Showing posts from June, 2014

Pound/Euro €1.25 & Pound/Dollar $1.70. What next?

Monday 30th June 2014 
Good afternoon and I hope everyone had a lovely weekend. The Glastonbury festival is now over, and nearly 200,000 revellers will now be suffering the post festival blues. They are not alone, as the currency markets seem to be suffering post Carney blues, with his recent mixed messages over interest rates pulling exchange rates up and down over the last few weeks. 

The volatility has continued this morning however the current GBP/EUR rate and GBP/USD rates are hovering in their recent familiar positions of around €1.25 and $1.70, around the level they have been for the last week or so. 

There is still no consensus in UK interest rates, with the BoE governor still giving mixed signals over when rates may rise, and this is reflected in the Pound/Euro rate going up and down around the €1.25 level. 

Which way will Pound/Euro rates move in 2014? 
It depends on UK economic data and what the markets think the data will mean for the timing of a UK interest rate hike. In short…

Pound falls after uncertainty over interest rate timing

Tuesday 24th June 2014 
The Pound has fallen against other currencies this morning after the Bank of England chief Mark Carney was quizzed by MP’s over their recent inflation report and comments on interest rates. 

When being quizzed this morning he cast doubts on when interest rates may rise. In recent weeks he made comments that the market took as a sign rates would be on the way up later this year, which gave the Pound some strength and pushed exchange rates up to multi-year highs. 

So what did he say and why has the Pound fallen?
The exact timing of a hike is now in doubt however. He said that any increases in interest rates would be driven by economic data, and that the most important aspect of the guidance they’re giving is that any increases in the rate when they come, will be limited and gradual. 

He also said that the Pound’s strength could be a worry. “On the export side where the data is a bit choppy ... there are still reasonable challenges there given the weakness of demand a…

Sterling/Euro & Sterling/Dollar - Best Exchange Rates

Thursday 19th June 2014 
The currency markets have stabilised somewhat, with Pound/Euro now stuck at €1.25 and failing to be able to break through that resistance level. Pound/Dollar however has risen to a 5 year high of $1.70+ following yesterday’s meeting of the US Federal Reserve (FED). In today’s post I’ll take a look at these 2 currency pairs, and explain how you can take advantage of these excellent rates even if you don’t need to transfer your currency for some time. 

We saw the Pound hit a 20 month high against the Euro this week of 1.2562, however some poor UK data has now brought the rate back down to 1.25. This was due to UK Retail Sales that were lower than expected.

The main reason rates are so good are the rumour UK interest rates are going to go up this year, and the fact the EU have recently cut their interest rate. (Higher interest rates or the rumour of higher rates tend to boost a currency due to the higher return for investors.) 

This interest rate specul…

Low inflation figures do little to dent the Pound

Tuesday 17th June 2014 
Good afternoon. The pound dipped slightly this morning, after figures showed that inflation has fallen to 1.5% in May compared with 1.8% in April. The market had been expecting the number to be a little higher, so the immediate effect for Sterling was a dip in rates. As you can see from the chart below however, the dip was not to last, as some poor Economic Sentiment figures from Europe released shortly after brought the GBP/EUR rate comfortably above the €1.25 mark again:

It is the sixth consecutive month that inflation has been below the Bank of England's 2% target, which would generally mean that there is now less call for the Bank of England to raise interest rates. The market has clearly shrugged off the figures, probably because separate figures from the Office for National Statistics showed that UK house prices leapt by 9.9% in the 12 months to April, and a rate hike would help cool the housing bubble slightly. 

What next for exchange rates? 
We are curr…

Pound hits 20 month high of €1.25 after interest rate rise hint

Friday 13th June 2014 
Good morning. Friday the 13th, unlucky for some, but not those that need to move Pounds to Euros. Sterling has surged higher following a speech by the governor of the Bank of England Mark Carney, in which he has signalled that interest rates may rise this year. I’ll go into a little more detail in a moment, but in a nutshell this has caused Sterling to rise higher, hitting a 20 month high of €1.25 against the Euro, and testing a 5 year high of $1.70 against the US Dollar: 

Mark Carney hints at interest rate rise 
Last night in a keynote speech, Mr Carney said a rate rise "could happen sooner than markets currently expect". He acknowledged there was "already great speculation about the exact timing of the first rate hike" from their record low of 0.5%, adding that the decision was "becoming more balanced". 

The news immediately caused the Pound to gain, as the rumour of higher interest rates attracts investment into the Pound, giving it …

Pound/Euro at 18 month high after ECB cuts interest rates

Monday 9th June 2014
Good afternoon. Apologies for the blog being quiet over the last week or so, as have been out of the country. Much has happened in my absence however, with the European Central Bank (ECB) last week announcing a raft of measures aimed at stimulating the EU economy. Today I will cover what they did, and how it has affected the currency markets and exchange rates. 

Pound/Euro hits 18 month high after ECB cut interest rates 
In their announcement last Thursday, the ECB revealed they have cut its benchmark interest rate from 0.25% to 0.15%. They also announced negative interest rates and cheap long-term loans to banks in a bid to boost the economy and encourage banks to lend to businesses rather than hold on to money. 

The ECB is the first major central bank to introduce negative interest rates and it is a little step into the unknown. The effect for exchange rates is a weaker Euro and the GBP/EUR rate rising to 1.24 which is the highest in 18 months. 

Why has it weakened t…