Showing posts from November, 2013

Pound remains above €1.20 vs the Euro

Friday 29th November 2013
Good afternoon everyone. A quick update before the weekend to outline what's been happening with exchange rates, and in particular the Pound/Euro exchange rate forecast.

BoE Governor causes Pound to rise above €1.20

Yesterday the governor of the Bank of England, Mark Carney, gave a speech. You can read a report here on the BBC website that outlines what he talked about. Most of the press has been reporting on the move of the 'Funding for Lending' scheme which has been moved from individuals to small business. 

What we're interested in however is what effect his words had on exchange rates. Mr Carney's predecessor Mervyn King had a habit of 'talking down' the Pound to such an extent that usually as soon as he opened his mouth, Sterling fell before he had actually said anything!

Mr Carney in contrast seems to do exactly the opposite. In recent speeches his comments have been very UK positive and have therefore caused the Pound to rise. Th…

Pound/Euro & Pound/Dollar exchange rate forecast

Wednesday 27th November 2013
There has been some volatility on the currency markets this week, with the Pound initially losing value causing exchange rates to drop. This trend however was reversed today after some strong UK data has given strength back to Sterling, pushing exchange rates up against other currencies. In today’s report, I’ll take a look at what’s been happening and the forecast for Pound/Euro and Pound/Dollar...

Bank of England takes dovish tone on UK economy UK GDP growth confirmed at 0.8% Pound/Euro forecast Pound/Dollar forecastBest Exchange Rates
Bank of England takes dovish tone on UK economy

On Tuesday the Bank of England Governor Mark Carney delivered his latest Inflation report. It’s important because the BoE control interest rates, which have a big effect on the value of Sterling, and therefore exchange rates. 

The Bank has said it will not consider an interest rate rise until UK unemployment falls below 7%, a rate that many economists now believe could happen soon…

Pound/Euro rates and the weeks economic data

Monday 25th November 2013
It's been a quiet start to the week in the currency markets. The only data of note today was the latest UK Mortgage Approval numbers. These were slightly lower than expected, and so Sterling has fallen a little against the Euro and US Dollar.

Why haven't rates broken the €1.20 mark?

As I predicted in my last post, Pound/Euro rates have again failed to break through the €1.20 level. As has been the case of late, it flirts around that level, before dropping back away. This is because at that level, it triggers lots of orders to buy. In turn this demand to buy Euros gives the single currency strength, and ultimately causes the rate to drop back away.

Moving forwards, I expect this to continue to be the case, dependant on how UK and EU economic data fares (see below). Should we get some further unexpected good news for the UK, we could see the €1.20 level breached. If we do, I'd expect it to keep pushing above this level. There is the risk however that i…

Pound/Euro rises to €1.20 on ECB rate cut hint

Wednesday 20th November 2013 
So the Bank of England news this morning was a bit of a damp squib, with all 9 members voting to hold QE and interest rates, so didn’t have much effect on exchange rates. 

However, the Pound/Euro rate has shot back up to €1.20 this afternoon, after a surprise indication that the European Central Bank may cut the deposit rate to negative. So in today’s post I’m going to explain why this has caused the rate to go up, and analyse whether it will keep rising or drop back away. 

Pound/Euro rates shoot up to €1.20 

A report from Bloomberg this afternoon hinted that the European Central Bank may reduce the deposit rate to negative. 

This effectively means that commercial lenders that deposit funds with the ECB getting less return, or even potentially have to pay to lodge funds with them. These rumours caused investors to sell the Euro, and this has caused it to weaken and become cheaper to buy. 

As you can see from the chart above, there was an immediate reaction to t…

This week's economic data releases

Monday 18th November 2013
It's been a quiet start to the week, with no major economic data releases. Despite this, Sterling has fallen a little throughout trading today to around €1.1900 vs the Euro and $1.6100 vs the US Dollar, however the Pound does remain strong overall relative to where it has been of late.

So, in today's report I'm going to list all of this weeks economic data that can affect exchange rates. Regular readers will know I often give my opinion on major releases, and the effect that I think they will have on exchange rates. Knowing things like this are invaluable when deciding to fix your exchange rate.

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This weeks economic data releases and how they may affect exchange rates

Monday - Today has been very quiet, with only EU Trade Balance figures that were as forecast, so had no real impact on exchange rates. 

Tuesday - The most important number today is Germany's ZEW Economic Sentiment su…

Pound/Euro exchange rate forecast Nov '13

Friday 15th November 2013 
Pound/Euro rates continue to be pulled in both directions, however the levels remain just under €1.20 which is around the best it’s been since January. So what has been happening since my last post that has caused the rate to fluctuate? 

Well in my last post I showed that the Unemployment and Bank of England data releases on Wednesday had caused the Pound to strengthen and pushed rates higher. To illustrate how volatile the rates are at the moment, these gains were short lived and on Thursday morning we saw the Pound fall back away due to lower than expected UK Retail Sales. 

