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Showing posts from February, 2010

GBP rates fall - may fall further after GDP today

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Good Morning. Sterling fell yet again against the Euro and US Dollar yesterday, on weak UK data and concerns the Bank of England could expand quantitative easing.

Sterling was hit in tandem with other perceived riskier currencies as worries about Greece's high debt levels and weak U.S. jobless claims data encouraged investors to cut risk exposure, prompting flows into the dollar and the yen. Rates @ 08:30am are as follows:
GBP/EUR 1.1252GBP/USD 1.5269GBP/AUD 1.7165GBP/NZD 2.1997GBP/CAD 1.6159GBP/CHF 1.6461GBP/ZAR 11.849GBP/JPY 136.30EUR/USD 1.3564GDP Today
There are worries that GDP growth of 0.1% seen in the final three months of 2009 may be revised downwards today. If it proves to have been a negative figure, that would show the UK had failed to emerge from recession.

Last week, figures showed that UK inflation had accelerated to 3.5% and that public finances had deteriorated further after the government borrowed another £4.3bn in January to plug the growing hole in the UK's fi…

Sterling weak after more dovish BoE comments

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Good Morning. Sterling fell against the Euro again yesterday, after Bank of England policymakers again voiced the fact there is likely to be more quantitative easing. BoE Monetary Policy Committee member Adam Posen said the central bank would very likely expand its quantitative easing programme in the months to come. The news has weakened the pound, and rates @ 08:30am are as follows:
GBP/EUR 1.1360GBP/USD 1.5326GBP/AUD 1.7237GBP/NZD 2.2200GBP/CAD 1.6170GBP/CHF 1.6623GBP/HKD 11.900GBP/ZAR 11.921GBP/JPY 136.89EUR/USD 1.3488The comments by the BoE has kept sentiment towards the pound very negative, on the view that a weak economy will keep UK monetary policy very loose for many months to come. This also means it's likely our interest rates will stay at their record low of 0.5%.

As other economies recover and start to raise their interest rates, it's likely the pound will lag behind other currencies and so the outlook for Sterling exchange rates is very poor. The BoE's dovi…

Sterling under pressure after BoE comments

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Sterling fell again yesterday after the governor of the Bank of England Governor Mervyn King said the recovery will be slow, and there will probably be a need for more Quantitative Easing. Rates @ 08:30am this morning are as follows:
GBP/EUR 1.1408GBP/USD 1.5454GBP/AUD 1.7366GBP/NZD 2.2357GBP/CAD 1.6297GBP/CHF 1.6702GBP/HKD 11.999GBP/JPY 139.43GBP/ZAR 11.973EUR/USD 1.3543Bank of England comments
As they have now given a very negative assessment of the UK recovery, and added that more stimulus may be required in the form of Quantitative Easing, analysts are now pessimistic about the recovery in the UK.

As investors now have less confidence in the UK, they have sold Sterling assets for safer currencies such as the US Dollar. This has weakened the pound, illustrated by the fact Sterling to US Dollar rates have dropped 10 cents since last month. That's a huge fall.

If GBP/USD rates have dropped, why haven't GBP/EUR?
It's to do with the Euro being very weak in the aftermath of the …

Pound to Euro and Pound to US Dollar Forecast

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Pound to Euro Forecast Outlook
The last week has seen some fluctuation in the GBP/EUR exchange rates, exhibiting just over a 1.7% movement from the low to the high of the week. Whilst remaining relatively stable, the downwards movements that we have seen can be attributed to the release of UK Retail Sales figures. The data released showed a decline of 1.8% compared with the forecast 0.5% fall.

Whilst this data will be possibly misjudged due to the return of VAT to it’s former 17.5% level and the recent poor weather, the figures do little to allay fears over a renewed downturn to an already depressed economy and currency. The drop from 1.1453 to 1.1335 on release of the figures; highlights the importance of staying in contact with your account executive. On a trade of £200,000, this is a difference of over £2300.

Looking to the week ahead; we will be seeing revised GDP figures for Germany on Wednesday and the UK on Friday. If Germany releases better figures than the UK, this will only go …

Pound still weak after poor retail sales

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Good Morning. Sterling fell to a 9 month low against the US Dollar last week after a big fall in UK retail sales highlighted weak consumer demand. It may have been the snow in January that caused consumers to stay at home, but the figures do little to spur confidence in the economy, and the pound has fallen as a result.

