Showing posts from June, 2010

Sterling falls against Euro Wednesday 30th June

Why has the pound fallen against the Euro Wed 30th June? Sterling fell in a big way against most major currencies on Wednesday. We've been saying for some time that the surge would not last forever, and the dramatic fall illustrated this. The drop is due to a combination of Euro strength and Sterling weakness, in a polar opposite of recent trends. We'll now look at the reasons in detail:

Euro gains strength

The single currency was boosted by increased demand at the half year end, and also a lower than expected take up of 3 month loans by the ECB. Concerns about the health of some EU banks meant that there was market expectation of a borrowing spree from the European central bank. When the tender happened Wednesday, there was much less take up than expected. This meant concerns over the finance of EU banks was eased. This increased confidence, and the Euro gained as a result.

Also on Wednesday, there was sovereign demand for Euros due to month end and half yearly flows. The two c…

GBP up against Euro on debt repayment fears

Good morning. The pound rose yet again yesterday, as investors shunned the Euro due to bank repayments due to the ECB this week. Rates at 08:30am 30th June are as follows:
GBP/EUR 1.2308GBP/USD 1.5054GBP/AUD 1.7601GBP/NZD 2.1690GBP/CAD 1.5796GBP/CHF 1.6318GBP/ZAR 11.480GBP/JPY 133.44GBP/DKK 9.1656EUR/USD 1.2227Concerns over the EuroEU states were expected to be making repayments to the European Central Bank this week, but fears they would not be able to make the payments have weakened the Euro. Combined with the stronger pound after last weeks budget, it helped push rates through the €1.23 barrier, although the rate has fallen slightly this morning. Shares have fallen due to the repayments due, and you can read a detailed report about this here on the BBC site.Will the pound continue to rise?The reason rates have risen is due to the budget removing investor concerns, coupled with comments from the Bank of England that interest rates may go up. This has increased confidence in the UK.…

Pound continues to rise against Euro

Good morning. The pound rose again yesterday on news that interest rates may go up in the UK. Sterling rose even more against the Euro after fears that the debt problems in many EU countries will leave the region weaker than in the UK. At 08:30am 29th June 2010 rates are as follows:
GBP/EUR 1.2314GBP/USD 1.5067GBP/AUD 1.7466GBP/NZD 2.1500GBP/CAD 1.5675GBP/JPY 133.55GBP/ZAR 11.449GBP/NOK 9.7640GBP/HUF 353.49EUR/USD 1.2234Interest Rates and the effect on exchnage ratesYesterday Bank of England policy maker Andrew Sentance said that the spending cuts and tax rises outlined in the budget would not remove the need to raise interest rates in the UK. Higher interest rates mean a better return for investors, and so the comments drove investment into the pound which strengthened the currency, helping to push exchange rates to new 19 month highs against the Euro, and 7 week highs against the US Dollar. Eurozone fears weakening EuroThe debt problems in EU countries such as Greece, Portugal, Italy…

Pound vs Euro & Pound vs US Dollar forecast

Good morning. The pound remains strong this morning, but where may rates move this week? Lets have a look at what's been happening in the markets, and this weeks events that could cause further volatility. First, the usual snapshot of rates as at 09:00am 28th June 2010:GBP/EUR 1.2160GBP/USD 1.5030GBP/AUD 1.7219GBP/NZD 2.1221GBP/CAD 1.5570GBP/CHF 1.6343GBP/ZAR 11.358GBP/JPY 134.39EUR/USD 1.2357Pound vs Euro / Pound vs US DollarSterling appreciated against the USD and Euro last week following Chancellor of the Exchequer George Osborne’s delivery of a tough but balanced budget and although the measures outlined would mean higher taxes and spending cuts investors reacted favourably towards Sterling. In the emergency budget Osborne revised down growth forecasts for 2010 and warned that unemployment would reach 8.1%. Strength for Sterling came from the tax policy and despite the VAT increase to 20% in January 2011, tax relief measures on corporate taxation and the fact that the VAT incr…

