Showing posts from October, 2015

Pound/Euro touches €1.40 on FED news

Exchange Rates move on FED news 

Last night at 6pm, the US Federal Reserve (FED) announced its decision to hold interest rates. However as is often the case in the currency markets, the devil is in the detail. They tool quite a Hawkish tone, and removed a key sentence in their statement that effectively hints that in December rates would be on the rise. This coupled with the expectation that the European Central Bank (ECB) will increase their stimulus measures in December has had quite an effect on Exchange rates. 


As you can clearly see from the chart, as soon as the announcement was made at 6pm, the Euro weakened significantly and became cheaper to purchase, pushing mid-market rates up to €1.40. The market has already this morning dropped back away by nearly 1 cent already this morning however to just above €1.39. Given we have now see the GBP/EUR rate climb by 6 cents in the last few weeks, I think this will be the peak in the short term. Those needing to buy Euros may w…

Sterling slips on poor growth data

The Pound’s decent run against the Euro over the last week has now ended, and today we have seen the GBP/EUR rate drop away by a cent. We had seen it as high as €1.3920, however this morning UK GDP figures were released that disappointed, and as you can see from the chart below it has caused a gradual drop in the rate of exchange: 

Pound falls on GDP data

This morning UK growth data was released, and it was lower than expected at 0.5%, confirming that the performance of the construction and manufacturing sectors are slowing. This has weakened Sterling and pulled exchange rates lower. 

What next for Pound/Euro rates? 

In my view Thursday is the next important day for GBP/EUR, with UK mortgage approvals and German Employment and inflation data. Following this on Friday, we have EU wide unemployment and inflation numbers, along with a UK measure of consumer confidence. 

 It’s still a pretty good time for those needing Euros however. Just a few weeks ago the rate was as low as €1.33, and despi…

Why has Pound/Euro risen to €1.38?

Pound/Euro surges on ECB comments 

In my last post on Tuesday, I said that today’s ECB press conference would be key to GBP/EUR rates, and that if there were hints they would extend their stimulus programme, the Euro could weaken and GBP/EUR rates would rise. This is exactly what we have seen happen today as they said that their Quantitative Easing programme would need to be re-examined. Look at the effect it has had on GBP/EUR and GBP/USD in the charts below: 

Pound/Euro rises by 2 cents: 

 Pound/Dollar drops by 1 cent:

ECB to re-examine its stimulus programme 

Inflation is low in the EU, but they can’t cut interest rates as they are already at 0.05%. As I’ve been saying recently, the only clear solution is to increase their QE programme. Today, the ECB president said that "The asset-purchase plans are proceeding smoothly and continue to have a favourable impact," adding that "The degree of monetary policy accommodation will need to be re-examined at our December meeting.&…

Pound/Euro exchange rate forecast

Sterling/Euro rates fall ahead of ECB meeting this week 

Pound/Euro rates have recovered in the last week, partly due to some positive UK employment data, but also due to speculation the European Central Bank (ECB) may announce further stimulus this week. Interest rates there are as low as they can go (0.05%), and in order to ward of the threat of deflation, they may have to increase their stimulus measures. I don’t think they’ll announce anything on Thursday, but it’s important to listen out for any hints the ECB president Mario Draghi may give in his press conference. 

To me it’s quite obvious that their QE programme will need extending, and that’s why the Euro has been weakening off in recent days as this eventuality gets priced into the market. However today the market starting correcting itself, pulling GBP/EUR back down to around the €1.36 level as you can see from the chart below. If he does hint at further measures, there may be a short term spike in GBP/EUR rates. 

If you need t…

Sterling/Euro rises from €1.3350 to €1.3550

Thursday 15th October 2015 
Sterling/Euro rates have recovered very well in the last few days, rising from the €1.33’s to €1.3550 today. In today’s post I’ll explain the reasons for the gains, and what action those with Euros to buy or sell can take to help achieve the best exchange rates. First, a quick look at this week’s GBP/EUR graph: 

Why have Sterling/Euro rates risen? 

As you can see from the chart above, early in the week Sterling/Euro fell to €1.3350, the lowest it’s been since February. As I explained in my recent post, the drop was due to very low inflation numbers that weakened the Pound. 

Since, then we’ve seen the rate gain nearly 2 cents to €1.3550, so what’s been going on? Yesterday morning it looked like the Pound would continue to drop, as UK jobs data was released at 09:30am. The Claimant count was pretty dire, and showed that there were nearly 7000 more people claiming benefits than forecast. The Pound fell to €1.3350 on the news, but quickly recovered. 

This is because…

Sterling falls on poor UK inflation figures

Tuesday 13th October 2015 
Volatility has returned to the markets, and since my last post on Friday we have seen the Pound/Euro rate drop a further 2 cents, dipping into the €1.33’s this morning, and is currently settled at around €1.34 as you can see from the chart below: 

Poor UK Inflation figures weaken Sterling 

The reason for the drop of over 1 cent this morning was due to poor UK inflation figures. This morning the Consumer Price Index (CPI) fell into negative territory at -0.1%. This is worse than expected, and pours cold water on any hope the Bank of England will be raising interest rates. As the pressure is off the BoE, investors are not going to be buying Sterling in a hurry, and as such the Pound has weakened. The effect on the exchange rate is that levels have dropped off across the board. 

Do you have Euros to convert to Pounds? 

While the market movements today are bad news for those buying a foreign currency with Sterling, those that have Euros to convert back to Pounds will…

Different ways you can get the best exchange rates

Thursday 8th October 2015 
The currency markets have been calmer this week, with not as much fluctuation a we have seen in recent weeks. In the chart below, you can see that the Pound/Euro rate in particular has remained range-bound between 1.3550 and 1.3650 in recent days: 

The reason rates are relatively stable is that economic figures have been roughly as expected. UK GDP is around 0.5% which is about what the markets thought. German Exports were down but it didn’t really weaken the Euro much. The Bank of England (BoE) have kept interest rates on hold as expected, and the speeches by the central bank governors didn’t really give any surprises. It’s still the case that the BoE will likely raise rates halfway through 2016 and I don’t expect much Sterling strength until then. 

How to buy currency at the best exchange rates 

Given the relative calm in the markets, I thought today would be a good opportunity to outline the various contracts that I can offer to help you get the best exchange…

Why has Pound/Euro fallen to €1.34?

Friday 2nd October 2015
The Pound/Euro rate has fallen sharply today, dropping from €1.36 to €1.3450 as you can see from the chart below: 

Why has the Pound fallen against the Euro?

It was actually due to data from the United States. At 13:30pm today the USA released their Non-Farm Payrolls data, which shows the number of new jobs created (not including agricultural jobs as they are seasonal, hence the name non-farm). The markets expected 203,000 new jobs, but the actual figure was a dismal 142,000. 

Because the number was worse than expected, investors sold the US Dollar and bought the safe haven Euro, causing it to gain strength and become more expensive to buy. This is why GBP/EUR fell sharply at 13:30pm as you can see from the graph above. You can see the inverse correlation for Sterling/Dollar, which rose as the Dollar weakened: 

Need the best exchange rates? 

If you would like to discuss the currency markets to help you decide when to fix an exchange rate, or would like to get a quo…