Showing posts from October, 2016

BoE 'Super Thursday' could affect Sterling this week

Sterling/Euro rates remain flat at around the €1.11 mark as we start a new week. This morning we had inflation and growth data from the Eurozone, however these were exactly as forecast so didn't have any effect on GBP/EUR rates. This week is an important one for Sterling, as we have 'Super Thursday' that could provide new direction for the Pound.

Bank of England 'Super Thursday' could affect GBP/EUR
It's 'Super Thursday' this week, which is when the Bank of England (BoE) releases a large amount of information that can affect the value of the Pound. We have an interest rate decision, although I think they will leave rates on hold at 0.25%. There's an outside chance of a rate cut that could weaken the Pound, but given the decent GDP and inflation numbers, I think there is no case for rates to drop further.

The BoE will also decide whether to increase their QE asset purchase programme. Also released are the minutes to the BoE decision on interest rates…

Positive Economic News for Britain, but Sterling moves lower

Yesterday saw some good news stories for UK Plc. Firstly growth for the last quarter beat forecasts, coming in at 0.5%. Before the referendum, the OBR predicted a 'Leave' vote would see Q3 growth at -0.1% and a 'Remain' vote would show growth of 0.5%. The actual numbers therefore show that the UK economy is performing well despite 'Brexit'.

In fact, actual growth figures have surpassed how the experts thought the economy would fare if we had voted to remain within the EU.

In other good news, Nissan announced that it would build 2 new cars at its Sunderland plant, showing that multinational companies have faith in Great Britain. There had previously been fears they would move production overseas due to concerns over the UK exiting the European Union. This follows news earlier this week that Heathrow expansion would go ahead, showing that the UK is looking forwards.

Pound falls despite the positive news
Usually good news like this would strengthen the Pound and…

UK GDP beats forecasts to show 0.5% growth

UK GPD figures have just been released, showing the economy grew by 0.5% in the last quarter. This is well above the expected 0.3% and Sterling has strengthened as a result. However the gains are already looking short-lived, with GBP/EUR settling back down at it's level of €1.12. Yet again it's looking like the economy is proving resilient in the wake of the Brexit vote, and the predicted recession is now looking very unlikely. It also looks like the BoE acted prematurely in cutting interest rates earlier this year.

Those that need to convert Sterling to a foreign currency may wish to consider taking advantage of the spike in rates, as it's likely any gains will be short lived. A quote I heard this morning was that 'Brexit' is a 2 hour movies and we're only about 10 minutes into it at the moment. There is still so much the market doesn't know about what negotiations will look like next year, and the markets hate uncertainty. This is likely to keep the Pound…

Currency matters when buying or selling property overseas

Many of our clients need to convert Sterling to Euros in order to purchase a property overseas, with France and Spain remaining the most popular destinations for a holiday home, or permanent move abroad. When looking to purchase overseas the timing of your currency purchase is crucial; it's as important as negotiating the price.

With recent events weakening the Pound significantly, many are worried about what effect a weakening Pound may have on their plans to purchase abroad. In today's post we'll cover some examples of the ways in which we can protect you against the exchange rate dropping.

Buying property overseas - will the Pound drop further?
It's a huge concern for those buying a holiday home overseas. Many people go on viewing trips budgeting on what the exchange rate happens to be at that particular moment. This is a common error. For example, if you were looking at a €200,000.00 property in the middle of last month it would have cost you around £168,000.00. To…

Sterling falls as BoE governor grilled

The Pound had been quite stable at around €1.12 vs the Euro, but today dropped a cent into the mid €1.11's. It's due to the BoE Governor Mark Carney being grilled by the House of Lords today, and speculation that he would be hinting at further monetary stimulus.

Mark Carney; impartial?
He is still speaking as I write this post, but so far he's been more dovish than many had expected, helping the Pound recover some of it's losses. Instead he's been defending the impartiality of the BoE in the face of criticism from government over their QE programme and interest rate cuts. Some would argue they acted too early in cutting interest rates earlier this year, and have not done enough to support the Pound. Some have said that he stepped outside of his remit in making dire economic warnings before the referendum that have not, as yet, materialised.