This slump itself was short lived however, as also yesterday we saw some disappointing EU growth figures that weakened the Euro and pushed the GBP/EUR rate back up again. 

Eurozone growth slows, pushing GBP/EUR higher

Yesterday official figures showed that the Eurozone economy grew by just 0.1% in the July-to-September period, down from 0.3% growth in the previous quarter. The European Centr…

Sterling up after BoE Report and Unemployment Data

Wednesday 13th November 2013 
The Pound has had a topsy turvy week so far. Yesterday we had some inflation data that weakened the Sterling, pulling exchange rates down from the highs we saw at the end of last week. The dip was temporary however, as today we have had some better than expected Unemployment figures, along with a positive report from the Bank of England that has pushed the Pound higher. 

UK Unemployment & The Bank of England Report

Figures released this morning by the Office for National Statistics show that the number of unemployed people in the UK fell by 48,000 to 2.47 million between July and September. The unemployment rate fell to 7.6%, the lowest rate in more than three years. 

The figures will be taken as an indication that the UK economy, which grew 0.8% in the third quarter, is continuing to recover. The news gave the Pound a boost, and caused exchange rates to rise slightly. 

This was followed at 10.30am this morning by the Bank of England Quarterly inflation r…

Why has Pound/Euro fallen to €1.19?

Monday 11th November 2013
Last week saw the Pound surge to levels above €1.20 vs the Euro, and as I mentioned in my report on Thursday, I explained that I did not expect levels to remain at these highs for very long. Indeed that has been the case with rates falling throughout trading today.

Sterling drops back away against other major currencies

As you can see from the chart below, throughout trading today Sterling has lost value against the Euro, steadily falling throughout the morning before settling just above €1.19. 

In terms of economic data releases, it's been a very quiet day today. US and some EU markets are closed for veterans day, and there have been no significant data releases. So in the absence of ecostats to drive the market, what has caused the Pound/Euro rate to drop back away?

It is simply market forces that have driven the value of the Pound today. As I explained in my last post, supply and demand drives exchange rates, much like it does in any other market. With rate…

Pound/Euro rises above €1.20 after ECB cut interest rates

Thursday 7th November 2013
Good afternoon. A short while ago, the European Central Bank (ECB) has surprised the markets, and cut the interest rate to 0.25%. This has caused significant weakness in the Euro, pushing GBP/EUR rates above €1.20 which is now the highest we’ve seen all year.

ECB cuts interest rates – Pound/Euro rates best all year

There were rumours that the rate would be cut, but most analysts didn’t expect it to happen this month – me included! The result is that the single currency has weakened significantly, and become cheaper to purchase.

As you can see form the chart above, the moment the announcement was made, the GBP/EUR rate shot up from €1.19 to €1.2025, before settling down at the benchmark level of €1.20.

You can read more about the cut, and the comments made by the ECB president here on the BBC website. The reason the rate has risen, is that a lower rate of interest means less return for investors. These investors have therefore sold the Euro off in huge volumes, …

Pound/Euro rates €1.19, close to best all year

Tuesday 5th November 2013
Good afternoon. We have seen Sterling continue to strengthen this week, and exchange rates are now very close to the best they have been all year. The main reason for the increase is the strongest services sector growth since 1997. 

In today’s report I’ll look at the reasons for the gains in detail, have a look at some other important data releases due this week, and also my view on the forecast for Sterling exchange rates for the remainder of 2013. So in today’s report:

UK Services sector growth pushes Pound higherEurozone continues to slow, weakening the Euro EU Commission however predicts Euro could gain strengthForecast for Pound/Euro rates for 2013This week’s economic data release that could affect rates
UK Services sector growth pushes Pound higher

This morning we saw figures that show activity in the UK services sector last month increased at its fastest rate in 16 years. The news has caused the Pound to surge in value against other currencies, breaking thr…

Pound/Euro rates jump to 2 week high of €1.18

Friday 1st November 2013 
Good morning.  It’s only been 2 days since my last post, but things can move very quickly in the currency markets. For most of this week exchange rates have been very stable, however yesterday was saw some significant negative data from the Eurozone that has weakened the Euro and pushed Pound/Euro rates back up. This is what we will look at in today’s report.

Why have Pound/Euro rates jumped to a 2 week high?

This week we’ve moved from a 2 month low to a 2 week high, due to poor data from the Eurozone. So what has caused the surge in rates? The single currency's weakness was caused by a number of factors, and we have seen the single currency fall pushing Pound/Euro rates to their highest in 2 weeks.

Data on Thursday showed euro zone inflation fell to the lowest in 4 years, which increases the chance of an interest rate cut in the EU.  We also saw German retail sales fall by half a percent, against a forecast of gains of half a percent. EU unemployment …