Wednesday, 21 May 2014

Pound/Euro hits 18 month high of €1.2350

Wednesday 21st May 2014
Good morning. We've seen further gains for the Pound this morning following very strong Retail Sales, and further speculation regarding UK interest rates. In today's report I'll have a look at both of these subjects in addition to what options you can consider if you have a foreign exchange transaction to carry out and want to get the best exchange rates. 

UK Retail Sales smash forecasts 


In my post yesterday I outlined that today’s Retail Sales could affect exchange rates. Markets expected the monthly figure to be 0.5%, but the actual figure came in at a staggering 1.3%, much higher than forecast.

As Retail Sales are a good indicator of the economy as a whole, the news has given the Pound a further push and we have seen rates break through the €1.23 level, and at the moment is holding on and looking sustained. This is the best we’ve seen Euro rates now for 18 months. 

Bank of England contradicts over interest rates 


Interest rate rises could be the "only game in town" to deal with an overheating market, says BoE deputy governor Charlie Bean,  which contradict what the governor Mark Carney said recently. This speculation on when interest rates may rise  has also boosted Sterling. It will be interesting to see if this spike above €1.23 will be sustained, or if it will drop back away as it has done in recent months. 

Will rates go up or down? When should you buy your currency? 


Nobody can predict the market unfortunately, but with an understanding of the tools available to you, you can ensure you get the best rate possible and be protected against rates moving against you. 

If you are converting Pounds to another currency – the rate is the best in 18 months which is fantastic. It could go higher, but you don’t want to hold out for an inch and risk losing out on the current levels. What you can do is place a Stop Loss order, which means you are protected if rates fall back away, but you can still take advantage should the rate move in your favour. 

If you are selling currency back to Pounds – it seems Sterling is going from strength to strength, and the more likely an interest rate rise is, the worse the rate will get for you. A forward contract allows you to fix the rate now for up to 2 years, even if you don’t have all your funds available to convert now. 

Whatever your requirement, I can help you get the best possible exchange rates, and discuss your options to help you make the most of your currency.

Click here to get in touch with me now and find out how I can help. 

Alastair Archbold