Indeed his predecessor Mervyn King seems to have a different view, saying recently that Britain can be more successful outsid…

Contrasting UK and EU economies

Super Mario causes brief dip in GBP/EUR rates 
Yesterday the European Central Bank (ECB) kept their interest rates on hold and their stimulus programme unchanged, but comments in the press conference afterwards caused a brief strengthening of the single currency. There had been rumours that the ECB would start to taper their Quantitative Easing (QE) programme from March, however ECB President Mario Draghi said policymakers had neither discussed extending the ECB's extensive bond-buying programme, nor ending it.

This sent the Euro higher, and briefly caused GBP/EUR to dip by 1%. He then added however that there would not be an abrupt end to the stimulus, hinting that they could extend the programme beyond the March 2017 deadline. This weakened the Euro again putting the GBP/EUR pair back to where it started, just above €1.12 level. In December, the ECB will discuss when and how to end the stimulus programme, so watch this space.

Contrasting economies 
There’s a good chance they wil…

Pound rises to €1.12 vs Euro

The Pound has risen today. This is not a mis-print. Sterling has actually managed to make some gains against other currencies. GBP/EUR has risen by a cent to around €1.12, the highest it's been since the flash crash.

Why has the Pound gone up against the Euro?
There are 2 reasons that Sterling has risen today. Firstly, it seems that the high court challenge regarding invoking article 50 was, as I expected, a waste of time. The Lawyer for the government said today that it's highly likely parliament would have to ratify any Brexit deal with the UK. If the challenge had been successful it could have created even more uncertainty surrounding Brexit, so it has brought some clarification to the process, and given the Pound some support.

The second reason for the rise is the fact figures today have shown that inflation is up to 1%, the highest it's been in 2 years. This is a result of the weak pound pushing up import prices, that are now starting to feed through to goods. The rea…

When will the Pound go back up against the Euro?

Pound/Euro rates have stabilised a little, after a dire start to October. At the time of writing GBP/EUR is just below €1.11. The Pound has been falling due to concerns about the UK giving up access to the single market, despite the fact the economic figures show that the UK economy remains resilient.

In the mainstream media, the falling Pound and a potential 'Hard Brexit' that would mean giving up free access to the single market have been dominating the headlines. But if you look past the negative reporting in the mainly left wing outlets such as the BBC, Guardian et al, maybe it won't be the Armageddon that's being predicted. The US, China Japan and Australia all have access to the single market without being in it. All they need to do is meet the EU's regulatory standards. There is no reason the UK cannot do the same. Then, when you look at how much of our trade is within the EU, you start to realise there is a world outside of the EU's borders.

For exa…

Brexit uncertainty keep Pound at record lows

Earlier this week we saw the Pound fall to record low levels against the Euro and the US Dollar, however yesterday saw some respite for Sterling. Theresa May had said that the government would allow closer scrutiny of their negotiation plans, which gave Sterling a little lift. The rally didn't last long however, and the Pound is on the back foot again, after a change of tone and insistence that parliament would not be given a vote, and that the government alone would invoke article 50.

It's starting to get a little messy, with a legal challenge in the high court on Monday, raised by pro-Remain campaigners, aiming to give parliament a vote on whether to invoke Article 50. This in my view is a complete waste of time as the referendum was ratified by parliament and all this is going to do, whether successful or not, is increase the uncertainty that is putting pressure on the Pound. Nicola Sturgeon has also started making noises about another independence referendum.

This is all …

Sterling falls into the €1.09's against the Euro.

The Pound seems to be in free fall at the moment. Today has been another terrible one for Sterling. At the time of writing GBP/EUR is now down to €1.0970 and GBP/USD is down to $1.2137.  The fall could be due to rumours a major Russian bank are going to remove their European Hub from London, raising concerns over the future of the UK financial centres in London.

I'll post a more detailed update tomorrow morning, and in the meantime you can follow live graphs that run 24/7 here.

If you have a currency transfer to make and are worried about the falling exchange rate, click here or complete the form below to find out about how we can help protect you against adverse rate movements and get you the best exchange rates.

Pound unable to recover losses after Friday's 'Flash Crash'

Good morning. As I'm sure most of my readers have noticed by now, Sterling took a hammering at the end of last week and on a trade weighted basis is now the lowest it's been since 2009. A 'Flash Crash' wiped about 10% off the value of the Pound in a few minutes, the biggest fall since the EU referendum, and has been put down to an error in a trading algorithm. I'm not sure about that, as if that were the case you would have expected the Pound to recover those losses during Friday as investors realised it was a trading error. My view is that someone somewhere made a huge amount of money on Friday.

