Showing posts from November, 2016

Italian referendum effect Pound/Euro exchange rates

Sterling/Euro rates seem to have been range-bound between around €1.17 and €1.18 over the last week as the chart below shows.  After rising by 5% earlier in the month, the pair now seems to have found a comfortable level around the best it's been in nearly 3 months.

Part of the reason the rate has recovered is the fact that the UK economy, for now, does not seem to have been negatively affected by the vote to leave the EU and continues to show resilience. The other reason rates have risen is due to the single currency becoming weaker and cheaper to buy.

Euro weakens on EU political concerns
Next week there is an Italian constitutional referendum, and next year, French and German elections. In the wake of Brexit and the surprise Trump victory, there are concerns that there may be populist voting in Europe, and this uncertainty has started to weaken the Euro which is one of the reasons rates have recovered by 5% this month.

Italian referendum and effect on GBP/EUR exchange rates

Pound/Euro rises above €1.18

Investors have continued to take the Pound higher today, with the Pound/Euro level now above €1.18. That's nearly 8 cents higher from the lows of €1.1050 earlier this month. The markets have taken the autumn statement positively for the UK, and Sterling is higher as a result.

It's not just strength in the Pound however; the Euro is also weaker due to political concerns in Europe, making the Euro cheaper to buy. It's a good time to remind our regular readers of the contract types that we offer, which are outlined below. The rates of exchange we offer are very close to the published interbank level, and significantly better than you would get simply using your bank or even another currency broker. Click here to get a free quote and find out more about the foreign exchange services we offer.

Contract Types that we offer for Foreign Exchange 
Spot Contract(Buy your currency today) – This is the most popular way to buy currency. You fix a rate over the telephone, settle within 2…

GBP/EUR rises to €1.1750 after Autumn Statement

The Pound has reacted positively after the Chancellor Philip Hammond's first autumn statement. GBP/EUR rates have risen by around half a cent to €1.1750 which is around the best it's been in 2 months. GBP/USD rates had also initially risen, however much better expected durable goods orders from the USA that were released during the statement. This strengthened the USD and pulled GBP/USD down to an intra-day low of $1.2365. The below charts show how Pound/Euro and Pound/Dollar have moved today during the statement:



Despite growth forecasts being lowered and the deficit set to remain for years to come, the Chancellors comments seem to have calmed the markets somewhat and given investors a little more confidence that the economy is in decent shape and able to handle the transition in leaving the EU. So all in all the reaction on the currency markets have been fairly muted, but we've seen a bigger move in the value of the Pound that we usually do with th…

How could Autumn statement affect exchange rates?

Sterling remains relatively stable at around the €1.16 mark vs the Euro, having strengthened by around 5% in the last fortnight. The most important event for the Pound in the coming week is the Autumn statement from new chancellor Philip Hammond. In today's post we'll have a look at how this may affect exchange rates.

What is the autumn statement?
First things first, what is it? The government make 2 economic statements each year, the budget in Spring, and the autumn statement which is this Wednesday at 12.30pm.  It outlines things like economic projections and spending. This one is very important because it will outline how they plan to steer the economy in the run up to trigger article 50 and begin negotiations to leave the EU.

How could it affect the Pound?
Previous statements have usually tended to be a bit of a damp squib, with most information already leaked to the papers well in advance, and in previous years it hasn't had  much of an impact on exchange rates. This o…

Pound/Euro rises to 2 month high of €1.1725

Pound/Euro rates have risen higher, hitting €1.1725 this morning. Just last week it was down in the €1.10's. The currency pair has risen more than 5% and is now sitting at it's best levels in 2 months.

(Click here to view live interactive currency graphs)

Why has the Pound/Euro rate gone up?
There are 2 reasons for the gain. Firstly, UK economic data continues to impress. Unemployment has fallen to an 11 year low, and Retail sales growth is at its highest in 14 years. The UK economy continue to prove resilient and if it were not for the uncertainty surrounding Brexit, the Pound would be much higher.

The second reason for the rise is a weakening of the Euro. The single currency is under pressure due to the political risks facing Europe, and the ECB indicated this morning that the EU economy is reliant on stimulus. This is keeping the Euro weak and making it cheaper to buy.

Will the Pound keep rising?
There is no way to know if Sterling will continue to gain, but it's worth …

Stering recovers back to €1.1650

The Pound has recovered this morning after yesterdays fall. It turns out the 'leaked government memo' was actually from consultancy firm Deloitte and had no input from number 10 or indeed any government department. The Pound has also received a boost on the news that Google will make a major £1bn UK investment and expand its London base. This shows that major international companies are still happy to invest in the UK despite concerns over 'Brexit' uncertainty. The 24 hour chart below shows the recovery in GBP/EUR rates.

So for now it seems the Pound is holding on to its recent gains, and buying levels for the Euro are at much better levels tan they have been.

What could affect exchange rates today?
At 09:30am this morning we have UK employment data which could affect Sterling. Later this afternoon we have a speech by a Bank of England member.

Do you need make a currency transfer?
If you are buying or selling property abroad, or a business that makes international paym…

Why has Pound/Euro rate fallen?

