Showing posts from January, 2010

Pounds gains pared over fears on UK's credit rating

Good Morning. Sterling rose against the Euro yesterday due to Euro weakness, but fell against the US Dollar after negative Standard & Poor's comments on the UK banking system.

Back by popular demand, is the rate snapshot in a new format:
(These are the rates as at 08:30am. For live rates, see live updates in the sidebar of the home page.)

UK Credit Rating
Standard and Poors, the credit rating agency has said that Britain was no longer classified as being among the most stable and low-risk banking systems in the world, adding Britain's weak economy would continue to hinder the industry's credit profile. We've been saying for some time that the UK debt levels will hinder any recovery for the pound, and this is what they've taking into account with this recent statement.
It was actually a new version of a report issued over a month ago, but it was still enough to unnerve investors and the pound weakened as a result.
Pound/Euro rates rose at the start of the day though…

Pound to Euro exchange rates at 6 month high

Good Morning. Sterling has risen this morning in the wake of comments from Bank of England policy board member yesterday. Andrew Sentance said it may be difficult to keep inflation on target if import and services prices keep rising. These comments seem to increase the chances of an interest rate hike in the UK.

With higher interest rates, Sterling becomes more attractive to investors and the increased demand in anticipation of higher rates is what has caused the pound to gain this morning.

He added that the economy, now officially out of recession (just!), was facing opposing pressures which the central bank would have to consider in its Inflation Report next month.

The market took the comments to suggest an imminent end to the BoE's 200 billion pound asset-buying plan, but analysts said they did little to change the view that interest rate rises will not follow until the second half of the year at the earliest.

Sterling to Euro
Rates have climbed due to the reasons above, and also d…

UK out of recession, pound falls. Sterling outlook for 2010 still week.

Good Morning. The pound dropped yesterday after the official GDP figures were released. The announcement confirms the UK is now out of the longest recession on record, but only just!
The UK economy has come out of recession, after figures showed it had grown by a weaker than expected 0.1% in the last three months of 2009. Analysts expected the economy to have grown by 0.4%, so although we are out of recession, it's not by as much as we thought.
As the figures had been forecast for some time, the pound had strengthened in the last week in anticipation of the release. When the actual figures came in worse, many investors sold Sterling which weakened the currency and caused Sterling exchange rates to drop.
The economy had previously contracted for six consecutive quarters - the longest period since quarterly figures were first recorded in 1955.

As you can see from the chart, it's not exactly a strong recovery. So, does this mean things will continue to improve? Not by any means. Al…

Uk to exit recession today? What does this mean for exchange rates?

Good Morning. Sterling had a good run yesterday, as investors looked ahead to UK gross domestic product data for the fourth quarter due today, which is expected to confirm that the UK is out of recession.

Gross Domestic Product
The Gross Domestic Product (GDP) figures are released at 09:30am this morning. What exactly is GDP? Quite simply, if the GDP measure is up on the previous three months, the economy is growing. If it is negative it is contracting. You can read a BBC article about GDP here.

Figures due out later are expected to confirm that the UK came out of recession in the final quarter of 2009. The economy has contracted for a record six consecutive quarters, but signs of recovery have started to emerge.

Last week, it was revealed that unemployment in the UK fell for the first time in 18 months.
The UK is one of the last major economies still in recession. Europe's two biggest economies (Germany & France) came out of it last summer, so we have been lagging behind.


Pound vs Euro & US Dollar forecast

Pound vs Euro
Last week saw the most volatile GBP/EUR trading for some months, with the pound benefiting throughout the week from the continuing financial crisis in Greece as well as early estimates of UK quarterly GDP figures suggesting that the UK economy has reached the end of recession.

This proved a massive boost for the pound which reached a 5 month high at around 1.1550, an improvement which would mean a saving of roughly £3000 on a £100,000 transfer to Euros compared with the exchange rate a week earlier.

