Showing posts from January, 2011
31st January 2011 :
In this week’s Report:

• Pound vs. Euro summary
• UK economy contracts, weakening the Pound
• Sterling vs. US Dollar
• The week’s data that may affect exchange rates

(For currencies other then EUR and USD, contact us for a consultation)

Sterling vs. Euro falls on shock GDP contraction

Sterling plunged on Tuesday last week after a shock contraction in Q4 UK GDP. Britain's economy shrank 0.5% in the last three months of 2010, confounding forecasts for a 0.5% expansion, with December's heavy snow accounting for only part of the first contraction in five quarters. Sterling fell approx. 1.75% from 1.1720 to 1.1536:

The figures will be bad news for the government, which is due to start cutting public spending in early in 2011. They will also cast doubt over previous market expectations that the Bank of England will raise interest rates in the first half of the year.

While last week’s GDP figures are backward-looking, they are nevertheless crucial to understanding…

Pounds gains limited against stronger Euro

28th January 2011
Good morning. Sterling gained a little against the US Dollar and Euro yesterday on expectations the Bank of England could raise interest rates by mid-year. Poor US data weakened the dollar also. A stronger Euro however meant that gains were limited. Today at 08:30am rates are as follows:
GBP/EUR 1.1595GBP/USD 1.5868GBP/AUD 1.6022GBP/NZD 2.0544GBP/CAD 1.5815GBP/CHF 1.5003GBP/NOK 9.2054GBP/ZAR 11.243GBP/JPY 131.09EUR/USD 1.3684Pound steady on BoE minutes

Sterling has found support after minutes of the Bank of England's (BOE) January meeting on Wednesday showed BoE policymaker Martin Weale joined Andrew Sentance in voting for a 25 basis point rate rise from a record low 0.5 percent.

Analysts said the additional vote to raise rates prompted investors to price in the rising likelihood of an increase in coming months. However, some said weakness in the UK economy, highlighted by news this week of a shock contraction in gross domestic product late last year, would cap the P…

Sterling gains on BoE MPC Minutes

27th January 2011
Good morning. After big falls on Tuesday due to lower GDP, Sterling gained slightly yesterday as the BoE minutes showed 2 MPC members voted for an interest rate hike. However, grim UK growth prospects stopped the pound gaining much. At 08:30am this morning rates are as follows:
GBP/EUR 1.1642GBP/USD 1.5912GBP/AUD 1.6053GBP/NZD 2.0669GBP/CAD 1.5848GBP/CHF 1.5037GBP/ZAR 11.251GBP/JPY 131.84GBP/HUF 318.36EUR/USD 1.3662Sterling gains on Interest Rate expectationsThe pound rose yesterday after minutes from the Bank of England's policy meeting this month showed two policymakers voted for an interest rate hike. Minutes of the Monetary Policy Committee's most recent meeting show members explicitly discussed the case for raising rates in January. The fact rates may go up means the pound gained against the Euro and other major currencies.

For most members the risks to inflation "in the medium term had probably shifted upwards," the minutes said. The fact that mo…

Sterling falls due to shrinking economy

26th January 2011
Good morning. Yesterday UK growth was expected at +0.5%. The actual figure was a DECLINE of 0.5%, raising the risk of a double dip recession in the UK. Sterling was hammered as a result, falling in a big way against all currencies. At 08:30am this morning rates are as follows:
GBP/EUR 1.1536GBP/USD 1.5792GBP/AUD 1.5816GBP/NZD 2.0545GBP/CAD 1.5731GBP/CHF 1.4911GBP/ZAR 11.163GBP/JPY 129.57GBP/NOK 9.0872EUR/USD 1.3686Sterling drops as economy shrinksSo what was the effect of GDP falling on Sterling exchange rates? The UK's economy suffered a shock contraction of 0.5% in the last three months of 2010, figures have shown. The figures are set to raise concerns over prospects for the economy, with large public spending cuts expected to come in this year. The contraction follows four straight quarters of growth.