Already knocked by worse than expected public finances data on Thursday, the pound extended losses on the view that a painfully slow economic recovery and a grim fiscal position would keep sentiment towards the currency negative. Rates @ 08:30am are as follows:

GBP/EUR 1.1369GBP/USD 1.5493GBP/AUD 1.7220GBP/NZD 2.2093GBP/CAD 1.6084GBP/JPY 141.875GBP/ZAR 11.860
EUR/USD 1.3628Tomorrow morning we'll have a full report on pound to euro forecasts, pound to US Dollar, and a full breakdown of the weeks data that may affect rates. Until then, you can follow market movements on our twitter page.

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Pound falls again due to stronger US Dollar.

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Good Morning. The pound has fallen again this morning, after the Federal Reserve in the USA raised its discount rate. This has made the dollar more attractive to investors, and the pound has lost out as a result. Rates @ 08:30am are as follows:
GBP/EUR 1.1430GBP/USD 1.5392GBP/AUD 1.7276GBP/NZD 2.2146GBP/CAD 1.6160GBP/NOK 9.2658GBP/JPY 141.62GBP/NOK 9.2649GBP/ZAR 11.842EUR/USD 1.3464Falling Pound
The drop today follows drops yesterday after figures showed the government borrowed another £4.3bn last month to plug the growing hole in the UK's finances. It is the first time the government has borrowed money in January (usually a bumper month for income from tax receipts) since records began in 1993.

Chancellor Alistair Darling recently came under pressure from a number of leading economists to act more quickly in cutting the size of the budget deficit. As we said earlier in the weak when rates were close to a 6 month high, it was likely that rates would retreat again as has happened se…

Pound gains against Euro after MPC minutes

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Good Morning. Sterling rose nicely against the Euro yesterday after Bank of England minutes showed the recent decision to stop it's Quantitative Easing programme was unanimous, but sentiment towards the pound remained shaky. The pound's rise was limited however, after data showed a rise in UK jobless claims versus consensus for a drop in the count. Rates @ 08:30am are as follows:
GBP/EUR 1.1516GBP/USD 1.5614GBP/AUD 1.7428GBP/NZD 2.2293GBP/CAD 1.6361GBP/NOK 9.2162GBP/ZAR 11.902GBP/AED 5.7314EUR/USD 1.3552Bank of England minutes The pound had initially fallen slightly as the markets reacted to the number of people in the UK claiming unemployment benefit rose unexpectedly last month, and also by the largest amount since July last year.
The BoE minutes led some to believe that a resumption in its quantitative easing programme QE was less likely, with inflation jumping in January. But others believed that asset purchases could resume in the future. So, still slightly up in the air, ho…

GBP/EUR drops. BoE minutes today.

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Sterling slipped against the Euro yesterday, with the single European currency gaining broadly as the market took the view its recent sell-off had gone far enough for now. Analysts have said that concerns over the fiscal health of Greece and other peripheral euro zone economies may have gone too far, and that the currency was oversold. Rates @ 08:30am are as follows:
GBP/EUR 1.1461GBP/USD 1.5797GBP/AUD 1.7509GBP/NZD 2.2344GBP/CAD 1.6468GBP/CHF 1.6827GBP/ZAR 12.073GBP/JPY 142.70GBP/NOK 9.2133EUR/USD 1.3778UK Inflation
The UK inflation rate rose to 3.5% in January - the fastest annual pace for 14 months - from 2.9% the month before, official figures have shown. Despite the rise, it's unlikely the Bank of England will raise interest rates due to the economic position of the UK, and so the rise in inflation has not caused any strength in the pound. You can read a full report on the inflation situation on the BBC site here.

Bank of England Minutes
A big week of UK data releases continue…

UK Inflation figures today. Greece's woes still play on Euro.

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Good Morning. The Euro rose against the US Dollar yesterday as expectations that European finance ministers would not say anything new on solving Greece's debt woes prompted short-term players to trim their short positions. Investors remained cautious about buying the single currency on uncertainty that debt problems in Greece will be resolved quickly.

Yesterday Sterling made little movement, due to the market holiday in the USA. Rates @ 08:30am are as follows:
GBP/EUR 1.1492GBP/USD 1.5719GBP/AUD 1.7545GBP/NZD 2.2309GBP/CAD 1.6429GBP/CHF 1.6852GBP/ZAR 12.051GBP/JPY 141.24GBP/NOK 9.2528EUR/USD 1.3671Eurozone predicts fragile growth
The economy of the eurozone will grow by about 1% this year, according to the head of the 16-nation bloc. "Growth is on the path of consolidation but growth in 2010 will be fragile, moderate," Jean-Claude Juncker said.

