Showing posts from April, 2016

Pound gains further, as Brexit looking less likely

Sterling has continued it's strong run as we start the week, with Pound/Euro rates not far from €1.29, and GBP/USD close to $1.45. The current levels are a good 5 cents higher than two or three weeks ago.

The reason for the rise upwards is the simple fact it's now looking less likely that Britain will vote to leave the EU The fact that President Obama has entered the debate, putting into doubt the ability for the UK to arrange trade deals with the US in the event of a Brexit. Odds are therefore starting to swing towards the remain campaign, and sentiment is higher helping to push the Pound higher against other currencies.

I think that the currency markets will move in line with opinion polls in the coming weeks, and anything that suggest we may leave the EU will weaken the Pound, anything that supports the remain vote, could help keep the Pound supported. Other than developments surround Brexit, there will also be the usual scheduled economic data releases that could move rate…

Pound/Euro rates hit €1.28, despite poor economic data

It's been a very good week for the Pound, rising against the Euro to hit levels not seen all month, peaking at €1.28 today:

There haven't been any particular economic figures causing the rise. Indeed this week we've seen poor Retail Sales, worse than expected Jobs figures, The BoE governor Mark Carney warning about the economic impact of a Brexit, and a plethora of influential political figures warning that the UK economy faces huge risks should the UK vote to leave the EU. All of this would usually mean the Pound dropping against the Euro. I'm as surprised as most that Sterling has continued to march upwards in light of the poor economic figures. I expected the spike earlier in the week to be short lived, however that has not been the case. This illustrates that it's impossible to predict and second guess where exchange rates will move.

So why has the GBP/EUR rate continued to climb?
There are 2 reasons for the gains for the Pound. Firstly, risk sentiment has inc…

Pound remains supported despite poor jobs figures

The Pound brushed off the poor unemployment figures this morning, and GBP/EUR rates remain around the 1.2650 mark:

There haven't been any significant economic figures released that would strengthen the Pound, and the reason rates have recovered is due to investors covering short positions and profit taking following the recent weakness for Sterling. Indeed even Mark Carney, the BoE governor, warning yesterday of the risks of the UK leaving the EU did nothing to affect Sterling.

Tomorrow (Thursday) is key to the next move for GBP/EUR rates. There is a very good chance they will announce, or hint at, further stimulus for the Eurozone. If the ECB president Mario Draghi hints at this in his press conference tomorrow, then it may cause the Euro to gain strength, and pull rates lower again.

The current levels are around the best in 3 weeks, and certainly worth considering taking advantage of. It was only several weeks ago that GBPEUR was in the €1.23's, the lowest the currency pair h…

What could move exchange rates this week?

Sterling/Euro rates are settled in the mid €1.25's after last week's positive moves for this currency pair. In today's post, I'll run through the coming week's economic data releases that I think will affect exchange rates. With a speech by BoE governor Carney, an interest rate decision and comments from Europe, and the EU referendum campaigns starting in earnest, it could be another volatile week on the currency markets.

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This week's economic data releases
Monday 18th April 2016 - Today is very quiet on the data front, with the only release of note US Housing prices at 3pm. Any moves on GBPEUR will therefore be caused by risk sentiment.

Tuesday 19th April 2016 - From Europe we have EU and German economic sentiment measures. Ov…

China trade figures push GBP/EUR higher

Pound/Euro rates are up to €1.26 today, and the reason for this is weakness in the single currency. This morning we saw some very decent Chinese trade data, and this indicates that their economy may finally be stabilising. This has caused investors to return to riskier bets, and they have sold the Euro in droves this morning, causing it to weaken and become cheaper to buy. Great news for those the need to convert Pounds to Euros at the best possible rates.

Why has Chinese trade data cause GBP/EUR to rise?
As with many of the recent moves in the currency markets, it's to do with risk appetite. Since the start of the year, the slowdown in China has caused global growth to slow, affecting growth across the world including here in Great Britain. This caused investors to become worried, and shun riskier investments in favour of safer havens. That's why safe currencies like the EUR, JPY, CHF etc have gained in recent months and become more expensive.

Today's numbers from China…

Pound gains more than 1%, but will it last?