Sterling did lose some ground on Friday following worse than expected UK Retail Sales Data, closing the week at around 1.14, highlighting the importance of capitalising on exchange rates quickly when the chance presents itself.

Looking forward to this week more volatility can be expected with Tuesday morning’s announcement of the official UK GDP figure for last quarter likely to be extremely significant. Any deviation from the predicted 0.3% rise would almost certainly move the m…

Pound falls on UK debt data

Good Morning. Looks like the good run for the pound is over, as Sterling fell broadly on Thursday, hitting a 1 week low against the US dollar on concerns about UK fiscal health and very weak UK money supply data. Due to Euro weakness however, rates remained only slightly down against the Euro. Rates @ 08:30am are as follows:
GBP/EUR 1.1501GBP/USD 1.6270GBP/AUD 1.7909GBP/NZD 2.2707GBP/CAD 1.7033GBP/CHF 1.6912GBP/ZAR 12.247GBP/JPY 146.92GBP/NOK 9.4044EUR/USD 1.4139UK Debt concerns keeps pound weak
UK government borrowing hit a new record for the month of December, and the total borrowing for the first nine months of the financial year was £120bn - the most since records began in 1946. This caused the pound to fall, and (apologies to regular readers for the broken record!) we've been saying in this blog for some time, that despite signs of a recovery for the UK, these huge debt levels will hinder recovery for Sterling.

It shows the impact of recession on the UK's finances, with t…

Pound vs Euro at 7 month high. Will it last?

Good Morning. Pound vs Euro climed again yesterday. Sterling didn't actually strengthen any more, it was simply Euro weakness causing the gains. We'll cover this in a moment, first a quick snapshot of where Sterling exchange rates stand @ 08:30am 21/01/10:
GBP/EUR 1.1509GBP/USD 1.6225GBP/AUD 1.7765GBP/NZD 2.2487GBP/CAD 1.6975GBP/CHF 1.6950GBP/HKD 12.603GBP/JPY 148.59GBP/ZAR 12.177EUR/USD 1.4093Pound gains All week we've had better than expected UK data which has strengthened the pound. We've had better than expected unemployment data, higher inflation than expected, and the Cadbury deal boosting investor confidence. However, the pound actually fell against most currencies yesterday over continued fears over the UK debt levels. The exception was GBP/EUR which climed due to Euro weakness.
Euro Weakness The Euro weakened over continuing concerns about the Greek economy weigh heavily on the currency. Although Greece has passed measures to reduce its budget deficit dramaticall…

Pound up on CPI data, may fall after BoE minutes today.

Good Morning. The pound rose yet again yesterday after better than expected inflation data.

Yesterday economists said they were shocked by the massive rise in inflation, the biggest jump in a single month since the index began in 1997. It was pushed up by a dramatic increase in the cost of fuel, as well as a lack of big pre-Christmas discounts on the High Street.

The retail price index, another measure of inflation which includes housing and tax costs, rose from 0.3 per cent in November to 2.4 per cent last month. This was the biggest jump since 1979, the year inflation hit 15 per cent.

Why did this boost the pound?
Higher inflation increases the chances of interest rate hikes. Higher interest rates mean a better return for investors, and therefore they buy Sterling in anticipation. More demand = higher price and therefore the pound strengthens relative to other currencies.

Will it last?
Probably not. The governor of the Bank of England has renewed his warning to the government that it mu…

Pound continues to gain against EUR & USD

Good Morning. GBP/EUR has broken through €1.14, which is the highest level for 5 months. Better housing data and fears over some EU economies have caused the gain. Rates @ 08:15am are as follows:
GBP/EUR 1.1400GBP/USD 1.6410GBP/CAD 1.6841GBP/DKK 8.4830GBP/HKD 12.737GBP/HUF 305.00GBP/JPY 148.61GBP/ZAR 12.134EUR/USD 1.4394
Pound vs Euro
Last week and indeed the start of this week, we have witnessed a positive performance for Sterling exchange rates increasing by just over 3% against the single currency. In real money terms this would have seen an increase of over €5000 when transferring £200,000 if traded at the peak of the market. These figures show the importance of keeping in touch with our professional currency brokers here at The Foremost Currency Group who can help to maximize your currency requirement with information to try and conduct your transfer at the best possible time for you.