The release is a first estimate for the quarter from the ONS and is subject to revision, but even so the figures were awful. The contraction took economists by surp…

Pound falls vs Euro, GDP figures today

25th January 2011
Good morning. Sterling fell against the US Dollar and Euro yesterday due to doubts over when the Bank of England will raise interest rates. Falls against the Euro were bigger as the single currency drew some support from easing debt worries and tough talk about keeping inflation in check from European Central Bank chief Jean-Claude Trichet.

Today we have GDP figures for the UK which will cause volatility. More on this after the usual snapshot of rates as at 08:30am:
GBP/EUR 1.1666GBP/USD 1.5922GBP/AUD 1.5991GBP/NZD 2.0811GBP/CAD 1.5810GBP/CHF 1.5123GBP/ZAR 11.169GBP/JPY 131.24GBP/HUF 319.34EUR/USD 1.3646Sterling falls on Interest Rate expectationsYesterday a Daily Telegraph article said the UK could be headed for stagflation and even small interest rate hikes could hurt. Implied rates based on overnight indexed swaps have pared chances of a 25 basis point rate hike in May to 65 percent, from 70 percent late last week.Sterling has been well supported since higher-than-fo…

Pound vs Euro for the week ahead

In this week’s Report:

• Sterling vs. Euro; why rates have fallen
• The dilemma facing the BoE regarding Interest Rates
• The week’s data that may affect exchange rates

(For currencies other then EUR and USD, contact us for a consultation)

Sterling vs. Euro; rates fall as UK figures disappoint

Last week started off looking like it should be another good one for the Pound, with a slight rise in UK house prices on Monday morning, and then a higher than expected jump in inflation to 3.7% (nearly twice the Bank of England’s target) early on Tuesday, which helped fuel a rise in the GBP/EUR rate to nearly €1.20 again as speculation grew that the MPC would be forced raise UK interest rates.

However any initial optimism for Euro buyers was short lived. Even the better than expected jobs figures couldn’t help the slide in the exchange rate as we moved towards the end of the week. With investors refocusing on perceived weaknesses in the UK economy they started buying back into the Euro as expectations…

Pound falls further vs stronger Euro

21st January 2011
Good morning. Sterling is down further this morning against the Euro and US Dollar. It's a combination of weakness in the Pound, coupled with renewed confidence in the EU and US markets. We'll look at this in a moment after the usual snapshot of rates as at 08:30am:

GBP/EUR 1.1750GBP/USD 1.5921GBP/AUD 1.6115GBP/NZD 2.1049GBP/CAD 1.5880GBP/CHF 1.5302GBP/ZAR 11.236GBP/JPY 131.70GBP/HUF 323.30GBP/NOK 9.307EUR/USD 1.3547Sterling down vs EuroUK Factory orders fell according to figures released yesterday. This was worse than expected and so Sterling fell as a result. Also pushing GBP/EUR rates lower was a much stronger Euro. The euro has risen sharply, despite signs that governments are in no rush to increase the eurozone rescue fund.

Traders cited decent buying in the euro/sterling pair by an UK clearer on behalf of a real money account. "It was partly a dollar move, but there was a sell-off in sterling also which drove it lower," said Michael Hewson, marke…

Pound falls vs Euro on Unemployment Data

20th January 2011
Good morning. Sterling slipped against the Euro yesterday as the single currency was buoyed by growing hopes that euro zone policymakers will be able to navigate their way through the sovereign debt crisis. Against the USD the pound also fell as investors took profit on long positions. At 08:30am rates are as follows:

GBP/EUR 1.1872GBP/USD 1.5971GBP/AUD 1.6048GBP/NZD 2.0903GBP/CAD 1.5927GBP/CHF 1.5237GBP/ZAR 11.179GBP/JPY 131.13GBP/HUF 323.62EUR/USD 1.3446 Sterling falls due to high unemploymentUK unemployment rose by 49,000 to almost 2.5 million in the three months to the end of November, the Office for National Statistics (ONS) has said. Prime Minister David Cameron said any rise in unemployment was a "huge concern".

