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Showing posts from September, 2015

Pound/Euro has fallen 8 cents since last month

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Monday 28th September 
The last week has been an interesting one for currencies, with the GBP/EUR exchange rate fluctuating between €1.39 and €1.35. Since last month, it's now fallen 8 cents. This means purchasing €350,000.00 today is costing you around £15,000.00 more than last month, which really illustrates how important it is to get your timing right, and have tools in place like 'Stop Loss' orders to protect against sharp drops in the market like we have seen recently.

Here's how the GBP/EUR rate has moved in the last 2 months:

What has been causing the volatility in currency prices? 

As I explained in my last post, the main reason for the fall in GBP/EUR rates last week was due to a strengthening of the Euro, which has now become more expensive to buy. The European Central Bank opted not to extend their stimulus programme, and have also said interest rates will not be cut. This has supported the Euro and is the main reason for rates dropping away. 

Also the global eco…

Why has Pound/Euro dropped to €1.36?

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Wednesday 23rd September 2015 
Today the much anticipated speech by the European Central Bank (ECB) president Mario Draghi has caused the Euro to gain strength, and this has pushed Pound/Euro rates down to around €1.36 which you can see from the chart below: 


What did Drahi say that caused the Pound/Euro rate to drop? 

In recent days there was speculation that the ECB may either increase their Quantitative Easing programme, or announce a cut in interest rates in order to combat a potential slowing of the Eurozone economy. The market had been partially pricing this into the value of the Euro over the last few days, which is why the Pound/Euro rate had recently hit nearly €1.39. 

For me there was one key part of his speech that caused the Euro to strengthen, pushing exchange rates lower: 

“I am aware that many of you closely scrutinise the potential effect of the low interest rate environment on financial stability; ... let me underline that we are closely monitoring risks to financial stabi…

Pound/Euro rises to €1.39

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Tuesday 22nd September 2015 
It’s been an interesting start to the week on the foreign exchange markets. Despite little economic data being released yesterday, the Sterling/Euro rate rose steadily throughout the day before settling around €1.3850. The upwards march continued this morning, with rates touching €1.39, before figures released at 09:30am this morning showed that UK government borrowing was much higher than expected. This halted the steady rise and at the time of writing, GBP/EUR sits just above €1.38: 



UK Interest Rates 

Last week the Bank of England’s chief economist indicated that an interest rate cut could be on the cards. I mentioned in my last post that I thought that unlikely, and today the chancellor George Osborne also indicated that the next move in rates is likely to be a rise. However, I still think that this is still quite a long way off. Indeed the Bank of England deputy governor has suggested that disinflationary forces from abroad meant there was no immediate n…

Bank of England could cause Pound to fall sharply

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Friday 18th September 2015
FED leave interest rates on hold 

Last night the US Federal Reserve opted to keep interest rates at their low of 0.25%. There was a small chance that they would raise interest rates but this didn’t materialise. The FED Chair Janet Yellen cited the slowdown in China and emerging markets as the reason to keep the benchmark rate and this has weakened the Dollar making it a little cheaper to purchase. The rate climbed to around $1.5650 but has since started to slip away. They will raise rates at some point, probably early next year, so any rise in the rate should be taken advantage of, as it’s likely the GBP/USD will drop in the medium term.  Therefore if you need US Dollars, consider a 'Stop Loss' order to protect against a sharp drop. I've read forecasts from Barclays Capital with expectations of $1.43 by the end of this year!

Click here for a quote on US Dollars.


Will Pound/Euro rates go up or down? 

The initial reaction to the FED move was for GBP/…

Pound rises on employment data, but will it go higher?

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Wednesday 16th September 2015
Today we saw the Pound/Euro rate rise on positive jobs data from the UK. Average earnings and the claimant count were both much better than expected, and you can see from the chart below that this strengthened the Pound, pushing the GBP/EUR rate from €1.36 to €1.3750 before dropping back away. We also had worse than expected inflation numbers from the EU, which helped push the rate higher as the Euro weakened and became a little cheaper to buy. 



Will the Pound continue to go up against the Euro? 

This is the question I’m asked daily by my clients looking for the best exchange rates to buy Euros. It is of course impossible to predict what will happen, but I don’t think the rate will get higher in the short to medium term. Indeed the current strength of the Pound is a problem for the Bank of England as it makes our exports more expensive, so if the rate does continue to climb, then I would expect the BoE to make noises about an interest rate being a long way o…

Will the FED raise interest rates this week?

Tuesday 15th September 2015
On Thursday, the US Federal Reserve will announce their decision on interest rates, and for the first time in many years, there is actually the chance of a change. It’s widely expected that the USA will be the first major western economy to start pushing interest rates up from the record lows they have been at for many years. 

It’s likely that they will keep them at their record low of 0.25% for another month, however there is a 20% chance that they will raise the benchmark rate to 0.5%. 

