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Showing posts from January, 2016

Sterling stages recovery against Euro

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Sterling has continued to recover against other currencies today, including a decent rise against the Euros. A few days ago rates were down at €1.29, but today have peaked at €1.3265 before settling back down in the low €1.32's:


Financial markets are still reacting the news yesterday from the European Central Bank and their hints at further stimulus. Oil prices are up, US and EU stocks rose, and the Pound has continued to gain against other currencies.

Will it continue? Impossible to predict of course. I'm hearing from some quarters that the Euro will continue to weaken due to the ongoing stimulus, which taken alone would cause the GBP/EUR to rise again. If however markets open again on Monday and the Srecent trend of oil prices dropping returns, then we could see a return to the Pound falling away again. So this could well be a temporary spike. My view is it's not a reversal of the trend, and for those that need to buy Euros, consideration should be given to locking somet…

Pound/Euro rates recover slightly, but will it last?

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There has been a slight recovery in GBP/EUR rates today due to comments by the European Central Bank (ECB) president Mario Draghi. As you can see from the chart below, it was normal service all morning with GBP/EUR steadily dropping to lows of €1.2920. You can see the sharp spike upwards at 13:30pm to €1.3082:


The spike will be welcome for any Euro buyers, but in real terms the rate is only back to where it was yesterday.

What caused the Pound/Euro to rise, and will it continue?
At 12:45pm the ECB announced its decision to keep interest rates at their low of 0.05%. This was as expected, as very low inflation in the EU means it will be a very long time before rates rise. At 13:30pm Draghi gave a press conference, and it was what he said here that caused the Euro to weaken, pushing GBP/EUR higher.

He stated that downside risks have increased due to global uncertainty, citing commodity markets and geopolitical risks in particular. He said that due to lower oil prices, inflation is likely…

Pound drops below €1.30 and could continue falling

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Sterling has continued to fall against other major currencies, and has fallen nearly 10% against the Euro and US Dollar since last year. We have now seen the GBP/EUR rate touch €1.29, and this pair has now fallen through the key €1.30 level. Against the US Dollar, rates have dipped to the $1.41's.  The Pound has been dropping for 8 weeks now, is sat at around a 6 year low for, and this is the worst losing streak for GBP/EUR since the single currency was created in 1999.

In today's post, I will outline the reason the Pound has fallen so much, and take a look at both the short term outlook for this week, as well as the more medium to long term outlook for the Pound, giving my view on whether the Pound go up or down against the Euro and US Dollar in 2016. First, a quick look at the charts for the last 1 month:

GBP/EUR last 4 weeks:
GBP/USD last 4 weeks

Why has the Pound fallen so much this year?
This week the governor of the Bank of England stated that there is no set timetable fo…

Will the Pound keep falling against the Euro?

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Pound/Euro rates continue to fall, and as you can see from the chart below, in just 1 month, the pair has now fallen from €1.42 to €1.32, seriously affecting any clients that need to buy Euros. The chart below outlines the movements for GBP/EUR over the last 4 weeks:


Having said that, we have actually seen a slight recovery today. Rates continued to fall last night, and by late morning today, the pair had dropped as low as €1.3150. However, at 12pm today the Bank of England announced it's decision to hold interest rates, but one of the members, Ian McCafferty, continued to vote for a rise in rates as he has been doing now for several months. I think the markets expected all 9 members to vote to keep the rate at 0.5%, and as one member still thinks the economy can handle a hike, Sterling recovered throughout this afternoon and this 24 chart shows the slight recovery by 1 cent today:


What next for Pound/Euro rates?
Personally I think the spike today will be short-lived and the downw…

Pound continues to fall, what could move exchange rates this week?