Pound Euro Predictions; Forecast for June, July 2010

Good morning. The pound rose yesterday to a new 19 month high against the Euro, hitting €1.2222 which is the highest since the aftermath of the financial crisis in 2008. Sterling also rose against the US Dollar, but not as much. The gains were short lived and we're back to €1.21 this morning. Rates at 08:30am 25th June 2010 are as follows:GBP/EUR 1.2102GBP/USD 1.4914GBP/AUD 1.7278GBP/NZD 2.1167GBP/CAD 1.5540GBP/CHF 1.6423GBP/DKK 9.0043GBP/HUF 343.51GBP/JPY 133.81GBP/ZAR 11.425EUR/USD 1.2332Why did the pound rise against the Euro June 2010?It was partly due to the increased confidence in the UK following the budget and positive comments by the ratings agency Moody's, as covered in yesterdays post. Mainly though, it was due to weakness in the Eurozone. Markets continue to worry about the EU debt crisis. Investors are concerned about the strength of their economies, and the Euro weakened as a result. The revival of Sterling is mainly due to the Euros fall, and it's notable th…

Pound hits 19 month high against Euro - will it last?

Good morning. The pound continued to climb yesterday after the BoE minutes and comments from a credit agency supporting the UK. We hit new 19 month highs against the Euro, but rates have already retracted slightly. Today we'll look at why the pound rose through June 2010 and where rates may go through July and August. Rates at 08:30am 24th June 2010 are as follows:GBP/EUR 1.2137GBP/USD 1.4935GBP/AUD 1.7150GBP/CAD 1.5541GBP/CHF 1.6510GBP/DKK 9.0312GBP/JPY 134.08GBP/NZD 2.1106GBP/ZAR 11.272EUR/USD 1.2304Bank of England minutesReleased yesterday, 2 weeks after the interest rate decision, the minutes showed one member voted to increase interest rates. Higher interest rates tend to support a currency due to the higher return for investors. Analysts said however that calls for higher rates were unlikely to continue given the austerity measures that will limit economic growth and inflation. Moody's CommentsThe ratings agency said yesterday Britain would retain its AAA credit rating i…

Sterling surges after budget

Good morning. The pound has surged following yesterdays budget. We'll look at the reasons why in a moment, along with where rates may move in the short to medium term. First, the usual snapshot of rates as at 08:30am 23rd June 2010:GBP/EUR 1.2102GBP/USD 1.4865GBP/AUD 1.7070GBP/NZD 2.1035GBP/CAD 1.5319GBP/CHF 1.6451GBP/ZAR 11.225GBP/JPY 134.41GBP/NOK 9.600EUR/USD 1.2280Sterling surges after budgetThe pound gained as investors concluded that the budget yesterday addressed the fiscal concerns over the deficit, and the AAA credit rating of the UK is safe for the moment. You can read a full report on the measures here on the BBC site. It seems George Osborne got the balance right between spending cuts and tax rises. There were no real surprises, and immediately after the budget there was little to no movement for the pound. Later in the day however when the US markets opened, the pound surged due to increased investor confidence, and this morning we're close to new highs against bo…

Budget Day - exchange rate volatility expected.

Good Morning. It's budget day, so we'll have a look today at what might affect rates. First, the usual snapshot of rates as at 08:30am 22nd June 2010:
GBP/EUR 1.1966GBP/USD 1.4739GBP/AUD 1.6785GBP/NZD 2.0791GBP/CAD 1.5073GBP/CHF 1.6350GBP/ZAR 11.0738GBP/JPY 133.75GBP/HUF 333.29EUR/USD 1.2316What's expected in the budget?Tough tax rises and spending cuts are expected, all of which are designed to tackle Britain's record deficit of £155 billion. Mr Osborne has said the Budget will set out necessary plans to bring down borrowing over the next four years and how this will be divided up between spending cuts and tax rises. The government says borrowing levels inherited from Labour are unsustainable and delaying action will damage market confidence in the UK and store up worse financial problems for the future. The chancellor is expected to announce a number of revenue-raising measures, including a levy on bank profits, an increase in capital gains tax and rises in cigarette …

How will the budget affect exchange rates?

Good morning. Rates remain fairly unchanged as markets await the emergency budget from the UK tomorrow. Today we'll look at the effects of the budget on the pound, and a breakdown of the weeks data. At 08:30am this morning, rates are as follows:

GBP/EUR 1.1970GBP/USD 1.4879GBP/AUD 1.6805GBP/NZD 2.0824GBP/CHF 1.6422GBP/HUF 332.61GBP/CAD 1.5117GBP/JPY 135.02GBP/AED 5.4604EUR/USD 1.2427Budget All eyes are now focused on the budget and how this may affect exchange rates. The budget is expected to contain large fiscal cuts. Rather than go over each aspect of the expected announcements here, you can read a detailed outline of what’s expected to be announced on the BBC site here. We're only really concerned with the effect on exchange rates.