What would be the effect on exchange rates if they raise interest rates? 

A hike in interest rates would make the US Dollar an attractive option for investors, due to the higher return they would get on their funds. Therefore, if the FED do indeed raise interest rates I would expect the US Dollar to gain strength and become more expensive to buy, and this would push GBP/USD exchange rates lower. The small chance of a hike will already be priced into the market, so if they leav…

Pound falls slightly on poor Industrial and Manufacturing Production figures

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Wednesday 9th September 
After gradually rising this week, the Pound has fallen slightly against the Euro and US Dollar today due to worse than expected UK data. Figures released earlier today showed that UK Industrial and Manufacturing production fell at its sharpest pace in more than a year. I warned on Monday that if the figures were worse than forecast Sterling could fall, and while the expected numbers were predicted to show slight growth, the actual numbers showed a decline of -0.4% & -0.8% respectively. As you can see from today’s GBP/EUR chart below, Sterling fell by around 1 cent against the Euro, however has since started to claw back its losses. (Click here to see my live currency chart)



Tomorrow key for whether Pound will rise or fall in the coming months 

At 12pm tomorrow, we will have a much clearer idea of whether Sterling is likely to rise or fall in the coming months, based on interest rate expectations. The Bank of England will announce its decision on interest rate…

Sterling rises against Euro and US Dollar

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Tuesday 8th September 2015 
Sterling has continued to gain against both the Euro and Dollar today, and as you can see from the charts below, we’ve seen rates rise steadily since the lows of last week: 

GBP/EUR
GBP/USD
Why has the Pound gained against the Euro and Dollar? 

Only a week ago, a raft of quite poor data from the UK had poured cold water on the idea that the Bank of England (BoE) would be able to raise interest rates any time soon, and due to this the Pound had weakened against other currencies. The BoE’s governor Mark Carney also said that the slowdown in the Chinese economy could affect UK inflation, further denting the Pound. 

Despite this however, this week we have seen the Pound fighting back. According to Reuters, the main reason for today’s GBP gains was an agreement from a Japanese insurance firm to buy a British insurer in a cash deal for £3.5bn. This huge demand for the Pound is what drove it up against other currencies. Even against the Euro, we saw the Pound rise by 1…

What could affect exchange rates this week?

Monday 7th September 2015 
Good morning. As usual for a Monday, today I will outline this weeks scheduled data releases that could affect exchange rates. 

If you’re reading my blog, the chances are that you have a currency transaction to perform and are looking at what is moving exchange rates. If that’s the case, then why not get in touch to discuss your requirement in more detail and get a quote? 

I can source exchange rates all major currency pairs that are up to 5% better than the banks can offer. We also have several different types of currency contracts that enable you to fix today’s rates for up to 2 years, and ways of booking currency should the exchange rate hit a particular level you may be targeting. Click here to send a free no obligation enquiry today and see how much you could save.

This week’s data that could affect Sterling exchange rates 

Monday 7th September 2015 – It’s been relatively quiet today on the data front due to a market holiday in the United States. In Europe, …

Pound/Euro rises on ECB comments

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Thursday 3rd September 2015
After falling 9 cents in the last month, Sterling/Euro rates have staged a slight recovery today, pushing back above €1.37 as you can see from the chart below: 



ECB cuts inflation and growth forecasts

The reason for the rise in rates wasn’t anything to do with the Pound, but rather the Euro weakening and becoming cheaper to buy. This was because the European Central Bank (ECB) has cut its inflation and growth forecasts for the next few years. 

They said that inflation in the Eurozone would probably be very low indeed for years to come and in turn this means that economic growth is unlikely to increase as much as had been thought. The banks president Mario Draghi said it expected inflation to be 0.1% for 2015, rising to 1.5% in 2016 and 1.7% in 2017, dampened by lower energy prices. They also hinted that further Quantitative Easing (QE) may be requried to shore up the economy. QE effectively creates new money to pump into an economy and usually weakens a currenc…

Which way could Pound/Euro rates go September 2015?

Tuesday 1st September 2015 
Good morning and welcome back to my regular currency updates after the Bank Holiday weekend. While here in the UK it was dismal weather, heavy traffic and only the lack of a James Bond movie to complete the typical August Bank holiday hat-trick, over in Europe it was business as usual and markets were open. 

Numbers released yesterday and again this morning from Europe were better than expected, with both Strong German Retail Sales and a better than expected EU inflation numbers giving the Euro a boost. This has pushed exchange rates lower. This morning we saw the Euro gain further strength due to better than forecast EU jobs numbers. 

The Euro has been getting stronger and stronger recently, as those with an eye on the GBP/EUR rate will have noticed. In the last month the rate has plummeted by over 8 cents, seriously affecting those trying to budget for a Euro purchase. As I outlined in a recent post, the reason for the decline is two-fold. Firstly we have th…