The increase came off the back of the UK GDP estimate which showed a prediction of a 0.3% increase…

Pound vs Euro at 4 month high

Good Morning. As usual for a Monday, we'll have a detailed look at the economic data releases of the week, and how this may affect rates. Sterling has already risen this morning. More on that in a moment, first a snapshot of rates @ 09:30am:
GBP/EUR 1.1369GBP/USD 1.6339GBP/AUD 1.7687GBP/NZD 2.2184GBP/CAD 1.6797GBP/CHF 1.6763GBP/ZAR 12.085GBP/JPY 148.56GBP/JPY 148.55EUR/USD 1.4366Pound gains on Monday
Sterling extended gains this morning after a great week last week, due to better than expected house price data early this morning. Sterling is now at a 4 month high against the Euro.The reasons are two fold; first the Euro has been dented by concerns about Greece's fiscal health while strong UK housing data this morning has boosted the pound.

A survey by UK property website Rightmove pointed to a solid recovery in the housing market, showing property asking prices in England and Wales up 0.4 percent month-on-month in January, taking the annual rise to 4.1 percent. The forecast fi…

GBP/EUR exchange rates at 3 month high

Good Morning. The pound has had a great week, and we've seen more gains already this morning. The reason is good GDP estimates, hawkish comments from the Bank of England, and also weak data from the EU and USA. Just look at where the rates are @ 08:30am:

GBP/EUR 1.1330GBP/USD 1.6320GBP/AUD 1.7618GBP/NZD 2.2100GBP/CAD 1.6749GBP/CHF 1.6724GBP/ZAR 12.026GBP/NOK 9.2329GBP/JPY 148.17EUR/USD 1.4405Eurozone leaves rates on hold

The European Central Bank (ECB) has kept eurozone interest rates on hold at a record low of 1% for the eighth month in a row. Economists argue that rates are unlikely to increase while eurozone inflation remains well below the ECB's target of 2%.

There are also questions over the state of Europe's economic recovery, with the state of Greece's public fianances a particular concern. Last year, Greece admitted that its budget deficit was expected to reach 12.5% of GDP, attracting the condemnation of the European Union.
The eurozone prohibits budget deficits o…

Pound gains on better UK data. ECB Decision today.

Good Morning. The pound had a great day yesterday, gaining comments from a Bank of England policymaker which were seen as very positive, and Sterling was also helped by better than expected UK economic data. Rates @ 08:30am are as follows:
GBP/EUR 1.1208GBP/USD 1.6282GBP/AUD 1.7477GBP/NZD 2.1906GBP/CAD 1.6784GBP/CHF 1.6581GBP/ZAR 12.006GBP/DKK 8.3387GBP/NOK 9.1566GBP/JPY 149.51EUR/USD 1.4522Bank of England Comments
Andrew Sentance, a member of the BoE's Monetary Policy Committee, was quoted in a newspaper as saying the central bank was close to holding back on injecting stimulus into the economy and would gauge the impact of its measures.The comments were seen as indicating the BoE may pause in its asset purchasing programme next month, particularly as he said inflation had not fallen as sharply as expected last year.

Industrial Output
An unexpected 0.4% gain in UK industrial output in November also helped sterling gain. The figures give weight to the view that the UK exited recession…

Pound gains on good data / USD Forecast

Pound Strengthens
Good Morning. Sterling extended gains today, hitting a 1 month high against the dollar and a 10 day high against the Euro, after data showed industrial production rose more than forecast.