Most analysts, as well as the government, expect the unemployment total to continue rising, in large part due to the spending cuts designed to cut the budget deficit. The British Chamber of Commerce was downbeat: "These figures are disappoi…

High inflation boosts the Pound vs Euro

19th January 2011
Good morning. As we predicted in yesterdays post, inflation figures for the UK were higher than expected yesterday, and as a result Sterling rose against most other currencies. Rates at 08:30am this morning are as follows:

GBP/EUR 1.1900GBP/USD 1.6014GBP/AUD 1.5920GBP/NZD 2.0634GBP/CAD 1.5836GBP/CHF 1.5340GBP/ZAR 11.002GBP/JPY 131.47GBP/NOK 9.3393GBP/HUF 323.72EUR/USD 1.3454UK Inflation higher than expected

UK inflation jumped in December with the Consumer Prices Index (CPI) rising to 3.7%, up from 3.3% in November. The rise will put further pressure on the Bank of England to lift interest rates to curb rising inflation.

Sterling was 0.77% higher against the dollar, pushing above $1.60 for the first time in months. Against the Euro Sterling rose around half a cent as traders factored in the chances of an earlier-than-expected rise in interest rates.

However here are few indications that a majority of the Monetary Policy Committee are ready to respond with an early rise in…

Sterling gains vs Euro and US Dollar

18th January 2011
Good morning. The pound recovered against the Euro yesterday, and hit a 2 month high vs the US Dollar. Sterling was boosted by data showing improving UK consumer confidence. Rates as at 08:30am are as follows:

GBP/EUR 1.1925GBP/USD 1.5968GBP/AUD 1.5985GBP/NZD 2.0663GBP/CAD 1.5719GBP/CHF 1.5298GBP/ZAR 10.921GBP/JPY 131.69GBP/HUF 325.08EUR/USD 1.3383Why has Sterling gained?The pound gained against other currencies due to speculation that rising inflation could prompt the Bank of England to raise interest rates, possibly as soon as May. The pound also benefited against a broadly faltering euro, which suffered as last week's rally lost steam and investors sought clearer signs that progress was being made to improve the euro zone's sovereign safety net.

Today we have more inflation data for the UK today. If the consumer price index is higher than expected, it will give more reason for the Bank of England to raise interest rates to combat rising prices.

Higher interest…

Sterling vs. Euro & US Dollar Forecast 2011

In this week’s Report:

• Sterling vs. Euro Forecast
• Analysis of EU Bond Auction and effect on Euro
• Sterling vs. US Dollar Forecast
• Round-up of weekly economic data releases

(For currencies other then EUR and USD, contact us for a consultation)

Sterling vs. Euro falls from 4 month high

This time last week, Sterling Euro rates were approaching a 4 month high, hitting €1.2060 at the peak. However towards the end of last week this upward trend in rates was over, and we saw a big decline in rates. In this week’s report we look at why exchange rates moved up so far, and what caused it to fall back away so quickly.

Eurozone Debt & Bond Auctions

The main reason for the recent upward trend in currency rates was due to a very weak Euro. Following the bailout of Ireland and Greece, many people thought that Portugal and Spain would also need assistance. It was this fear that had been weakening the Euro during the start of 2011, helping push rates to their best in over 4 months.


Big decline for Pound vs Euro exchange rates 2011

14th January 2011
Good morning. Nothing lasts forever, and the rise of Sterling vs the Euro is no exception. After hitting 4 month highs at the start of the week, as we correctly predicted rates have now fallen sharply away due to a stronger Euro, despite hitting a 1 month high vs the US Dollar.

