Wednesday 25th September 2013
Good afternoon. The currency markets have been fairly calm recently, and exchange rates seem to have stabilised. We haven't seen a huge amount of movement since my last post. GBP/EUR rates remain around the €1.19 level, and GBP/USD rates just above $1.60.
In today's post I will look at economic statistics that will be released in the next week, and how they may affect exchange rates. I will also explain how I can help you achieve exchange rates that can be much better than those offered by banks and other financial institutions.
So if you need to buy Euros at the best rate, have a foreign currency you need to convert back to Sterling, are looking for the best exchange rates, or are trying to find out if the Pound will go up or down against the Euro, read on...
Pound/Euro forecast 2013
In the last few months the Pound/Euro rate has climbed nicely, peaking a few weeks ago in the mid €1.19's. This is due to much better economic data that indicate the economy is recovering nicely. The only fly in the ointment was last week's poor retail sales that took the wind out of the Pound's sails a little.
Since then rates have stabilised around the €1.19 level. This is because the markets have now accepted the economy is recovering, and so good economic numbers are no longer a surprise.
So will rates go higher? Stay where they are? Drop back away?
I think that for the next few days it will be the UK GDP figures that will have an impact on rates. These are released at 09:30am tomorrow morning. I expect this to be revised up to 0.7%, and the markets have already priced this in to where the exchange rate stands. If the number is higher than this, the Pound/Euro rate may rise. If the number is worse, expect a drop in rates.
On Friday the European Central Bank (ECB) president Mario Draghi gives a speech. I think that his comments could well affect GBP/EUR rates. Put simply, if his words are positive for the Eurozone, Pound/Euro could drop, and vice versa.
For the medium to longer term, I personally don't think that rates will climb to €1.20 and above. Why? Well it wouldn't be in Britain's interest to have higher exchange rates, as it would affect imports to the Eurozone due to UK goods being more expensive. 50% of our exports go to Europe, so if the rate climbed too high I would expect the Bank of England to move to weaken Sterling.
If I needed to buy Euros in the next 6 months, I would look to fix a rate on a Forward contract. This allows you to fix today's rates which are around the best they've been all year. You only lodge 10% of the total to be converted, and the remainder when you instruct me to transfer your Euros. This protects you against the rate dropping away and allows you to budget.
If you need to buy Euros and want the best rates, send me a free enquiry now by clicking here.
Converting Euros back to Pounds
Rates have been moving against you due to the strong pound. If we look at the bigger picture though, last summer rates were nearly €1.30, so it's not too bad. You don't have to look back too far to remember when rates were €1.50+.
So if I had to convert Euros to Pounds, I would take the view that if the EU economy recovers, rates could improve. I wouldn't want to leave things to chance though, so I would place a 'Stop Loss' order to convert funds if rates breached a particular level; €1.20 for example. In this way I can hold out for an improvement in the rate, but have a 'worst case scenario' or safety net should the rate continue to get worse.
Converting Euros back to Pounds? Click here to find out more about the rates I can offer.
Other data releases in the next week that could affect exchange rates
Thursday 26th Sept - UK GDP figures, as I mentioned above, are released at 09:30. We also have US Unemployment and Home Sales numbers in the afternoon.
Friday 27th Sept - Nothing of note from the UK, however there are some important EU releases such as the ECB president's speech and some inflation numbers. In the United States we also have Central Bank members giving talks, so expect some volatility in GBP/USD rates.
Monday 30th Sept - UK mortgage approvals, but I don't think it will have much of an impact. Of more importance will be EU Inflation numbers and Retail Sales.
Tuesday 1st Oct - The new month starts with a raft of Manufacturing numbers from the EU, Britain and the United States. Could be a volatile day as we also have EU unemployment numbers.
Keen to know how data releases like this could affect the exchange rate you're interested in? Send me a free no obligation enquiry now.
Getting the best exchange rates
That's the easy part - the rates I can source are commercial levels up to 5% better than the banks. Send me an enquiry now to find out more. The tricky part is timing your trade so you buy at a good level. There's no way to predict the way exchange rates may move, but what I can do is explain what is causing the movement, and my thoughts on how things may move in the future.
It is of course up to you to decide when to fix your rate, but by taking advantage of my expertise gained from over 10 years in the financial services industry, you can make an informed choice of what to do.
Why not take the advantage of a free consultation by clicking here and sending me an enquiry. I will personally contact you within 24 hours to discuss your requirements, run over your options, and give you an idea of the rates I can offer.
Click here to send me an enquiry or call me today. You may be very surprised how much you can save. I look forward to hearing from you.
Alastair Archbold
Labels: Best Exchange Rates, economic data releases, Moving Euros back to Pound, Pound/Euro forecast 2013, UK economy., When to fix your exchange rate, will rate go up or down