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Showing posts from December, 2015

Pound/Euro falls to €1.35

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Sterling/Euro rates have failed to recover their recent fall, and today have continued to drop and currently sit in the low €1.35's. This morning figures showed that government borrowing was much worse than expected, and this means that it's less likely the Chancellor will meet forecasts for this year. The below graph shows how GBP/EUR has moved so far in December:


As you can see, the decline started early in the month when the European Central Bank confirmed they are increasing stimulus measures, which should have the effect of returning the Eurozone to growth. This has strengthened the Euro and is making it more and more expensive.

Here in the UK, the wind has really been taken out of the Pound's sails. Much of the driving force behind Sterling's strength was down to an expected interest rate hike. This is now unlikely until 2017 so the Pound has dropped off.

As we head into 2016, I think the focus will start to turn to the UK EU referendum. The uncertainty this is…

What could FED interest rate rise have on exchange rates?

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Today it's widely expected that the US Federal Reserve will raise interest rates in the USA, the first major western economy to do so since the financial crisis of 2008. What affect could it have on exchange rates if they do? What might happen if they don't? I'll look at several scenarios in today's post, and also ways you can protect against the rate moving against you.

As it's widely expected that they will go ahead and raise rates, the US Dollar has been slowly gaining strength in recent months. As you can see from the chart below the rate has dropped by 6 cents in the last 3 months, from $1.56 to $1.50:


What will happen to exchange rates if the FED raise rates?
Logic would dictate that if they do raise rates, the USD would strengthen and rates would drop further. This is because the higher return would attract investors to the USD. However this may not be the case.... the last time they raised rates 10 years ago, the Dollar actually weakened against Sterling ov…

Summary of GBP/USD, GBP/CAD, GBP/AUD, GBP/EUR

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As I outlined in my most recent post, the Sterling/Euro exchange rate is now well below the recent 8 year high of above €1.40. It has fallen a further cent today to around the €1.37 mark, following positive comments about the EU econmoy this morning from the ECB president. Despite the drop in Euro rates however, many currency pairs are trading at their best in nearly a decade. So today I thought I would give a quick overview of some of the main currency pairs I trade, specifically GBP/USD, GBP/CAD, GBP/AUD, and GBP/EUR.

Remember that in addition to my regular reports on exchange rates, I can also secure you commercial rates of exchange up to 5% better than banks or other brokers. If you have a currency transaction to carry out in the coming months and would like a quote, click here to send me your details.

Sterling/US Dollar
This week is the most anticipated of the year for Sterling/Dollar, and it's widely expected that the US Federal Reserve (FED) will raise interest rates in th…

Will Pound/Euro rates get back to €1.40?

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Since the sharp drop in GBP/EUR exchange rates last week, we've failed to see the currency pair make much of a recovery. Earlier in the week we saw the rate creep back towards the €1.40 level however it didn't last long, and the pair seems to be settled in the  mid €1.38's:


There wasn't much to go on in terms of data this week. We had GDP figures from both the EU and UK, but the numbers were as expected and didn't really affect rates. We also had the latest interest rate decision and policy statement from the Bank of England, but again there were no surprises. No change was made, and only 1 member voted for a rate hike. I think it's highly unlikely rates will go up in the UK for at least a year, and that in turn is likely to keep the Pound from making much headway against other currencies including the Euros.

Will Pound/Euro rates get back to €1.40?
In my view they will eventually, but not in the short to medium term. Many clients are bemoaning the recent dro…

GBP/EUR falls from €1.42 to €1.38

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We've seen a huge drop in the Pound/Euro rate today. The markets have been anticipating today as key to GBP/EUR, and it has certainly caused significant volatility. As you can see from the chart below, the rate has fallen from the recent highs of €1.43, down into the €1.38's today. This is a huge drop, and as I warned in my last post the rate was unlikely to go any higher and may in fact drop back away, and this has proved to be the case:


Why has the Pound/Euro rate dropped?
As expected, the European Central Bank (ECB) have today announced that they have cut the bank deposit rate to -0.30%, and increased their Quantitative Easing programme. This had been priced into the market already, and clearly it was overly priced in, as once the announcements came, the Euro really gained strength. This is because the actions taken today will ultimately be positive for the Eurozone, and as such the Euro has pushed higher and become more expensive to buy.

There was some initial confusion, a…

WIll Pound/Euro go up or down in 2015/2016

Currently we are seeing extremely attractive Sterling/Euro exchange rates, that are only a few cents below the best they have been in over 8 years. Many clients are asking me whether the rate will go higher or lower in the coming months. It is of course impossible to predict this, and if I could I would be a multi-millionaire!

However if we analyse the reasons the rate is where it is, along with expected developments in the UK and EU economies, you can make a clear and informed choice of what you want to do. If you need to convert Sterling to Euros, or move Euros back into Pounds in the next few months, then read on to learn more about the GBP/EUR rate and explore your options. To discuss your particular requirements and get a quote, click here. 

Why is the Sterling/Euro rate near an 8 year high? 
Our starting point today is looking at why the rate is so good. In part this is due to a Strong Pound caused by the fact the UK economy is performing very well, and in contrast to the Eurozo…