Today we'll look at why the pound has fallen against the Euro. First, rates at 08:30am this morning are as follows:
GBP/EUR 1.1782GBP/USD 1.5840GBP/AUD 1.5884GBP/NZD 2.0584GBP/CAD 1.5737GBP/ZAR 10.805GBP/JPY 130.52GBP/DKK 8.7744GBP/SEK 10.5649 Pound falls vs Euro Yesterday there were further bond auctions in the Eurozone following Portugal'ssuccessful raising of finance earlier in the week. The fact that they were easily able to raise finance on the bond markets signals renewed confidence in the Euro, and it became stronger throughout the day. Also strengthening the Euro was the comments by European Central Bank (ECB) president Jean Claude Trichet saying that they would have no problem ra…

Euro gathers strength following bond auction

13th January 2011
Good morning. Yesterday was a mixed day. Sterling fared quite well initially against most currencies, but the Trace deficit was wider than expected, pushing the pound back down. Against the Euro the Portuguese bond auction went better than expected, and so the Euro is now getting stronger. We'll look at this after the usual snapshot of rates as at 08:30am: GBP/EUR 1.1985 GBP/USD 1.5740 GBP/AUD 1.5821 GBP/NZD 2.0584GBP/CAD 1.5531GBP/JPY 130.72GBP/DKK 8.9276GBP/NOK 9.2919GBP/ZAR 10.762EUR/USD 1.3126Pound falls vs US Dollar & Euro

Sterling slipped back from a 1 month high against the US dollar yesterday after data showed the UK trade deficit widening more than expected in November. This weakened the pound and pushed rates down.

Against the Euro, Sterling also fell slightly. This was in part due to the Trade Balance figures, but mostly due to a stronger Euro.

Bond Auctions

Yesterday Portugal held it's bond auction, and analysts thought they would find difficulty i…

Pound Euro rates to rise due to Portugese debt?

12th January 2011
Good morning. The pound stayed close to a 4 month high against a struggling euro yesterday as sovereign debt worries plagued the Euro and the increasing prospect of higher interest rates in the UK supported the pound. Rates at 08:30am this morning are as follows:

GBP/EUR 1.2023GBP/USD 1.5651GBP/AUD 1.5786GBP/NZD 2.0539GBP/CAD 1.5445GBP/CHF 1.5241GBP/ZAR 10.673GBP/JPY 129.90GBP/HUF 332.72EUR/USD 1.3014Pound vs Euro; Portugal bailout to cause more weakness?The euro remained on the back foot with the focus on whether Portugal will be able to raise funds in the debt market today, or be forced to turn to the European Union and IMF for financial aid. Bond auctions in Spain and Italy will also be closely scrutinised this week. The bond auction will try to raise the funds necessary, as currently they pay 7% interest on their debts. It was just after Greece and Ireland reached this figures that they had to be bailed out. Most analysts now think it's a question of when, rath…

Pound remains above €1.20 but gains limited

11th January 2011
Good morning. The pound rose to a 4 month high against the Euro yesterday, due to the ongoing concerns regards some EU countries. Gains were short lived though as housing data weakened Sterling. Rates at 08:30am this morning are as follows:
GBP/EUR 1.2024GBP/USD 1.5552GBP/AUD 1.5795GBP/NZD 2.0470GBP/NOK 9.2849GBP/CAD 1.5434GBP/DKK 8.9559GBP/JPY 129.16GBP/ZAR 10.626Pound vs Euro

The single currency was stung by increasing concerns about sovereign debt problems in the euro zone. The euro was on the back foot after a senior euro zone source said at the weekend that euro zone countries are cranking up pressure on Portugal to seek financial help from the European Union and the International Monetary Fund.

