Tuesday, 15 April 2014

Sterling/Euro €1.21 & Sterling/Dollar $1.6740

Tuesday 15th April 2014
Sterling is holding firm above €1.21 against the Euro, and has risen to $1.6740 vs the US Dollar. The Pound has however remainder relatively range-bound this week without pushing much higher than that. Its 2 things keeping the rate supported: firstly we had the ECB president over the weekend say that if the Euro strengthens, they will look at stimulus. Today, UK inflation numbers were as expected, increasing the chance of an interest rate hike in the UK next year. 

In today’s post I’ll take a look at these 2 things that are keeping rates supported, and explain how you can take advantage of the current rates which are around a 16 month high. 

ECB warns of stimulus if Euro strengthens further 


ECB President Mario Draghi said in Washington on Saturday that "further strengthening of the exchange rate would require further stimulus." 

So what does this actually mean? 

If the Euro were to strengthen, it would become more expensive to buy and Sterling/Euro rates would fall. His comments effectively say that if the Euro were indeed to strengthen, they may pursue a Quantitative Easing programme to stop it doing so. This has kept GBP/EUR rates at the €1.21 level. 

So if this is the case, could rates go higher? I don’t think so, unless they actually decide to go ahead and pursue a QE programme. At the moment it’s just rhetoric, so while it’s keeping rates from falling, it’s unlikely they will rise in the short term. 

For those of you that need to sell Euros, this means rates are likely to remain range-bound so you may wish to consider fixing a rate sooner rather than later. It’s the same story for Euro buyers, as rates have failed to go higher than these levels recently. 

UK Inflation numbers also keep the Pound supported 


Inflation numbers came in as expected at 1.6% this morning. Some in the market thought the number would be a little lower, which would have meant less chance of an interest rate hike in the UK in 2015. 

Higher interest rates mean a higher return for investors, so speculation it will happen sooner rather than later is good for the Pound. As the number was as expected, it remains the case we think rates will rise in 2015, so this gave Sterling a little boost this morning. 

Are you looking for the best exchange rates? 


Whether you need to convert Sterling to Euros, move Euros back to Pounds, or convert any other major currency – I can help you source excellent rates of exchange that are up to 5% better than banks can offer. When converting large volumes, the savings can be very considerable indeed. 

Why not get in touch for a free chat about the service I can offer? I can offer you a consultation to discuss the options available to you, provide you with a rate to compare with your bank or existing broker, and discuss with you what’s happening in the currency markets to help you decide when to fix a rate. 

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