Showing posts from March, 2010

Sterling gains against Euro & Dollar. April 2010 Outlook.

Good Morning. The pound rose against the Euro and US Dollar yesterday, after better than expected GDP data and other better economic news. However the outlook for Sterling remains clouded by political uncertainty. Rates @ 08:30am 31st March are as follows:
GBP/EUR 1.1220GBP/USD 1.5062GBP/AUD 1.6460GBP/NZD 2.1219GBP/CAD 1.5313GBP/CHF 1.6057GBP/JPY 140.35GBP/ZAR 11.043EUR/USD 1.3421UK Growth revised up
The UK economy emerged from recession in the fourth quarter of last year at a faster pace than previously estimated, official figures have shown. Data from the Office for National Statistics said the economy grew 0.4% between October and December in 2009. This was faster than the previous estimate of 0.3% growth during the quarter.

The better figures boosted the pound, and exchange rates rose against the Euro and US Dollar.

Sterling's rise was briefly dampened though, after UK finance minister Alistair Darling said in testimony to parliament's Treasury Committee that depreciation of…

Sterling/Euro & Sterling/US Dollar forecast 2010

Pound vs Euro
The past week has been rather volatile for the Sterling-Euro currency pairing with a 1.6% shift between the highs and the lows of the week. On Tuesday, data released pertaining to figures for both the Consumer Price and Retail Price Indices showed that inflation levels in the UK had contracted; giving strength to the Pound.

Wednesday presented a good reading for the Business Climate in Germany anticipating Bullish movement for the Euro. This movement was further compounded by Alistair Darling’s Budget report. Tory leader David Cameron stated, “This chancellor has had his last chance….he totally failed….they (Labour) are carrying on spending and failing. The biggest risk to our [economic] recovery is five more years of this prime minister.” This all amounted to a fall in the GBP/EUR rate.

Thursday presented the high of the week on the back of greater than expected retails sales data in the UK; peaking at 1.1242 before quickly falling back to previous levels. We also saw a fi…

Data that can affect exchange rates

This Weeks Data
For the UK, we have Mortgage Approvals on Monday and Gross Domestic Product (GDP) on Tuesday. Mortgage data is considered as a leading indicator of the UK Housing Market. A Mortgage growth represents a healthy housing market that stimulates the overall UK economy. We expect 48 thousand approvals – if it’s less than this then the pound may weaken. GDP on Tuesday is a broad measure of the UK economic activity and health. Markets are looking for monthly growth of 0.3% - again, differing figures will affect Sterling. Political uncertainty is also likely to continue to affect Sterling

In the EU, we have various measures of Confidence today. A high level of consumer, economic and industrial confidence stimulates economic expansion while a low level drives to economic downturn, and the Euro can be affected accordingly. We also look to more developments from Greece, as sterling slipped against the euro on Friday after a European Union agreement to help Greece tackle its debt pr…

Euro gains strength after bailout plan for Greece

Sterling hit a one-month high against the euro on Thursday after a stronger-than-expected headline reading of UK retail sales suggested the UK economy is slowly improving. However, continued fears over political uncertainty in having a hung Parliament, coupled with the lack of a plan to cut the deficit meant Sterling fell again later in the day.

Also the plan to bail Greece out strengthened the Euro later in the day, and as a result rates dropped. At 08:30am rates are as follows:
GBP/EUR 1.1085GBP/USD 1.4817GBP/AUD 1.6323GBP/NZD 2.0945GBP/CAD 1.5172GBP/CHF 1.5833GBP/ZAR 10.993GBP/JPY 137.07EUR/USD 1.3365Weak Pound
Analysts are unconvinced Wednesday's budget will help the government increase public support and narrow the Conservative Party's lead ahead of a vote expected in early May, and a hung parliament remains a real possibility.