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After a pretty bruising week for the Pound last week, Sterling has fallen further this morning, after the latest UK Industrial and Manufacturing production figures came in quite a bit lower than forecast. This has weakened Sterling and pulled GBP/EUR and GBP/USD rates lower, as you can see from the charts below:

GBP/EUR
GBP/USD


Later today, we have a speech by Bank of England governor Mark Carney. His comments will be closely monitored for any hints as to when UK monetary policy may change. One of the reasons the Pound has been falling recently is the fact that it could be at least another year until the BoE raise interest rates. Any signals of a change in stance could affect the Pound. Also at 3pm today, we have the latest Gross Domestic Product (GDP) estimate from the NIESR. This is very important as it will show whether the UK economy is still growing at 0.6%. Given the latest slowdown in global growth, there is a good chance UK GDP will also have slowed, and if today's figures …

Pound falls to €1.33 vs Euro

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Well it seems nothing can stop Sterling from continuing to fall against the Euro. Today, we saw another 2 cent drop from €1.35 down to €1.33, which means this week alone we have seen the GBP/EUR pair drop 4 cents:


Strong US jobs data today helped strengthen the US Dollar, and investors worried about global concerns caused by the Chinese slowdown are moving out of Sterling into the safe haven US Dollar, pulling the Pound lower against other currencies.

I'll be back in action next week on Monday with a full breakdown of next week's economic data that could affect exchange rates.

In the meantime, if you are concerned about the exchange rate moving the wrong way, and would like to discuss the current market conditions and get a quote, then click here to send me a free enquiry. I can discuss your personal requirement over the phone, explain what is moving the rate and what could be in store in the coming months. I can also explain the various options you can consider to ensure you d…

Sterling continues to fall against Euro and US Dollar

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It's not been a good start to 2016 for the Pound, and in the last 24 hours we have seen Sterling drop significantly further against both the Euro and US Dollar, as the charts below show. GBP/EUR in particular has now dropped by an alarming 10 cents since last month to the lowest in 12 months.

GBP/EUR

GBP/USD

Why is the Pound falling against the Euro and US Dollar?
Global concerns are now weighing heavily on Sterling. Last night Chinese shares fell 7% for the second time in a week. After 30 minutes trading was suspended to stop panic selling. This had a knock-on effect this morning on the FTSE and there is now a real global fear of another financial meltdown. Oil prices fell ever further, with the price of a Barrel now $33 which is the lowest in 13 years.

All of this means investors are dumping risky assets including Sterling, weakening the currency significantly, pushing exchange rates lower and lower.

Chancellor George Osborne has also warned of the effects to the UK from a slowin…

Sterling/US Dollar exchange rates in 2016

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Sterling/US Dollar exchange rates fell sharply towards the end of 2015. The main reason for this was the fact that the US Federal Reserve raised their interest rate, the first major western economy to do so. This had the effect of strengthening the US Dollar due to the higher return on offer for investors. The increased demand for USD made it more expensive to purchase, which you can ssee in the chart outlining the last 3 months movements for GBP/USD:


What does 2016 have in store for GBP/USD?
There are 2 sides to this coin, Sterling and the US Dollar. If we look at Sterling first, then we could see the Pound weaken in the first part of this year, before bouncing back in the latter part of 2016. This is due to the uncertainty the EU vote will generate, which I outlined in yesterdays GBP/EUR post which you can see here.

Looking at the US Dollar, there is talk that the FED will continue to raise interest rates this year, albeit gradually. I think March could be the next move. If they do…

Will Pound/Euro rates go up or down in 2016?

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The Pound has made a slight recovery against the Euro since yesterday, rising into the mid €1.36's. This was in part due to much worse than expected German inflation data, which was way below the forecast. As such, the Euro weakened and became cheaper to buy. You can see the 1 cent gain in the rate over the last 24 hours in the chart below:


Despite the slight gain, the GBP/EUR rate is of course still significantly lower than the 8 year highs we saw of €1.40+ towards the end of last year. Many of you reading my blog want to know whether the rate wil recover back to these levels. It is of course impossible to predict exchange rate movements, however with an insight into the kind of things that can move the rate, you can make an informed decision on what action to take. Let's take a more detailed look at what 2016 may hold in store...

Will the Pound/Euro rate go up or down in 2016?
Before I tackle this question, we first need to look at the following points:

Why did GBP/EUR excha…