Also causing the pound to rise were comments from a Bank of England official that the central bank was close to holding back on economic stimulus. This is positive news for the UK, and GBP has strengthened accordingly.

Euro Weakens
EUR weakened also today, helping boost GBP/EUR rates. The reason for the weakening was the figures showing the German economy shrank by 5% in 2009, hit by a slump in exports and investment, official data has shown.

It was the first time in six years that the economy had shrunk, and it was the largest contraction since World War II, the Federal Statistics Office said.

Germany, Europe's largest economy, emerged from recession in the second quarter of 2009.
The government predicts growth of 1.2% in 2010, but reports suggest it is set to raise its forecast to 1.…

Pound to Euro Forecast 2010

Good Morning. Sterling rose yesterday, boosted against USD after a weak reading of U.S. employment kept the USD under pressure.

The pound was supported versus the dollar, but gains were capped and sterling was unable to push higher against the euro as investors remain wary of the UK's mounting debt burden and weak economy, along with concerns about political uncertainty. Rates have started to fall this morning however.

Today we'll have a look at the rates for pound to Euro. Rates @ 08:30am are as follows:
GBP/EUR 1.1087GBP/USD 1.6092GBP/AUD 1.7324GBP/NZD 2.1680GBP/CAD 1.6607GBP/CHF 1.6372GBP/ZAR 11.848GBP/JPY 147.84GBP/NOK 9.0421EUR/USD 1.4507Sterling to Euro

GBP/EUR trading began last Monday at the 1.125 level after strong readings for the UK manufacturing sector and mortgage approvals increased fuelling optimism that the British economy is improving.

The manufacturing purchasing manager's index on Monday came in up for December, higher than November and exceeding forecasts. T…

Economic Data that can effect exchange rates

Good Morning. As usual on a Monday, we'll take a detailed look at the weeks data releases. First, a quick snapshot of where rates stand @ 08:30am 11th January 2010:
GBP/EUR 1.1108GBP/USD 1.6140GBP/AUD 1.7322GBP/NZD 2.1795GBP/CAD 1.6565GBP/ZAR 11.812GBP/JPY 148.74GBP/CHF 1.6398GBP/NOK 9.0657EUR/USD 1.4527US Job Losses up
US employers unexpectedly cut 85,000 jobs in December, but the unemployment rate held steady at 10%, official figures have shown. The number of job losses was surprising, particularly after November's figures had been revised. This has weakened the US Dollar, which is good news for those needing to buy USD, as rates have climed slightly.

UK Producer Prices up
The prices of goods leaving UK factories rose at a faster pace than expected in December, figures show. Figures from the Office for National Statistics (ONS) showed UK producer prices rose by 0.5% last month.

It took the annual rate of output price inflation to 3.5%, which is the highest rate since January…

Pound largely unchanged after BoE keep rates and QE on hold

Good Morning. Sterling fell yesterday on political concerns as British Prime Minister Gordon Brown survived an attempt to oust him, for the moment. The pound gained little as the Bank of England kept policy steady as expected and rates on hold. At 08:30am rates are as follows:

GBP/EUR 1.1155GBP/USD 1.5978GBP/AUD 1.7446GBP/NZD 2.1842GBP/CAD 1.6504GBP/CHF 1.6514GBP/ZAR 11.823GBP/HKD 12.390GBP/JPY 148.83EUR/USD 1.4317 Bank of England UK interest rates have been left at 0.5% following the Bank of England's latest meeting. Policymakers had indicated they were likely to stay on hold until at least February when they will get new growth and inflation forecasts and the scheduled asset purchases run out.

