Showing posts from July, 2016

Pound/Euro range-bound at €1.19; but is it really that bad?

Sterling remains range-bound against the single currency, with GBP/EUR rates stuck around the €1.19 mark. This is illustrated in the chart below showing the currency movements this week:

As I outlined in my last post, it's probably the case of the market simply waiting to see what will happen with both 'post-brexit' economic figures, in addition to anticipation of what will happen with the Bank of England next week, and if they will cut interest rates as many expect.

We did see GDP data from the UK yesterday, which was better than expected. It should be noted however that these figures were for Q2, so only represented the economy in the run up to the EU referendum. Still, it was positive as most had expected the economy to slow slightly as uncertainty about the vote crept into the economy.

Blame it on the Brexit?
Today the Pound fell a little on news that Lloyds would be axing around 3000 jobs in the UK, blaming Brexit uncertainty. Personally I think this is nonsense. The…

Sterling falls as BoE set to embark on stimulus measures

Sterling/Euro rates held within a 0.5% range as the trading week started yesterday, with the market remaining relatively stable compared to the recent volatility we’ve seen. We saw the Pound fall slightly during the day after the slightly subdued CBI industrial trends survey, but it didn’t slip much however and had clawed its way back to around €1.1960 by the end of the day. However overnight and this morning, the Pound fell as the chart shows below. This is because the Financial Times reported in early editions that Martin Weale, a BoE rate setter, has changed his stance and indicated that the he favoured the BoE adopting immediate stimulus at their next meeting: 

Markets quiet while investors wait to see actual data 
The market has actually been relatively flat of late, and this is because recent figures such as last Friday’s PMI figures don’t really tell us that much about the actual impact of the Brexit vote. What it showed is that business sentiment is at its lowest levels since…

Pound falls as business activity slows at fastest rate in 7 years

The Pound has taken a bit of a tumble this morning, following the release of UK Manufacturing and Services PMI data. This was the first chance to see what effect Brexit would have on the real economy, as the figures were for July, after the vote.

The number was the sharpest decline in 7 years, and shows a sharp downturn in the manufacturing sector. Here is how it affected the GBP/EUR rate:

The rate had climbed up to around €1.2040, but as soon as the numbers were released, you can see that it has fallen nearly 1 cent, but in the grand scheme of things it's not really too bad; the GBP/EUR rate is simply back down to where it was yesterday lunchtime.

I think it's a bit of a knee-jerk reaction to be honest, and I think that the rate will bounce back to around the €1.20 mark if not today then early next week, but any further gains are likely to be limited by fears that further economic figures, when they come, will also show the economy is suffering.

Pound recovers to €1.20 vs Euro - what next for Sterling?

I'm back in action today after my break, and plenty has happened in the currency markets in the last few weeks. Sterling has strengthened against the Euro and other major currencies, due to Theresa May becoming our new Prime Minister, removing much of the political uncertainty that had put Sterling under pressure. The Bank of England also decided not to cut interest rates, which some had expected them to do. As the chart below shows, this caused GBP/EUR rates to rise from €1.17 to above €1.20 where it has since stabilised:

Political Stability helps the Pound
Before I jetted off to Menorca, it looked like the UK was in for a prolonged period of political uncertainty. The Conservative leadership race was underway, but when Andrea Leadsom pulled out of the race, it paved the way for Theresa May to become our Prime Minister. I think this is a good choice, and it also means we've avoided a lengthy 2 month leadership contest that would have been quite destabilising in what is a crit…

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My blog will be a little quiet for the next few weeks while I take a well-earned break, and so my usual daily market commentary will pause for a short while. I will be back in action with my regular currency updates on Friday 22nd July.

Our trading floor remains open however, and if you would like to speak to one of my colleagues to discuss your currency requirements and get a quote, follow the link below.We offer exceptional rates of exchange for anyone looking to convert £5k+ on a bank to bank transfer basis.

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....back in a couple of weeks :)

Pound makes slight recovery, but forecasts remain gloomy

Sterling has recovered slightly today, following much better than expected Manufacturing and Industrial production figures. Later this afternoon we'll have a GDP estimate for the UK, with the actual true reading coming next month.

It should be noted however that the production figures, while positive, were for the month of May. We'll have to wait a little longer until economic figures for the 'post Brexit' period, and that's what the markets will be watching for, to see what effect the referendum is starting to have on the economy.

The slight up tick in Sterling today is something that those converting the Pound may wish to take advantage of. Nearly all major forecasts are all saying the the Pound is likely to fall much further in the coming months, due to the expected negative effects on the economy due to the vote.

(Live exchange rate graphs can be found here)

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Pound drops again, and could continue to fall much further

The Pound has continued to suffer in overnight trading in the Asian markets, falling below $1.28 against the US Dollar, and hitting €1.16 vs the Euro at one point. Rates have recovered a little this morning, but the outlook for Sterling looks rather bleak.

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How far could the Pound fall against EUR & USD?
Since the referendum vote, the Pound has fallen almost 15% against the US Dollar and 11% against the Euro. The question is will it continue to fall. The reason it's dropping is worries about the financial state of the UK economy in the wake of the Brexit vote. Property funds have ceased trading, economic figures are likely to be poor, the BoE are likely to cut interest rates, and there's a real chance of the UK entering recession again. I think there is a real chance the BoE will cut interest rates to 0.25% next week, and the following month may bring them down to zero. If that happens, expect the Pound to continu…

Pound falls to new 31 year low - GBP/USD, GBP/EUR forecast

The Pound continued its downward trend today, falling sharply against both the Euro and US Dollar. GBP/USD is now at a new 31 year low, and at a level not seen since 1985. Against the Euro, GBP/EUR rates have fallen to the lowest since the end of 2013, the lowest in 2 and a half year. Here's how rates have fared over the last week for our main 2 currency pairs:

Why has the Pound continued to fall?
It's all to do with concerns about the economic impact of the Brexit vote, and investors are starting to worry about the wider implications of what it all means. Economic data has also dissappointed, with the latest construction figures and inflation numbers much lower than expected. It should also be noted that these recent figures although released now, are for the period before the referendum. Later this month economic data releases will start to filter through showing the real effect on the economy, which may mean the Pound will drop further as the month progresses.

Bank of Engl…