their quantitative easing programmes, and create new money to pump into the economy…

Sterling to EUR & USD rates tumble

Yesterdays Trading
The pounds run could not last forever, and yesterday was the end of the continued gains for Sterling. The pound dropped heavily against both the Euro and the Dollar, wiping out the recent gains the pound has made. As outlined in yesterdays report, those clients that left it to chance in the hope rates would continue to climb may have missed their chance. Clients that placed Stop and Limit orders, in order to aim for a higher rate while protecting themselves limited their loss to management and predictable levels.

So, why the sudden drop? It's all to do with deteriorating market sentiment. Despite a jump in services sector data from the UK yesterday that pushed the pound higher, the main reason for the decline is again mainly due to the dollar.

As outlined in other posts this week, Sterling has gained on the back of the US Dollars losses, as investors moved funds from the dollar to the pound. Now, other US data has pushed investors back, as weak U.S. employment and …

Sterling rally continues

Belief that the global economy is recovering has helped Sterling continue its gains this morning. At the time of writing rates are as follows:

GBP/EUR 1.1650 - 6 month high!
GBP/USD 1.6626
GBP/AUD 2.0180
GBP/CAD 1.7968
GBP/NZD 2.5507
GBP/JPY 160.02

Pound Euro rates are now at a 6 month high, and the rise is being driven by investors returning to perceived higher risk currencies like Sterling. Be aware though, the Euro is also gaining, just not as much as the pound which is why rates are rising. Today we have some important GDP data from the EU, and if its better than expected these gains may be short lived.

Another reason for the pounds rise is the weakening of the US Dollar. Following news that General Motors, one of the worlds largest car makers have gone into recievership, this has severely dented confidence in the US economy. So, as investors move their funds from USD to other currencies, Sterling is the winner as the recent surge in it's value demonstrates.

It is in these times th…

Sterling Exchange Rates continue to climb

The pound continued its strong gains in trading yesterday, and hit a 7 month high against the US Dollar and also new highs against the Euro.

Rising share prices prompted investors to seek perceived riskier assets such as the pound, and some analysts now believe that the UK economy could emerge from a global recession sooner than other major economies.

Other data yesterday showed Britain's manufacturing sector contracted at its slowest pace in a year in May as the pace of decline in new orders, output and employment eased."Today's PMI reading adds to the growing body of evidence that the pace of contraction in the UK is slowing, even raising the possibility that the UK may be one of the first large economies to emerge from the crisis," said analysts at UBS. This also helped the pound continue to rise

US Dollar
The dollar has fallen on signs the global economy is improving. This makes currency traders more confident to switch to higher-yielding currencies (like t…

Sterling at best levels all year.

Good morning and welcome to a new week for the currency markets. Below we will take a look at economic data being released this week, but let's first take a quick look where the pound is after a good week last week.

Pound to Euro
Rates have steadily climbed up over recent weeks, and last week broke through the 1.15 level for the first time this year. This is much better than at the start of 2009 when this currency pair was almost at parity. The reason for the gain is partly due to a slowly recovering pound, but also due to poor economic data being released from the Eurozone. We could see an interest rate cut in the EU this week that could help keep this run going, however we also have news from the BoE this week, which if poor could wipe out the recent gains.

UK House Prices boost pound
Sterling jumped to its highest level in more than 6 months against the US dollar late in the week - the pound is on track for its biggest monthly gain since 1985. One of the reasons for the rise is…