Showing posts from October, 2014

GBP/USD falls as FED announce end to QE

Thursday 30th October 2014 
Sterling/Dollar has plummeted overnight, following the FED’s expected decision to end its Quantitative Easing (QE) programme. This also had the effect of weakening the Euro, pushing GBP/EUR rates higher. The charts below show the currency movements: 

FED announce end to QE 
The US Federal Reserve has announced it is ending its quantitative easing (QE) stimulus programme, saying that it was confident the US economic recovery would continue, despite a global economic slowdown. The central bank, which also said it would not raise interest rates for a "considerable time", has gradually cut back QE since last year. 

While the decision was expected, it did have the effect of strengthening the US Dollar, bringing rates down below the $1.60 mark, however this morning GBP/USD recovered to around $1.60. The main reason the rate fell is their hawkish tone on interest rates.

Pound/Euro rises 
As investors bought the Dollar, they sold the Euro which caused the singl…

GBP/EUR gains unlikely as UK interest Rates set to remain low

Wednesday 29th October 2014 
Pound/Euro rates have slipped slightly in the last 24 hours, bringing the mid-market rate down to €1.2647. While a little lower than the recent 6 year high, it’s still a very attractive buying level for Euros given that last summer rates were as low as €1.14. 

GBP/EUR gains unlikely as UK interest Rates set to remain low 
Part of the reason the Pound has failed to go any higher against the Euro is the fact interest rates are no longer expected to go up any time soon. Reinforcing this view was a speech this week from the Bank of England (BoE) deputy governor Jon Cunliffe. 

In it he said that interest rates can be kept at their current record low level for longer than first thought, saying that weak pay and lower inflation, coupled with slower UK growth and slowdown in the global economy meant the BoE should remain "cautious". 

So with rates now set to remain at their record low of 0.5% for quite some time, it’s hard to see what would push Sterling exch…

What next for Sterling exchange rates?

Monday 27th October 2014 
Good afternoon. The Pound is currently trading at the top end of its recent range against the Euro, sitting at a mid-market level of €1.27 at the time of writing. The European Bank stress tests over the weekend were quite poor, which has weakened the Euro slightly making it cheaper to purchase. Against the US Dollar, the Pound is also up slightly at $1.6135. 

Which direction could Sterling take this week? 
As I often point out, it’s impossible to predict the market. However, with a good knowledge of economic data and recent trends, it is possible to make an informed choice as to when to fix your exchange rate. You should also consider taking advantage of a free consultation with me if you need to get the best possible rates of exchange. Below I will list all this week’s economic data that I think will have an effect on exchange rates. 

Be aware if you are buying Euros, that the rate has reached these levels many times recently before dropping back away. Given we’…

Pound/Euro forecast between €1.24 and €1.27

Tuesday 21st October 2014 
In the week since my last post, we have seen significant volatility in Pound/Euro rates. As you can see from the chart below, we have seen highs touching €1.27, and lows or nearly €1.24: 

What is causing the volatility in GBP/EUR rates? 
The movements in the exchange rate over the last week have been very large indeed. In the last 7 days alone, the cost of buying a €250,000.00 property has differed by nearly £5000.00 purely due to fluctuations in the exchange rate. This clearly illustrates how important your timing is, in addition to having a good knowledge of what can move the exchange rate. 

The Pound fell last week on data and comments from the Bank of England, which suggest that interest rates are going to remain low for up to a year. This has taken the wind out of the Pound’s sales and caused exchange rates to drop. 

The fall was short lived however, as data from the Eurozone doesn’t exactly inspire confidence. Various EU economies are not performing very we…

Pound falls further on low inflation

Tuesday 14th October 2014
Sterling has fallen by a further cent today against the Euro, with rates dropping down into the €1.25’s. Against the US Dollar, rates have dropped by 1.5 cents bring rates down into to around $1.59. What has caused the Pound to fall? 

It is due to very low UK inflation numbers. Figures this morning showed that UK inflation fell to a 5 year low of 1.2%. The reason this has caused rates to fall is that these new low inflation numbers meant that an interest rate rise in the UK is very unlikely in the short term. I expect the Bank of England will now hold off well into 2015, probably after the general election. 

On the one hand, the UK economy is the fastest growing in the developed world, and this would normally mean a rise in interest rates. Indeed it’s this speculation that has been driving the Pound up in recent months. However these latest figures change all of that, so it looks like the Pounds run has come to an end for the time being. 

In my most recent repor…

Pound at risk as Euro crisis weighs on UK

Thursday 9th September 2014
After falling earlier this week, GBP/EUR rates recovered slightly yesterday due to a weaker Euro. Let’s first look at why rates fell. It’s all to do with inflation, and the impact this has on when the Bank of England (BoE) will raise interest rates.  As regular readers will know, the speculation on interest rates going up has been the driver behind the Pound’s appreciation this year, as higher rates strengthen a currency due to the better return on offer for investors.

However inflation in the UK is now easing which could allow the central bank to keep interest rates low. This is what has cause the Pound to drop away this week. Indeed yesterday the BoE’s Monetary Policy Committee (MPC) decided again to hold UK interest rates at a record low of 0.5% which was not a surprise. Nor was their decision not to extend its quantitative easing programme beyond the £375bn already spent. In two weeks, the Bank will reveal how members of its rate-setting committee voted…

What could affect exchange rates this week?

Monday 6th October 
Good afternoon. The Pound has fallen a little further this morning, dropping to €1.2715 vs the Euro, and against the US Dollar we have seen rates drop below the $1.60 barrier to $1.5977. Exchange rates seem to have stabilised there and so in today’s report I will list economic data releases this week that could have an impact on exchange rate. 

What makes exchange rates go up and down? 
There are various factors that affect exchange rates, such as economic data, political instability, natural disasters like floods and droughts, and acts of war such as the current conflicts in the Middle East and Ukraine. 

Only one of these is predictable, and that’s economic data releases. These are forecast well in advance, and so if figures are better than expected, a currency can strengthen. If however numbers are worse than forecast, a currency can fall in value. 

Below is an outline of this week’s data that I think could affect the Pound and Sterling exchange rates. If you have a c…

Pound falls away from 6 year high vs Euro

Thursday 2nd October 2014 
The Pound has fallen quite sharply today, falling from 1.2875 to 1.2750 against the Euro. Against the US Dollar we have seen rates fall from 1.6250 to 1.6125. What’s been going on? 

Pound/Euro drops as single currency strengthens 
Earlier this week GBP/EUR rates were close to a 6 year high, peaking at 1.2875 yesterday afternoon. It looks like investors have had enough of buying the Pound however, and as soon as markets opened this morning the Pound steadily lost value, as you can see from today’s chart:

Euro gains strength, but remains on a tightrope
Today we had the European Central Bank (ECB) announce its decision to hold interest rates at the record low of 0.15%. Not really a surprise, as they can’t really cut it any lower than they already have! This was expected, so all eyes and ears were on the press conference that followed, to see if the ECB president Mario Draghi said anything about their Quantitative Easing programme. 

It turns out that what moved the …