Most polls now point to a hung parliament, where no party has a majority. This is an uncomfortable scenario for markets which fear it could leave a g…

Sterling lower after budget

Good Morning. Yesterdays budget was largely political and had little impact on rates. The pound fell slightly across the board, however gains were made on GBP/EUR after the Euro weakened on Portugal's credit rating being downgraded and continued fears over Greece. At 08:30am rates are as follows:
GBP/EUR 1.1204GBP/USD 1.4930GBP/AUD 1.6369GBP/NZD 2.1129GBP/CAD 1.5239GBP/ZAR 10.988GBP/JPY 137.11GBP/CHF 1.5978EUR/USD 1.3322Budget So what effect has the budget had on Sterling exchange rates? The pound fell after the budget as it did little to temper concerns over Britain's mounting deficit.
Finance minister Alistair Darling lowered his forecasts for public borrowing and confirmed plans to halve the deficit in four years, although analysts said the budget presentation was short on details on how this would be achieved.
The budget was largely political, with nothing to boost confidence in the markets. As the budget had little to do with the economy, and all to do with politics, I'…

How will budget affect Sterling exchange rates

Good Morning. Sterling slipped yesterday after data showing a slowdown in UK consumer price inflation reinforced expectations that price gains may have peaked, and that monetary policy would stay loose for some time. Markets now await today's budget. Rates @ 08:30am are as follows:GBP/EUR 1.1174GBP/USD 1.5018GBP/AUD 1.6380GBP/NZD 2.1311GBP/CAD 1.5260GBP/CHF 1.5945GBP/JPY 136.46GBP/ZAR 11.008EUR/USD 1.3431Budget
Chancellor Alistair Darling is preparing to deliver his third budget today, the last before the general election. He is expected to describe it as "a Budget to secure the recovery and invest in our industrial future".

New tax rises and spending cuts are unlikely to be outlined, ahead of the election expected to be held on 6 May. But Mr Darling might spell out more details of where the government expects to make £11bn of public sector efficiency savings by 2012/13.

Latest figures suggest that government borrowing might be nearer £170bn, largely due to lower than e…

GBP/USD and GBP/EUR Forecast

Pound vs Euro
The past week has seen slightly more volatile movement for the Sterling/Euro currency pairing, with a 2.3% shift between the highs and lows of the week. To put this into monetary terms it would mean a difference of £4,600 on a £200,000 trade.

We have however seen some positive growth with Sterling, rising to its strongest position in three weeks against a weaker Euro on Thursday, as it extended gains due to the report published on Wednesday with the welcome news that unemployment figures in the UK were lower than expected.

This news paired with continued speculation as to the economic instability of several Eurozone countries provided Sterling with a chance to strengthen. Sterling dropped again slightly at the end of the week due to a number of factors, not least the speech made by ECB President Trichet with regards to his crisis management plan, volatility is often experienced during his speeches as traders attempt to decipher interest rate clues.

Also responsible for Sterl…

Pound gains on borrowing data

Sterling rose to a three-week high against the euro on Thursday after UK public sector net borrowing came in lower than expected and on talk of European interest in buying British firms.
Public sector net borrowing was the highest on record but below the forecast, hence the rise. At 08:30am rates are as follows:
GBP/EUR 1.1142GBP/USD 1.5185GBP/AUD 1.6472GBP/NZD 2.1300GBP/CAD 1.5447GBP/CHF 1.6015GBP/ZAR 11.098GBP/JPY 137.42EUR/USD 1.3617The figures released yesterday indicated the budget deficit may come in below the government's forecasts, and the better than expected news boosted the market. Finance minister Alistair Darling will deliver a budget next Wednesday, and we'll then know more about the governments spending plans and how they plan to reduce the deficit.

However, Sterling's outlook was weighed down by concerns about the UK's budget deficit, heading for 12 percent of gross domestic product this year. Despite the brighter February public borrowing figures "…

Sterling gains after opinion polls - will it last?

Good Morning. Sterling fell yesterday morning over EU warnings over the level of UK debt. It recovered slightly in the afternoon after better than expected housing data and opinion polls showing the Conservatives are back on course to win the election. Today though we have more data that could well wipe these gains out. More on that in a moment. First, rates @ 08:30am 17th march are as follows:
GBP/EUR 1.1050GBP/USD 1.5220GBP/AUD 1.6525GBP/NZD 2.1368GBP/CHF 1.6049GBP/CAD 1.5418GBP/JPY 137.90GBP/ZAR 11.176EUR/USD 1.3775EU Warning over debt
Gordon Brown was dealt an embarrassing blow last night when the EU gave warning that Britain must do more to curb its spiralling debt. The European Commission wants Labour to outline further spending cuts and spell out where cuts will come from.