They are pushing for this to stem contagion risks from its debt problems already faced by Greece and Ireland. Analysts said the euro would remain under selling pressure on concerns that debt problems will extend beyond Portugal and Spain (another country that investors belie…

Pound vs Euro breaks through €1.20

Sterling vs. Euro; Pound Strengthens over Euro debt fear

The pound reached the strongest in 3 months against the euro breaching the 1.20 mark as speculation that the British economy will be more resilient than the euro region in the next coming months.

The BOE have predicted the economy will grow by 2% this year which is 0.5% higher than the predicted 1.5% growth expected in the Euro zone.

However the need for additional Stimulus measures may still result in the Pound losing ground against the Euro in the near future. “We’ve got this massive, very open type debate about U.K. interest rates which I think will create volatility for the pound, and we’ve already begun to see that this year,” said Jane Foley, a senior foreign-exchange strategist at Rabobank International in London.

European Central Bank President Jean- Claude Trichet warned governments not to rely on the ECB to get Europe out of its debt crisis and urged them to step up efforts to tighten fiscal rules. Sources have also reveal…

Pound to Euro forecast; 3 month high

7th January 2011
Good morning. Growing worries about sovereign debt problems spreading to the wider euro zone yesterday significantly weakened the single currency. This pushed Sterling Euro rates to nearly €1.19. Rates at 08:30am this morning are as follows:

GBP/EUR 1.1897GBP/USD 1.5440GBP/AUD 1.5570GBP/NZD 2.0396GBP/CAD 1.5432GBP/CHF 1.4882GBP/ZAR 10.502GBP/JPY 128.98GBP/NOK 9.2105GBP/HKD 11.998EUR/USD 1.2960
Pound rises against EuroThe service sector in the UK suffered poor results yesterday, but the figures didn't actually weaken Sterling that much. Due to the snow causing problems for Retail Sales. "There was an initial sell-off in the pound but overall the market has taken the data with a pinch of salt," said Jane Foley, senior currency strategist at Rabobank.

"Weather-related components make it difficult to read much into the data and the market will be waiting to see if there's a bounce in the next month's reading," she said.The reason for the increa…

Sterling gains vs Euro but falls vs US Dollar

6th January 2011
Good morning. Sterling fell vs the US Dollar yesterday after better than expected construction data in the US. Against the Euro, Sterling rose through the €1.18 barrier. Rates at 08:30am this morning are as follows:

GBP/EUR 1.1831GBP/USD 1.5542GBP/AUD 1.5546GBP/NZD 2.0458GBP/CAD 1.5428GBP/CHF 1.5013GBP/ZAR 10.437GBP/JPY 129.01GBP/HUF 325.78EUR/USD 1.3132Pound falls vs US DollarYesterday data showed that companies in the USA were hiring at a much faster pace than expected. Also pushing Sterling lower were figures showing activity in the UK construction sector contracted last month.

The jobs report brightened the outlook for the U.S. economy, while a monthly construction index suggested Britain's economy was on shaky ground and backed expectations that domestic interest rates are likely to remain on hold despite sticky inflation. This caused GBP/USD to fall.

Sterling rises against Euro

Traders noted steady buying of the pound earlier by Middle Eastern and Asian central b…

Pound vs Euro & Pound vs US Dollar forecast 2011

Sterling vs Euro; Pound steadies against after 7 week low

At the end of the final week of the year a beleaguered Sterling limped towards 2011 and managed to steady against the Euro though it remained weak and near seven-week low . After a flat start to the week sterling suffered steep losses on Thursday dropping nearly 2 cents against the single currency throughout the course of the day - traders attributed the losses to little more than year-end related euro/sterling buying. The drop highlights the effects of thin trading which can happen during the festive period.

Sterling steadied against the Euro on Friday, helped by a survey showing an unexpected rise in UK house prices and on the back of euro/dollar buying.

Lender Nationwide said UK house prices rose 0.4 percent in December, the first rise since May. This confounded forecasts for a 0.3 percent fall and suggested the property market was not in steep decline as it was in 2008.

Analysts said that despite the data investors remain w…