The eurozone was hit hard by the economic downturn last year, contracting by 4%, its biggest drop since the euro launched in 1999…

Pound/Euro & Pound/US Dollar Forecast 2010

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Pound vs Euro
The single currency struggled to make any gains over a generally weak pound last week as news from Greece continued to grab the headlines. The Greek economy, which has struggled since the recent downgrade in its sovereign credit rating, has now began to have a major affect across the entire Euro zone as fears of its high debt levels loom.

With other countries such as Portugal, Spain, Italy and Ireland also in high levels of debt, small cracks have begun to show in the Euro for the first time since its introduction. The outcome for Greece now suggests a bailout from a larger EU nation such as Germany or an exit from the Euro all together.

By Wednesday investors looked towards the UK as the Bank of England unveiled a dovish report in which the UK inflation outlook was revised down, increasing the possibility of further quantitative easing. The QE scheme which in simplistic terms involves pumping more money into the UK economy is more than likely to weaken the pound and drive …

Pound up 2 cents against Euro

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Sterling gained against a broadly weaker euro yesterday after a European Union deal to support Greece was seen short on detail, but stayed weak versus the dollar as a dovish Bank of England report weighed on sentiment. Rates climbed significantly, as you can see from where they stand @ 08:30am
GBP/EUR 1.1531GBP/USD 1.5705GBP/AUD 1.7658GBP/NZD 2.2491GBP/CAD 1.6484GBP/CHF 1.6874GBP/HKD 12.201GBP/NOK 9.2848GBP/JPY 141.58GBP/ZAR 11.986EURUSD 1.3616Investor optimism after EU leaders announced the Greek rescue plan pushed the pound to a three-week low versus the single currency.

However, the euro turned lower across the board as markets awaited official details of the deal.Sentiment towards the pound remained shaky and it stayed weak against the dollar as Wednesday's BoE report suggested the door remained open to more asset purchases under quantitative easing and that rates would stay low for some time.

The pound was also expected to stay under pressure in the medium term on political unc…

Pound falls on Boe - Euro falls on Greek debt

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Sterling fell broadly on Wednesday, hitting a three-week low against the euro after the Bank of England released dovish inflation forecasts and left open the door to extending quantitative easing. Fears on Greek debt kept rates falling too much as the Euro weakened. Rates @ 08:30am are as follows:
GBP/EUR 1.1324GBP/USD 1.5594GBP/AUD 1.7538GBP/NZD 2.2256GBP/CAD 1.6486GBP/CHF 1.6611GBP/ZAR 11.937GBP/JPY 140.15GBP/NOK 9.166EUR/USD 1.3767Bank of England
BoE forecast price increases would be well below its 2 percent target in two years' time if interest rates rise as markets predict, suggesting rates could stay at record lows for longer than previously thought.BoE Governor Mervyn King added to the dovish tone, saying it was "far too soon" to conclude that the bank's quantitative easing programme was over and said further asset purchases would be made if necessary. The fear of more QE means the pound is not attractive to investors, and fell as a result.

The BoE inflation repo…

Pound weak on debt fears

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Good Morning. Sterling reversed gains against the US Dollar and stayed range bound against the Euro, after ratings firm Fitch said Britain was among the most vulnerable of triple A sovereigns. Rates @ 08:30am are as follows:
GBP/EUR 1.1380GBP/USD 1.5665GBP/AUD 1.7882GBP/NZD 2.2574GBP/CAD 1.6737GBP/CHF 1.6706GBP/ZAR 12.033GBP/JPY 140.41GBP/NOK 9.2482EUR/USD 1.3758UK Debt
Many news outlets have been focusing on the debt problems that some EU countries such as Greece has, that's keeping the Euro weak. The UK should be seen in the same category of countries as Greece and Spain, who are facing severe debt problems, a leading economist has said. Ex-IMF chief economist Simon Johnson, also described the G7 group of leading economies as "fundamentally useless".

One of the major concerns about a country having large budget deficits is that it cannot spend sufficiently to boost its economy. Although the UK did officially come out of recession in the fourth quarter of 2009 - ending si…

GBP/EUR and GBP/USD Forecast Feb 2010

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Pound vs Euro
Last week was a relatively stable week for GBP/EUR exchange rates showing little more than a 1% movement between the high and low point of the week for the currency pairing. The slight movements seen in the market came after the Bank of England’s decision to hold interest rates and pause their much-publicised Quantitative Easing program. This may have been seen as a positive in many investor’s eyes however the market did not reflect this.