The intervention, a week before the Budget, will electrify the debate over the economy. David Cameron promised in a BBC interview last night to fight the election campaign by going farther than Mr Brown in s…

Sterling falls on Economic & Political uncertainty

Good Morning. Sterling fell again yesterday after a member of the Bank of England's Monetary Policy Committee (MPC), warned that the British economy could shrink again. At 08:30am 16th March exchange rates are as follows:
GBP/EUR 1.1002GBP/USD 1.5048GBP/AUD 1.6446GBP/NZD 2.1368GBP/CAD 1.5316GBP/CHF 1.5957GBP/ZAR 11.143GBP/JPY 136.05EUR/USD 1.3673UK's economic problems
One of the MPC's members has said that she expects the UK economy to shrink. The markets have taken the comments as a sign that the recovery will be very fragile. You can read a full report on her comments on the Times website here.

Another thing that is keeping Sterling weak is political uncertainty. Financial markets fear a minority or coalition government would fail to effectively cut Britain's budget deficit, forecast to reach 178 billion pounds this year, or more than 12 percent of gross domestic product.

It's important to remember our fiscal debt here in the UK is the same as Greece. Markets fe…

GBP/EUR & GBP/USD Forecast

Pound vs Euro
The past week has been very flat for the Sterling-Euro currency pairing with only a 1.7% shift between the highs and the lows of the week on Monday and Thursday respectively. The general feeling has been that Sterling, broadly speaking, has gained during the week as growing speculation around various Euro states being on the ‘chopping board’ continues.

This includes but is not limited to Portugal, Italy and Spain, all having been given negative mention by Ratings agencies in recent times. However, with few data releases for both the UK and the Eurozone last week, volatility has been at a low for the two currencies. This low volatility in the currency pairing highlights the benefits of placing a ‘Stop Loss’ or ‘Limit Order’ on a contract with FCG.

Talking to your account executive and knowing where to place a minimum and/or maximum on your exchange rate would help to optimise your purchase. This would safeguard against any potential loss should the market drop and ensure tha…

Sterling rises slightly, but remains under pressure

Good Morning. Sterling rose yesterday after a slight rise in inflation expectations, though analysts expected economic and political concerns to keep the pound under pressure ahead of an upcoming general election. At 08:30am rates are as follows:
GBP/EUR 1.1014GBP/USD 1.5106GBP/AUD 1.6463GBP/NZD 2.1514GBP/CAD 1.5447GBP/CHF 1.6098GBP/ZAR 11.149GBP/JPY 136.86EUR/USD 1.3715A survey from the Bank of England showed expectations for inflation over the next 12 months rose slightly and showed a modest rise. Sterling rose slightly but this is not overly significant. I don't think it will have any impact on Bank of England policy ahead, and most analysts expect the pound to remain under pressure.

Sterling has fallen 7 percent on a trade-weighted basis from its January highs. Analysts remained jittery the threat of a hung parliament after the election could stymie efforts to deal with the UK's spiralling budget deficit.

Adding to the negative mix was concern over Britain's sovereign ra…

Sterling falls yet again on poor data

Good Morning. The pound fell yet again yesterday after much worse than expected Manufacturing and Industrial production data, and analysts expect further declines for the currency given the gloomy economic outlook for Britain and worries on the political front. At 08:30am 11th March rates are as follows:
GBP/EUR 1.0969GBP/USD 1.4963GBP/AUD 1.6334GBP/NZD 2.1389GBP/CAD 1.5349GBP/CHF 1.6027GBP/ZAR 11.134GBP/JPY 135.23EUR/USD 1.3640Manufacturing and Industrial Production
The Industrial and Manufacturing Production data measures outputs of the UK factories and mines and the manufacturing output. The figures are seen as a short term indicator of the strength of UK manufacturing activity that dominates a large part of total GDP and so can affect the pound.