How may the budget affect exchange rates?It's all to do with investor confidence. If there are sweeping moves that mean the UK is a less attractive place to invest, the pound will probably drop. Recently David Blanchflower, ex member of the MP…

Security: Is it safe to use a currency broker?

Good morning. Rates remained fairly flat yesterday, with little movement. Markets seem to be waiting for developments in the EU, and of course the upcoming budget in the UK. Today we'll look at the security side of trading with a currency broker like the Foremost Currency Group, and a quick look at some news regarding the Chinese Yuan. First, the usual snapshot of rates:GBP/EUR 1.1987GBP/USD 1.4862GBP/AUD 1.7089GBP/NZD 2.1060GBP/CAD 1.5257GBP/CHF 1.6503GBP/ZAR 11.172GBP/JPY 134.89GBP/HUF 334.45EUR/USD 1.2394 Why has the pound dropped against the Euro?The Euro has gained strength after a Spanish bond auction soothed worries about the country's finances. A stronger currency is more expensive to purchase, and so rates have dipped slightly. Despite the Euros advance, analysts said worries about Spanish banks remain and the market will be looking for the results of bank stress tests which the Spanish central bank said would be published soon.It's really about which currency…

Pound falls - Pound Sterling Forecast June July 2010

Good morning. Sterling has dropped across the board also after dovish comments from Bank of England chief Mervyn King, and exchange rates are lower this morning. His comments about inflation control weakened the pound. We'll look today at events that will determine where exchange rates may move during June and July.
The main news going forwards is the meeting with EU leaders regards the debt crisis, the looming budget, and the news that the new Chancellor will give the Bank of England the key role in regulating the UK financial sector. Rates at 08:30am this morning are as follows:GBP/EUR 1.1953GBP/USD 1.4673GBP/AUD 1.7031GBP/NZD 2.1016GBP/CAD 1.5072GBP/CHF 1.6491GBP/ZAR 11.156GBP/HKD 11.426GBP/HUF 335.01GBP/JPY 133.77EUR/USD 1.2271EU Leaders meet to discuss debt crisisEU leaders are to meet to tackle the challenge of getting economic growth back on track while reining in the worst public debts for decades. Leaders are intent on preventing contagion from the Greek budget crisis. Th…

Pound falls - what's the outlook for June & July?

Good morning. The pound has fallen and exchange rates have dropped after lower than expected inflation figures. We'll take a detailed look at that in a moment after the usual snapshot of Sterling exchange rates as at 08:30am:
GBP/EUR 1.1997GBP/USD 1.4790GBP/AUD 1.7108GBP/NZD 2.1265GBP/CAD 1.5183GBP/CHF 1.6687GBP/NOK 9.4189GBP/ZAR 11.211GBP/JPY 135.46EUR/USD 1.2325Inflation lower, weakening Sterling

UK inflation fell faster than expected in May. The fall was bigger than the 3.5% analysts' forecast reinforcing the belief that the Bank of England is more likely than not to keep interest rates down at 0.50% into 2011 as recovery remains bumpy and gradual with major fiscal tightening and the Eurozone debt crisis posing serious threats to growth prospects.As we outlined earlier in the week, if interest rates look like they will be hiked then it strengthens a currency. This is because higher rates mean a higher return, and spurs investment. Now that inflation is lower than expected rat…

Sterling gains against Euro and US Dollar

Good morning. The pound rose to a one month high against the US Dollar yesterday. Sterling also rose against the Euro, but not by much due to a stronger single currency. The reason for the rise was lower UK borrowing forecast that strengthened the pound. We'll look at that in a moment, along with a detailed forecast for Sterling to US Dollar. First the usual snapshot of rates as at 08:30am: GBP/EUR 1.2086GBP/USD 1.4723GBP/AUD 1.7263GBP/NZD 2.1309GBP/CAD 1.5210GBP/CHF 1.6867GBP/JPY 134.20GBP/ZAR 11.291EUR/USD 1.2179Pound gains on public borrowing forecastsThe Office for Budget Responsibility which was created by the new government coalition forecasted state borrowing would fall faster than originally thought, partly due to higher tax receipts. There was also support from Sterling when the Bank of England said that inflation would rise and there would be a good chance of interest rates rising later this year. When interest rates go up, it gives a better return for investors and ther…