The environment for the MPC now becomes much more challenging. Firstly it has to decide whether to provide more QE next month which is possible, but we doubt that it will. Concerns about the government's massive debt also weighed on the pound, with a record £225 bn of planned gilt issuan…

Pound falls as government divisions appear

Sterling slipped yesterday after Gordon Brown may face a leadership challenge before a general election, and this underlined uncertainty facing the Labour government. Rates @ 08:30am 7th January are as follows:
GBP/EUR 1.1092GBP/USD 1.5937GBP/AUD 1.7306GBP/NZD 2.1629GBP/CHF 1.6442GBP/ZAR 11.702GBP/JPY 147.74GBP/NOK 9.0712EUR/USD 1.4359There was actually some better than expected services sector data for the UK, however despite this, fears over the UK's fiscal position kept the pound on the back foot. This clearly demonstrates that despite better data, the UK's debt and government uncertainty is stopping the pound gain against other currencies.

Leadership Challenge
Labour has been plunged into a civil war after a last-ditch coup attempt left Gordon Brown's premiership in fresh turmoil. Senior Cabinet members took hours to issue apparently lukewarm statements of support for him after two former ministers demanded a secret ballot of MPs on his leadership.

The plotters claimed…

Pound makes small gains despite drop in consumer confidence

Good Morning. Sterling has risen against both the Euro and US Dollar this morning, brushing off data showing a deterioration in UK consumer confidence. At 09:30am rates are as follows:
GBP/EUR 1.1147GBP/USD 1.6024GBP/AUD 1.7522GBP/NZD 2.1847GBP/CAD 1.6629GBP/CHF 1.6551GBP/NOK 9.1409GBP/JPY 147.83GBP/ZAR 11.720EUR/USD 1.4373Despite the gains this morning, few analysts expect the pound to continue rising, as the UK economy is seen lagging other major countries in pulling out of recession. Also, the Bank of England is expected to keep interest rates low for many months. Gains in the UK currency were capped due to ongoing concerns about the deeply indebted British government, while a looming general election is also expected to pressure the UK currency lower in the mid-term.

UK Manufacturing
UK manufacturing activity grew at its fastest pace in more than two years in December, a survey has indicated. The Chartered Institute of Purchasing & Supply's purchasing managers' index ro…

Sterling up against USD, down against Euro

Good Morning. The pound rose against USD yesterday, boosted after better than expected UK manufacturing. Also, mortgage approvals increased optimism that the British economy is improving. Investors selling the USD helped to support the pound, however Sterling fell against the euro after a European central bank was seen buying the single currency before a bank fixing.

Rates @ 08:30am are as follows:
GBP/EUR 1.1118GBP/USD 1.6043GBP/AUD 1.7595GBP/NZD 2.1873GBP/ZAR 11.682GBP/CAD 1.6665GBP/JPY 147.52GBP/NOK 9.1454EUR/USD 1.4425Pound vs Euro
After a disappointing run up to the Christmas Holidays, with the past months fluctuating market being the result of both poor UK and Euro Zone economic data releases, Sterling finally looks set to make a gain on the Euro at some point through the year. The end of 2009 has already seen a gentle rise in GBP/EUR and data yesterday showed strong readings for the UK manufacturing sector and mortgage approvals increased fuelling optimism that the British economy…

Sterling Exchange Rate Outlook 2010

Good Morning and welcome to a New Year in the currency markets. The pound had a good run at the end of the year due to thin trading volumes exaggerating the price. At 08:30am on the 4th January 2010 rates are as follows:
GBP/EUR 1.1271GBP/USD 1.6141GBP/CAD 1.6833GBP/AUD 1.7865GBP/NZD 2.2234GBP/CHF 1.6759GBP/ZAR 11.869GBP/JPY 149.95GBP/NOK 9.3215EUR/USD 1.4318So will the pound rise through 2010?
Many analysts believe Sterling could come under pressure early in 2010, however, due to jitters about its huge debt burden ahead of a UK general election, although the currency is broadly seen as undervalued on a longer term horizon. Over the next couple of months the market will have to take into account the potential implications of the election and this could prove negative for the pound. Investors are concerned about the possibility of the election resulting in a hung parliament, which may make it difficult for the government to take steps to reduce the UK's ballooning budget deficit.

So, …