It's been a pretty good start to the week for the Pound, rising a little over 1% against both the Euro and the US Dollar. First thing on Monday morning, Sterling was trading at a 2 year low against a basket of other currencies, but the last few days has pushed it higher. Below shows how GBP/EUR has moved so far this week:

What caused the Pound to rise?
The reason Sterling has gained is firstly yesterday's performance of EU stocks. They rose very nicely when markets opened yesterday, and this in turn pushed currencies higher that move in tandem with riskier assets. The Pound is seen as a risky currency, so as investors were buoyed by rise in EU stock markets, they started trimming bets against the Pound and there was a push to buy Sterling while it was at a 2 year low.

Secondly, the inflation numbers this morning were slightly higher than forecast, giving Sterling another nudge upwards, pushing GBP/EUR rates almost 2 cents higher than the lows of early Monday morning.

Will it …

Sterling/Euro rates: putting things in perspective

Thursday 7th April 2016
Good afternoon. With the Pound in perpetual decline at the moment, in today's post I'm going to provide a more general view of the Sterling/Euro rate, and put things into perspective to explain why the current GBP/EUR levels are actually not too bad at all....

Why is the Pound falling against other currencies? 
Last year, GBP/EUR rates were at 8 year highs of €1.40+. The reason for this was, firstly, a robust UK economy showing decent growth. This meant that the Bank of England were expected to raise interest rates and this potential higher return attracted investment into the Pound, strengthening Sterling to record highs. Secondly, the Euro was very weak. The well-publicised issues in Greece along with a raft of QE stimulus measures for the Eurozone combined to weaken the Euro and pushed exchange rates to highs of €1.40.

Fast forward 5 months and it’s a very different picture. GBP/EUR rates are now sat at €1.2380; almost 15% lower than the peak of last …

Why has the Pound fallen against the Euro today?

Despite the lack of any significant UK economic data today, Sterling has fallen again by almost a cent against the Euro, to the low €1.24's as you can see from the chart below:

What has caused the Pound to fall?
As mentioned above and in my post on Monday, there has been no real data of note from the UK today. So with a lack of economic figures being released, what has caused Sterling to drop? It's to do with risk sentiment, and there is little out there to settle the nerves of investors. The general feeling is that the economic performance of the UK has been poor and today Sterling has been sold off, weakening the UK currency.

The economy is slowing, and stock markets have also suffered today, showing concerns over both UK and global growth. If you look at the data over the last week, it seems that there are risks that the Pound could fall further still, as polls seem to suggest a swing towards a Brexit. The attacks in Brussels and the migrant crisis could well mean the UK v…

What could affect exchange rates this week?

Good morning and welcome to a new week in the currency markets. After last week's sharp fall for Sterling, in today's post I'm going to list the main economic data releases that I think could affect exchange rates. Remember that if you're looking to save money by getting the best possible exchange rates, I can help. In addition to providing information on the currency markets, my company can also provide commercial exchange rates that are up to 5% better than bank and other brokers.

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This week's economic data releases
Monday 4th April - Today we have PMI construction data from the UK, and Unemployment data from Europe. Both could affect Sterling/Euro rates depending on the result. This afternoon, the USA has Factory orders that might strengthen the USD.

Tuesday 5th April - There are no rel…

Pound/Euro drops into the €1.24's

The Pound is at the lowest against the Euro in nearly 18 months today, and it's not been a good start to April. This week alone, GBP/EUR has dropped from 1.2750 to 1.2486 at the time of writing:

Why has the Pound fallen so much this week?
It's a combination of things, but mainly due to pretty poor economic data from the UK, meaning Sterling is not an attractive option for investors. We've had figures showing that the UK deficit is growing. Investors worry that if the UK vote to leave the EU, it would hit investment. Reduced earnings from abroad and sovereign wealth funds pulling money out of the economy, could well mean the Pound will weaken more.

Also this morning, manufacturing figures today that show the sector is stagnating. The export market is tough given the global economic slowdown, and in turn this is likely to affect UK growth.

And this is all against the backdrop of the EU referendum, which I've talked about in detail on this blog and the risks it presents to…