This linked to the rolling debt problems in Greece and Spain; makes it even more surprising that Sterling has failed to make significant gains against the single currency. With a potentially difficult week ahead for Sterling exchange rates, the importance of staying in close contact with your account executive here at the Foremost Currency Group is imperative as any bad data could damage the inherently fragile Pound and greatly magnify the cost of overseas purchases.

Opinions released yesterday evening by the Ex-IMF chief economist, Simon …

Sterling falls against Euro and US Dollar

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Good Morning. Sterling fell to an 8.5 month low against the US dollar at the end of last week as concerns over euro zone sovereign debt problems boosted the appeal of the greenback as a safe-haven currency. This morning at 08:30am rates are as follows:
GBP/EUR 1.1394GBP/USD 1.5609GBP/CHF 1.6722GBP/AUD 1.7947GBP/CAD 1.6646GBP/NZD 2.2579GBP/NOK 9.3026GBP/DKK 8.4828EUR/USD 1.3687Worries about debt problems in the euro zone have extended beyond Greece to Portugal and Spain, hitting riskier assets, with sterling falling in tandem with the euro against the dollar.

Concern over Britain's public finances, and political uncertainty ahead of a general election due by June also weighed on sterling sentiment.

"The euro zone debt story is the main focus. The euro is looking weak and sterling is following," said Audrey Childe-Freeman, currency strategist at Brown Brothers Harriman.

The pound saw only very brief gains from the Bank of England's expected decision on Thursday to pause …

Sterling weak ahead of Bank of England meeting

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Good Morning. Sterling is still very weak in the run up to the Bank of England policy announcement tomorrow. Also weighing on the pound was political uncertainty, with polls showing the Conservatives lead is narrowing, increasing the chance of a hung Parliament when the election comes. At 08:30am rates are as follows:
GBP/EUR 1.1473GBP/USD 1.6042GBP/AUD 1.8043GBP/NZD 2.2514GBP/CHF 1.6912GBP/ZAR 11.894GBP/HKD 12.456GBP/JPY 144.69GBP/NOK 9.3459EUR/USD 1.3978Bank of England
The BoE is expected to signal a pause in quantitative easing tomorrow by refraining from increasing its £200 bn asset buying programme. However, analysts say confirmation will be needed before sterling can push higher. That's the reason we've seen no gains this week.

Although a pause is broadly expected, investors were wary, particularly after the recent weaker than expected fourth quarter UK gross domestic product data. This showed that the UK only just grew in the last quarter by only 0.1%.

"GDP has been d…

Sterling falls against Euro & US Dollar

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Good Morning. The Pound vs Euro rate fell yesterday after the Euro strengthened by corporate demand, which outweighed robust UK manufacturing activity data and helped drag the pound down to a 1 month low against the dollar. Rates @ 08:30am are as follows:
GBP/EUR 1.1428GBP/USD 1.5912GBP/AUD 1.8096GBP/NZD 2.2534GBP/CAD 1.6853GBP/CHF 1.6829GBP/HKD 12.356GBP/HUF 307.34GBP/ZAR 11.896GBP/JPY 144.03EUR/USD 1.3919The pound also weakened after opinion polls showed that an election this year may result in a hung parliment. This translated to political uncertainty, which gives investors the jitters. They then sell Sterling for a safe haven currency such as the US Dollar. The result is lower rates which we've seen this morning.

Bank of England & Quantitative Easing
The key event this week is the Bank of England's policy decision on Thursday, where it is expected to signal an end to quantitative easing by refraining from any further increase in its 200 billion pound asset buying progr…

Sterling/Euro & Sterling/US Dollar forecast Feb 2010

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Good Morning. Today we'll look at GBP/EUR & GBP/USD, plus a look at the weeks data as usual.

Pound vs Euro
Last week at last provided some good news for Euro purchasers after Sterling made gains against the single currency. A raft of broadly Sterling positive and Euro negative data was the dominant reason behind the shift in trading levels which saw them move from a low of 1.132 (interbank level) on Monday to a high of 1.162 (interbank level) on Thursday. In real terms on a purchase of €200,000 this represents a saving of over £4500 in market movement alone between Monday and Thursday.

Tuesday saw the start of Sterling’s run with the release of UK Q4 GDP figures which confirmed that the UK was no longer technically in a recession. The figures were however somewhat disappointing to the market, showing a growth of just 0.1% but falling some way short of the expected 0.4% growth. This perhaps prevented Sterling from gaining against the Euro even further and drew out the sceptics spe…