Pound to Euro prediction - a volatile week ahead

Good morning. Today we'll look at the Euro, and a breakdown of all the weeks data that will likely have an impact on exchange rates. First, the usual snapshot of rates as at 08:30am:GBP/EUR 1.2037GBP/USD 1.4652GBP/AUD 1.7113GBP/NZD 2.1149GBP/CAD 1.5130GBP/CHF 1.6716GBP/NOK 9.4193GBP/HKD 11.418GBP/ZAR 11.210GBP/JPY 134.50EUR/USD 1.2167 Pound vs EuroSo what's happening with Sterling to Euro? Last week rates hit a new 19 month high, but on Friday weaker than expected Industrial data from the UK hit the pound and rates have since fallen away. What most people want to know is if rates will continue climbing or if they will fall back away. I would also like to know! There is nobody that can accurately predict exchange rate movements, and the market is so volatile at the moment things could go either way.This week EU leaders meet to discuss the crisis and try to agree to a robust plan to sort out the problems plaguing the single currency. This will likely be the main driver for ra…

Pound hits new high against Euro

Good morning. The pound rose yesterday against the Euro and US Dollar after Sterling was supported by a rally in the equity markets. At 08:30am rates are as follows:GBP/EUR 1.2136GBP/USD 1.4710GBP/AUD 1.7412GBP/NZD 2.1539GBP/CAD 1.5189GBP/CHF 1.6798GBP/ZAR 11.306GBP/NOK 9.5455GBP/JPY 134.62EUR/USD 1.2115Sterling risesWhen equity markets rally, often the pound gains and this is what we saw yesterday. The Bank of England also held interest rates yesterday as expected, but this had little to no impact on the value of Sterling. The pound fell earlier in the week after there were warnings about the UK's credit rating due to the deficit. This caused the pound to be sold off, weakening the currency. It would seem though that it had been oversold, as later in the week investors bought back the pound, indicating that for the most part, bad news is already priced into the value of Sterling. Just like the euro, the British pound is heavily dependent on general risk appetite. Investor fear in…

Pound gains against Euro again - will it keep rising?

Good morning. The pound has recovered a little from the drops we saw in the last few days. Investors bought back the currency, taking the view it had been oversold the previous day when a ratings agency highlighted Britain's hefty budget deficit. Rates this morning are as follows:GBP/EUR 1.2122GBP/USD 1.4582GBP/AUD 1.7410GBP/NZD 2.1493GBP/CHF 1.6718GBP/ZAR 11.325GBP/HKD 11.369GBP/JPY 132.75EUR/USD 1.2031Pound makes small gainsOn Tuesday, a credit agency Fitch warned the UK had a big challenge ahead in terms of cutting the deficit. This hurt the pound and rates fell. Yesterday Sterling clawed back some of it's losses, after analysts said the pound was probably oversold on the news. The pound is likely to remain on the back foot though, with focus starting to shift to the expected cuts that will be announced in the budget. How will interest rates affect the exchange rate?Today the Bank of England and European central bank announce their decision on interest rates. We think both…

Pound falls from 18 month highs against Euro

Good Morning. The pound fell against most currencies yesterday after a credit rating agency warned the UK faced a "formidable" challenge to cut its budget deficit. The comments brought the Pound to Euro rate down from it's recent 18 month highs. Rates this morning are as follows:GBP/EUR 1.2089GBP/USD 1.4474GBP/AUD 1.7518GBP/NZD 2.1720GBP/CAD 1.5151GBP/CHF 1.6661GBP/ZAR 11.119GBP/HKD 11.286GBP/JPY 132.39EUR/USD 1.1971 Pound falls against EuroCredit Ratings agency Fitch said the UK must cut it's deficit more quickly than set out by the former Labour government in April. It also pointed out that most other countries had pledged to cut their fiscal deficits by more than the UK has. "With other European sovereigns strengthening their fiscal consolidation plans and market concerns about sovereign risk in advanced countries increasing, both the size of the UK deficit currently projected for 2011 and the failure to reduce it to 3% of GDP within five years are striking,…