What goes up must come down...

Friday 10th January 2013 
Well, as is often the case in the currency markets, spikes are short lived and the gains we saw yesterday against the Euro have been eroded. In today’s post I’m going to have a look at what has happened this week with Pound/Euro rates, Pound/US Dollar rates, and Pound/Australian Dollar rates. I'll also take a look at where the rates have been historically, and what may happen during 2014.

If you find my blog useful, then feel free to get in touch with me by clicking here. I can offer you a free consultation on what’s happening with exchange rates to help you make an informed choice on when to fix your rate. In addition to taking advantage of my market knowledge, I can give you a quote for your exchange that could be up to 5% better than your bank or existing broker. 

First things first, let’s see what’s been happening with exchange rates this week. 

Pound/Euro 

The rate is around the best it’s been in 12 months. The ECB meeting yesterday that I touched on in yesterday’s post, caused rates to hit €1.2150. As I explained in my brief post yesterday, the fact that the ECB hinted at lower interest rates significantly weakened the Euro, and this made it cheaper to buy, pushing rates to the mid €1.21’s. 

It was not to last however. This morning we saw some disappointing industrial and manufacturing production figures that were well below forecast. The result was a weakening of the Pound/Euro rate back to where we started the week! 

During the last week though, the fluctuations mean converting £150k netted you a Euro amount differing by up to €2500.00, illustrating that getting your timing right can make a huge difference. 

Pound/US Dollar 

Exchange rates to buy US Dollars are close to a 4 year high. The poor UK data this morning, as I outlined in the Euro section above, pulled rates from 1.65 down to 1.64. 

However this afternoon we had some extremely low jobs numbers from the states. Analysts thought nearly 200,000 new jobs would be created, but in fact it was only 74,000. As the number was way lower than expected, the Dollar weakened and pushed the GBP/USD rate back up to 1.65 again. 

Pound/Australian Dollar 

Exchange rates to buy Australian Dollars are currently the best they have been in over 4 years. Remarkably, this time last year the GBP/AUD rate was the worst it has been in decades. This was because the AUD was very strong, Australia avoided recession and China import huge amounts of raw materials from Australia and so this gave the currency support and making it expensive. That all changed 6 months ago and the rate is now the best in over 4 years! 

This is in part due to the UK recovering, so the Pound is strong. I think it's more to do with China though - their growth has slowed massively, so less demand for raw goods from Australia, this in turn has significantly weakened the Aussie and has made it very cheap to buy indeed. 

I think it's going to continue to be china that drives the rate - if their economy starts growing at a ridiculous pace again, then we'll see the rate drop back away. 

To put it in perspective, converting £150k to AUD is netting you nearly $60,000 more than beginning of last year, which is quite amazing really when you think about the fact rates were at the lowest in 30 years 6 months ago. 

Summary 

So there we go, and that’s my view on some of the major currency pairs. If you are looking for the best exchange rates, want to discuss which way the market may go, or simply want to get a quote on the exchange rate I can offer you, then click below to send me a free no obligation enquiry. 

I’ll be back on Monday with a breakdown of how next week’s economic figures might affect exchange rates. 

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Alastair Archbold