The figures were expected to show an increase in both measures, however we actually saw a significant drop in output. As the figures were much worse than expected, this reduced confidence in the UK economy, and as a result Sterling was sold…

Sterling falls (again) as trade deficit grows

Data yesterday showed the trade deficit for the UK was much worse than expected, and this combined with renewed fears our credit rating may be downgraded has hit the pound, and exchange rates have fallen yet again. At 08:30am rates are as follows:
GBP/EUR 1.0991GBP/USD 1.4908GBP/AUD 1.6296GBP/NZD 2.1150GBP/CAD 1.5330GBP/CHF 1.6067GBP/JPY 134.40GBP/ZAR 11.031EUR/USD 1.3566Trade Deficit
Data yesterday showed the UK trade deficit rose in January to its widest since August 2008, and the figures were far larger than expected, hurting Sterling. The news came as a disappointment and caused the pound to weaken, dipping 0.4% to 1.10 euros and losing 0.75% against the dollar to below $1.50.

The UK's currency has fallen by some 24% against a basket of world currencies since early 2007 - before the global economic crisis. That fall in the value of the pound, making UK goods cheaper abroad, might have been expected to boost sales overseas. However, exporters may have taken advantage of a weaker s…

Sterling exchange rates fall again

Good Morning. Sterling fell yet again yesterday as risk waned and overall sentiment towards the pound remained uncertain, leaving the focus back on structural and political weaknesses affecting the UK economy. Rates @ 08:30am are as follows:
GBP/EUR 1.1015GBP/USD 1.5009GBP/AUD 1.6461GBP/NZD 2.1421GBP/CAD 1.5408GBP/CHF 1.6115GBP/ZAR 11.084GBP/JPY 135.14EUR/USD 1.3623Weak Sterling
Commenting on the current weakness of the pound, Jane Foley at said "Risk appetite has waned and sterling has come back down versus the dollar. There is much uncertainty about where power would go in a hung parliament and together with the need to tackle the budget deficit, sterling can weaken further over the coming months."

The consensus is that Sterling is the weakest of the major currencies, and the only thing keeping rates up against the Euro is the ongoing debt problems of Greece. This may be ending though, as the Euro strengthened against both Sterling and the US Dollar yesterday as Gr…

Sterling Euro & Sterling US Dollar Forecast

Pound vs Euro
Last week we witnessed another tough week for Sterling exchange rates versus a basket of currencies including around a 3.5% drop against the Euro at its lowest point. The decline came after speculation mounted that the UK could see a hung parliament when the election takes place in May.

Political uncertainty is one of the biggest market movers and with such uncertainty it’s no surprise Sterling is seemingly on free fall. Many of our clients are in the process of buying a property abroad and this drop could have increased a transaction by over £6000 based on a €200,000 transfer.

Even with this downward trend and outlook for that matter there is one word of caution from this trader. The currency markets are extremely volatile and often unpredictable so those with a transfer of Euros to Pounds may not see their requirement continually increasing. It is well documented of the problems currently being seen in Greece and this issue could turn rates around should increased negativ…

Pound remains flat after rates left on hold

Good Morning. The Bank of England and European Central Bank both left rates on hold yesterday as expected. Rates this morning are as follows:
GBP/EUR 1.1074GBP/USD 1.5037GBP/AUD 1.6678GBP/NZD 2.1805GBP/CAD 1.5522GBP/JPY 134.23GBP/ZAR 11.231GBP/CHF 1.6195EUR/USD 1.3579Bank of England
The Bank of England has kept interest rates at a record low of 0.5% for the 12th consecutive month. The decision was widely expected by economists, who believe that any rise in the cost of borrowing could damage the UK's fragile economic recovery. Also as expected, the bank has not pumped any more money into the economy under its quantitative easing (QE) programme - for now at least.

