Showing posts from November, 2014

Pound/Euro forecasted to hit €1.54. Or €1.12. Who's right?

Friday 21st November 2014 
The Euro has weakened again today, pushing the Pound/Euro rate up from €1.25 to €1.26, marking the end of a topsy-turvy week in which was saw GBP/EUR climb 2 cents, recovering half of last week’s losses. In today's post, I'll explain the jump in the rate, and also have a look at a forecast that Pound/Euro will hit €1.54. Or €1.12, depending who you believe. Let's start with today's movements :

Why has the Pound/Euro rate gone up?
It’s nothing to do with Sterling, and all to do with the Euro. This morning the ECB president gave a speech and his comments caused the Euro to weaken and become cheaper to buy. So what exactly did he say? 

“We will do what we must to raise inflation and inflation expectations as fast as possible, as our price-stability mandate requires,” adding that some inflation expectations “have been declining to levels that I would deem excessively low,”

With the next ECB policy meeting only a few weeks from now, and the EU econo…

Pound recovers after Bank of England Minutes

Wednesday 19th November 2014 
Sterling/Euro recovers to €1.25 
Just a quick update this morning, as we have finally seen the Pound recover slightly after the last week in which we saw rates drop from €1.28 to €1.24. 

Earlier this morning the Bank of England released the minutes to its recent meeting where they decided to leave rates on hold. Of the 9 member committee, 7 voted to hold rates, with 2 voting to raise them, which has been the case for the last few months. You can read the full minutes here on the BoE website.

Why did this cause the Pound to rise? 
Given inflation numbers have been lower recently, some analysts including me thought that the 2 members that had been voting for a hike would not do so. The market had also been expecting this and it starting getting priced into rates in advance, and before the release of the minutes GBP/EUR rates were as low as €1.2440. As you can see from the chart above, as soon as the result was out Sterling exchange rates jumped to €1.25 where i…

Sterling/Euro falls into €1.24’s – will it go back up?

Tuesday 18th November 2014 
The Pound has continued to fall against the Euro, and today has dipped into the €1.24’s. A week ago rates were €1.28+ so this is a big drop in a short period of time. The rate started to drop when the UK inflation numbers came in very low, which I touched on in a post last week. This means that the Bank of England are likely to keep rates on hold for quite a while. 

The reason for today’s drop was twofold. Firstly we had further UK inflation numbers that were slightly lower than expected, compounding the view the economy isn’t ready for a rate hike, and the Pound dropped a little. Soon after, we had some sentiment data from Germany, Europe’s largest economy. This showed that sentiment rose in November for the first time in almost a year, surpassing expectations and raising hopes of an improvement in their economy after it dodged recession in the third quarter. 

This data gave some strength to the single currency, and made it more expensive to purchase. 

What w…

Sterling continues to fall against other currencies

Friday 14th November 
The sterling sell off continues this week, as expectations of an interest rate hike in the UK are pushed back. The chart below shows how the rate has moved over the last few days:

There hasn’t been any further data to cause the drop, and the fall is purely investors continuing to dump the Pound due to the fact interest rates are not going up any time soon, as I outlined in my last post on Wednesday. 

The drop has been quite significant. Purchasing €250,000.00 today compared to Friday morning would cost you £4,400.00 more, purely due to exchange rate movements over 2 days. This demonstrates how quickly things can change, and how important it is to get your timing right with regards to when to fix your exchange rate. 

Getting the best exchange rates 
If you need to buy or sell any international currency on a bank to bank transfer basis, then get in touch with today by clicking here. I can discuss what is happening with exchange rates, the forecasts where experts expect…

Inflation figures brings the Pound crashing down.

Wednesday 12th November 2014 
Good morning. Earlier this week I warned that today would be key for Pound/Euro rates, and that if the Bank of England inflation report forecasted low inflation, then Sterling could drop off. This is exactly what has happened, and despite an initial rise in rates following good UK employment figures, we soon was the rate drop by over 1 cent as you can see from the chart below: 

UK Employment gives the Pound a (temporary!) boost 
The day actually started well for the Pound, as figures showed that UK unemployment fell for the 18th consecutive month, beating expectations. The numbers also showed that one measure of average earnings growth beat inflation for the first time in five years. As the numbers were better than the markets were expecting, the Pound rose to above €1.28, getting near 6 year highs as you can see from the graph above. But the gains were short lived, as we will see in a moment…. 

Bank of England inflation report brings Sterling crashing back d…

What could affect Sterling/Euro rates this week?

Monday 10th November 2014 
Good afternoon. It’s been a very quiet start to the week with no economic data releases of note. The Pound/Euro rate remains in the mid €1.27’s, and Pound/Dollar rates have dipped into the $1.58’s. 

As usual for a Monday, below I’ve listed the weeks data releases that I think will affect exchange rates. It’s a very quiet week all in all, with the most interesting release being on Wednesday when we see the latest UK unemployment numbers, along with the Bank of England (BoE) inflation report. This is important as inflation forecasts will have an effect on when the UK may raise interest rates. If inflation is forecast to remain low, expect the Pound to weaken. If inflation looks like it is on the rise again, the Pound could well strengthen. 

I personally think GBP/EUR will remain in its recent range of 1.26 to 1.28 in the coming weeks. Those buying Euros should consider locking a rate in now while it’s close to the best in 6 years. I can’t see anything on the hori…

Pound/Euro rises after ECB press conference

Thursday 6th November 2014 
The Sterling/Euro exchange rate has rocketed today, following comments by the European Central Bank (ECB) president Mario Draghi, as I predicted could well happen in my post earlier this week.

Central Bank Decisions and the Pound/Euro exchange rate 
Both the UK and EU central bank announced their latest decisions on interest rates today. There were no surprises, with both keeping their benchmark rates on hold. However after the EU decision, the president of the European Central Bank (ECB), Mario Draghi, said in a press conference that the bank stands ready to give the Eurozone further economic stimulus "should it become necessary". Mr Draghi said: "Should it become necessary to further address risks of too prolonged a period of low inflation, the Governing Council is unanimous in its commitment to using additional unconventional instruments within its mandate." 

Markets have taken this as a negative sign for the Eurozone, and the Euro weake…

What could affect exchange rates this week?

Monday 3rd November 2014 
We have seen Pound/Euro rates reach €1.28 today, due to slightly better than expected manufacturing numbers that gave Sterling a boost. The other reason rates have climbed up from €1.27 is a weaker Euro following last week’s decision from the USA to end their QE programme.

The end of QE in the states strengthened the US Dollar, pulling rates down below $1.60 where they remain today. 

Below I have listed this week’s economic numbers that I think could affect exchange rates. I personally think that Pound/Euro will slip back away again in the coming days, as has been the general trend in the last few weeks. The high GBP/EUR rate is not good for the UK economy as it makes our goods and services more expensive. 

In the last few weeks we’ve seen BoE members and even the Prime Minister stating their wish for interest rates to stay at record lows for a long time to come. This could well be an attempt to weaken the Pound to help our exports, and I believe this could hold …