Showing posts from October, 2013

Pound/Euro 2 month low: November Forecast

Wednesday 30th October 2013
Good afternoon.  Currency markets remain fairly subdued, with no huge movements in rates over the week. The Pound has fallen a little further against the Euro, but gained slightly against the US Dollar. Today I’ll have a look at what has caused these shifts despite the lack of much economic data.

Pound slides to 2 month low against Euro

Sterling was recently touching €1.20 against the Euro following some good economic numbers, however this trend ended several weeks ago, and since then the rates have been sliding. So what has caused the rate to drop?

The main reason is slightly better optimism surrounding the EU economy, and the fact that analysts are no longer that excited about the UK’s recovery, which is what had been driving the rise in the value of the Pound.

In the summer, a raft of positive economic data had market commentators gushing about how good the economy was. Investors bought the Pound as a result, and this demand drove its value higher, which is…

What exactly moves exchange rates?

Monday 28th October 2013
Good afternoon. The weather in the South of England has been very unsettled in the last 24 hours to say the least, however in stark contrast, the currency markets have been very stable. 

With a distinct lack of data releases today, exchange rates have really only moved on sentiment, with Pound/Euro remaining between 1.17 and 1.1730, and Pound/Dollar showing slightly more volatility, dropping from 1.62 to 1.6130 throughout the course of the day, as you can see from the charts below. 

Pound/Euro exchange rate:

Pound/US Dollar exchange rate:

So what exactly moves the exchange rate?

There are several factors that move exchange rates, but by far the most important are economic data releases, such as Retail Sales, growth numbers & unemployment figures for example. These are already forecast well in advance, and exchange rates will already have priced in the expected results. What moves the rate is when the actual figures differ from expectations. 

For example last week…

Why has the Pound stopped rising against the Euro?

Wednesday 23rd October 2013 Good afternoon. Sterling remains a little weak against other major currencies, and is in the low €1.17’s against the Euro. This is mainly due to the single currency gaining strength due to more optimism, and effects of the US government shutdown. So what have I got for you in today’s report?
Bank of England minutes unsurprisingUK Interest Rates could rise sooner than thoughtEuro gains strength pushing GBP/EUR rates lowerSpain finally exits recessionThe types of FX contract I offer
Bank of England minutes unsurprising
This morning the latest MPC minutes from the Bank of England (BoE) were released. They showed that the MPC voted unanimously to keep interest rates on hold at 0.5%, and the Quantitative Easing (QE) programme unchanged. This was all as expected and so had no real effect on exchange rates.
What was interesting was the positivity we saw from the BoE. They showed that UK unemployment and economic output are improving at a faster pace than expected, an…

Effect of US Debt Ceiling on Exchange Rates

Thursday 17th October 2013
Good afternoon. Markets have reacted to the news that the US has averted hitting it’s debt ceiling, so today’s post is a quick analysis on the effect it has had on exchange rates.

Let’s start at the beginning; what is this debt ceiling that’s been in the news?

The US government is forbidden from borrowing more than $16.7 trillion by law, under legislation that dates its way back to World War I. The first debt ceiling was set at just $5bn, but as America has continued to spend more than it earns, it has repeatedly had to raise the debt ceiling nearly 100 times since then. 

The last time it was set was in May, following a suspension of the ceiling during the first few months of 2013. If it had been hit, the government would have to pay $6bn in debt repayments.

Defaulting on debt would be catastrophic, since trillions of dollars in capital flows are backed up by US bonds - a traditional safe haven. This could result in a credit crisis equal or worse to that seen du…

Pound falls against Euro after poor economic data

Monday 14th October 2013 
Good afternoon all. Well what a difference a week can make! The change in the weather in the UK has been mirrored by a change in the fortunes of the Pound. In Britain we seem to have very quickly entered autumn, and as the leaves started falling, so did the Pound, after a raft of poor economic data. 

This has pulled exchange rates lower and away from the all year highs seen just recently. In today’s report I’ll look at what has happened to cause the fall, and what else may happen with exchange rates in the coming weeks and months: 
UK Retail Sales drop Industrial and Manufacturing production fall Trade balance in the UK widens. IMF warn world could enter recession again 
Poor economic figures cause the Pound to fall 

It’s only been a little over a week since my last post, and at that time the GBP/EUR rate and the GBP/USD rate were both around the highest we’ve seen all year. Things can change very quickly in the currency markets however, and that’s exactly what we…

Pound/Euro & Pound/Dollar best exchange rates

Wednesday 2nd October 2013
Good afternoon. It’s been quite a volatile week in the currency markets so far, with Pound/Euro touching €1.20 on several occasions, before dropping back away as has been the case for a few weeks. Against the US Dollar, the Pound is up following the Federal shutdown. So in today’s report I’ll look at the effects on the Pound/Euro and Pound/Dollar exchange rate.


Pound/Euro rates are the best they’ve been all year, and this week touched €1.20 several times. It didn’t manage to break through however, and dropped back each time it tested the high. Today we had news from Italy and the ECB that has pulled rates back in to the mid €1.19’s.

Firstly, The European Central Bank (ECB) has kept its benchmark interest rate on hold at 0.5%. Recent economic data has shown that an economic recovery may be taking hold in the Eurozone. Eurozone factory activity grew for the third month running in September, according to a survey.

The euro also found some support on growi…