Initially it looked like a recovery was on the cards, but the Sterling sell off continued, and at the time of writing GBP/EUR is now at €1.11, and GBP/USD at $1.24. Wow. Below shows the sharp fall in GBP/EUR rates over the last month (click here for live charts):

The reason Sterling has been unable to recover it's losses is the fact that the markets have now realised t…

As GBP/EUR nears €1.12's, how can you protect against adverse exchange rates?

The Pound has continued to fall during trading today, and touched into the €1.12's briefly, and currently sits supported at €1.13 at the time of writing. The reason is continued concerns the UK will push for a 'Hard Brexit' when it begins it's negotiations for leaving the EU. The Pound was also pushed lower by comments from PM May, who last night spoke about the impact of loose monetary policy, low interest rates and monetary policy.

This led to speculation that the government is against a further interest rate cut by the Bank of England, who are of course supposed to be independent. While normally this should have bolstered the Pound, in the current climate it just raises more uncertainty which in turn has weakened the Pound further. You can read more about this here on Reuters. 

As you can see from the chart above, in less than a month the Pound/Euro rate has dropped by 7 cents, illustrating how quickly things can change. Anyone that needs to convert currency shouldn&…

GBP/EUR rates recover slightly, but will it last?

The Pound has recovered a little today. After starting the London session at around €1.13 vs the Euro, we have seen Sterling steadily rise throughout the afternoon, and we're now just below €1.14. While this is good, it's still significantly lower than it has been, and still not far from a 5 year low.

Tomorrow will be key for the Euro as the European Central Bank give an overview of the financial market, economic and monetary developments. It's followed by a summary of the discussion on the economic and monetary analyses and on the monetary policy stance.

This could affect GBP/EUR rates as the markets will be looking for clues as to whether they will start to wind up their stimulus measures in the coming months. If they do hint at this, then the Euro could strengthen and start sending Pound/Euro rates lower again. If they don't and their comments hint that they may just continue treading water, then the Euro may weaken pushing rates higher.

The general feeling however…

GBP/EUR hits 5 year low as Euro gains strength

GBP/EUR rates have now dropped to the mid €1.13's this afternoon which is the lowest we've seen the pair in over 5 years. This time it isn't due to the Pound or Brexit, but rather a strengthening of the Euro. A short while there was a rumour from Bloomberg that the ECB may be tapering their QE stimulus programme by around €10bn per month. This is probably the case that they feel adding to an already large money supply won't be effective.

You can see the sharp drop in GBP/EUR rates when they made the announcement just after 4.30pm today:

This will be a serious concern for Euro buyers. If you need to make a large GBP/EUR transfer, then speak to us today about how you can protect yourself against the rate continuing to drop further.

Pound remains low despite good economic data

Sterling has fallen further this morning, due to continued concerns over, you've guessed it, the EU referendum. At the conservative conference PM May has said that controlling immigration will be the key point in negotiations, meaning that remaining a member of the single market will be secondary to this. The Chancellor Philip Hammond has also stated that they will no longer aim to reduce the deficit to zero by 2020, instead stating that if necessary they will reduce austerity and borrow if needed, in order to stimulate the economy.

It's not all bad news..
Despite the fears and uncertainty surrounding 'Brexit' that has caused the Pound to weaken so much, the fact is that the underlying fundamental data coming from the UK shows that the economy is proving resilient. Yesterday Manufacturing data showed that activity grew at it's fastest pace in more than 2 years, and that growth in the 3rd quarter will be the strongest so far this year. This morning we saw Constructi…

Pound falls sharply after 'Brexit' news from PM May

Good morning. After a relatively flat week for Sterling last week, we open this morning with the Pound having plunged against other currencies. Against the Euro,  rates have dipped into the low €1.14's, and against the US Dollar, the rate is now in the mid $1.28's, a fresh 31 year low.


Why has the Pound fallen against the Euro?
The fall in the value of the Pound is due to the Prime Minister Theresa May stating over the weekend that the UK will invoke Article 50 by the end of March next year, and start formal negotiations to leave the EU. This means we'll have left Europe by the middle of 2019 at the latest. She states that the UK would make a good deal with the EU as an independent sovereign United Kingdom.

We knew this was going to happen at some point, so why has the Pound fallen so much today on the back of the news? It's due to the fact that it's now looking very likely that we will see a 'Hard Brexit', something that had been rumoured in recent …