The lack of more QE meant the pound did not fall, but then it didn't gain either, and remained largely flat through the day. Figures released last week showed that the UK economy grew by 0.3% in the final three months of 2009, compared with an initial estimate of 0.1% growth.

Although the 0.3% growth in the final quarte…

Pound remains weak - Interest Rates today

Good Morning. The pound gained yesterday on good PMI data, however good data from the Eurozone cancelled this out, and so Pound vs Euro rates remain steady at €1.10. Rates for other currencies rose slightly. At 08:30am rates are as follows:
GBP/EUR 1.1010GBP/USD 1.5032GBP/AUD 1.6695GBP/NZD 2.1804GBP/CAD 1.5507GBP/CHF 1.6108GBP/JPY 132.81GBP/ZAR 10.241EUR/USD 1.3650PMI Data
A purchasing managers' survey showed Britain's services recorded their strongest expansion in more than three years in February. Analysts said the figures lifted expectations the UK economy may be recovering faster than previously thought, lessening concerns that Britain could slip back into recession.

Earlier, a Nationwide Building Society survey also showed British consumer confidence hit its highest in two years in February. Given how volatile sterling has been recently, people don't want to be caught on the wrong side," said RBS currency strategist Paul Robson.

The pound's recent falls came a…

Sterling still weak on political uncertainty

Good Morning. After falling on Monday on political uncertainty, Sterling remained fairly rangebound against the Euro, but has climbed against the US Dollar. Rates @ 08:30am are as follows:
GBP/EUR 1.1016GBP/USD 1.5000GBP/AUD 1.6606GBP/NZD 2.1620GBP/CAD 1.5516GBP/CHF 1.6115GBP/ZAR 11.345GBP/JPY 133.05GBP/NOK 8.9085EUR/USD 1.3613Why the pound is weak
The prospect that an election expected in May could result in no one party having a clear majority has raised concerns that any incoming government may not be able to take the harsh measures needed to cut the UK's ballooning budget deficit. A new opinion poll published showed the opposition Conservatives regaining their advantage, while another showed their lead shrinking. Both still suggested Britain was heading for a hung parliament. Also, the fact that Gordon Brown may yet remain our prime minister for another 4 years was enough to send the pound crashing, so the markets reflecting what many think about his leadership.

Concerns abou…

Biggest 1 day drop for the pound in 1 year.

Good Morning. The pound fell in a big way against all currencies yesterday, after polls showed that we may yet have a Labour government for another four years. Rates @ 08:30am this morning are as follows:
GBP/EUR 1.1030GBP/USD 1.4905GBP/AUD 1.6567GBP/NZD 2.1445GBP/CAD 1.5496GBP/HKD 11.574GBP/ZAR 11.413GBP/JPY 133.05EUR/USD 1.3509Sterling drops
The pound saw it's biggest one day drop in a year yesterday. Polls showed that the Labour government may win the election, and the fact that David Cameron has only a 2 point lead, versus a man who many media outlets are politely saying has 'personality issues' mean the outlook for the UK is not good. Many can't understand this fact, and to be honest neither can I.

If Labour win the election, it's likely they will continue their plan of borrowing huge amounts of money to pump into the economy, and have little plan to actually try and reduce our deficit. The markets reacted accordinly and we saw massive selling of Sterling a…

Weekly Currency Forecast GBP/EUR GBP/USD

Pound vs Euro
The Pound weakened against the Euro after a report showed a greater-than-expected increase in government spending in the fourth quarter, adding to concern the U.K. may struggle to manage its rising debt levels.

Sterling headed for a second weekly decline versus the single currency after data showed state spending increased 1.2 percent. Revisions to gross domestic product data showed the economy shrank 6.2 percent since the first quarter of 2008, making the recession the deepest on record.
With this recent downtrend on GBP/EUR this could be a great opportunity to look into a forward contract.

A forward rate can protect your currency against any pitfalls within the market safeguarding your transactions against any further market downturns. You can purchase a ‘Forward’ for anything up to 2 years in advance with a 10% deposit.

With the pending problems in the Greek financial sector we may see Sterling Strength if Germany and France decide to come up with a ‘Bail Out Plan’, howev…