Sterling had held on to last weeks gains yesterday, however this morning we've seen the rate drop from 1.1650 to just below 1.15. The reason for the fall is a leaked memo reported by the BBC and the Times, that warns there is no proper Brexit strategy, and divisions in the cabinet with regards to how to proceed. It also said that 30,000 more staff may be needed.

The government have said they don't recognise the claims and don't know where the report came from. The markets have reacted however and sold the Pound, weakening it in the process and pulling exchange rates lower. If the memo turns out to be a fake, we may see rates recover, but regardless of its authenticity, it does demonstrate how complex the process of leaving the EU is going to be.

In regards to the Pound/Euro rate, it's not that much of a drop though, and considering a week ago GBP/EUR rates were in the €1.10's, the current levels are still much better than they have been.

Also this morning we have j…

Why is the Pound rising so much?

What a week for Sterling! Just a few days ago on Wednesday morning, GBP/EUR rates were in the €1.10's. A little more than 48 hours later, and GBP/EUR is at 1.1660. That's a rise of 5%, and an encouraging and welcome rally for Sterling. The chart below shows the remarkable rise of Pound/Euro rates over the last 48 hours:

 Why has the Pound gone up so much in such a short period of time?
The catalyst for Sterling's rise was the US election result on Wednesday. Markets expected the Dollar to weaken and the Euro to strengthen which should have caused GBP/EUR to drop, but that's not what we've seen. Investors have been reversing short positions against the Pound, on the view that in light of Trump winning the election and the UK voting to leave the EU, there are fears that there could also be populist votes in the EU in their upcoming elections & referendums. Perhaps then the UK currency has been unfairly punished in recent months.

With Germany and France holding el…

Sterling nears €1.15 vs Euro

Sterling has continued to perform well and today has risen further, hitting €1.1470 vs the Euro, and $1.2470 vs the US Dollar. Yesterday morning GBP/EUR was at €1.11 so this pair has recent by 3% since yesterday, and the Pound is now the best performing major currency over the last 7 days

Why is the Pound rising?
Pick up a copy of the Guardian or read the BBC website, and you would be forgiven for thinking that the UK has almost no economic future outside of the EU, and in voting to leave has relegated itself to a minor economy, no longer a major economy with clout on the world stage. However when you step away from the left wing press, you see a different story. The UK economy is proving resilient and performing very well in the wake of the vote to leave the EU. The UK economy is the 5th largest in the world, and there is no reason that the Pound was weak other than uncertainty in the financial markets causing investors to sell of the Pound. Now however, the Pound is bouncing back, a…

Sterling/Euro rises to €1.14

Pound/Euro rates have soared today as a result of the US election result. This morning the rate was down at €1.11, and at the time of writing it's up to €1.14 which is back to where it was before the flash crash.

It's partly due to Euro weakness, but actually what's happened is the opposite of what the market had expected. Logic held that if Trump won, the Dollar would weaken and the Euro would strengthen, pulling GBP/EUR lower. This is what we initially saw overnight, but that trend has been reversed, and the Pound has risen by 3 cents against the Euro. My view is that the markets are starting to realise the Pound has been kept unfairly subdued, and perhaps coming to the realisation that the EU economy is in a dire state.

Why have GBP/EUR rates gone up?
It's a combination of the Pound getting stronger, and the Euro getting weaker. For some time, it's been politics driving exchange rates with markets pretty much ignoring the economic fundamentals. When you actuall…

President Trump, and the effect on exchange rates

Well, the polls got it wrong again. Amazingly as I woke up this morning and turned on BBC news, I was greeted with the Republican Candidate Donald Trump in the lead, and it's now been confirmed that he will be the next president of the United States. Strange times! The effect on the currency markets have been mixed this morning. Here's how GBP/EUR and GBP/USD moved overnight:

You can see the inverse correlation between the Euro and the Dollar. As the result became more clear, investors dumped the US Dollar in favour of safe haven currencies like the Euro. This caused GBP/USD to rise as the Dollar weakened and became cheaper to buy. The Euro gained strength and pulled GBP/EUR down by around 2 cents, however has since recovered.

Logic would dictate the uncertainty means the Dollar will weaken and that's what we saw initially. Now however the USD is regaining some strength as investors are unsure where to place funds. The USD is a safe haven currency so despite logic dictati…

How could the US election affect exchange rates?

Next week, the most important thing for the currency markets will be the US election. Americans go to the polls on Tuesday, with a result expected early on Wednesday morning UK time (5am or so) unless it’s very close, in which case we may not know until Thursday or beyond.

It’s a very important event for exchange rates, as the result could affect not just GBP/USD rates, but also GBP/EUR rates and other currency pairs.

When will we know the result?
Voting will happen on Tuesday, but due to the time zones in the USA, little by way exit polling information will be released while the final outcome is still in the balance, to avoid influencing how people vote in the West. The result will depend on key swing states such as Florida, and if we see a decisive victory for Clinton there it could all be over very quickly.

However if the results are very close, or Trump loses by a very small margin and mounts some kind of challenge, then things could drag on for a few days. (In the 2000 elections…

Pound nears €1.13 as BoE raises UK growth forecasts

In an update to my earlier post, Sterling has gained further and for the time being seems to have held on to those gains. Following this morning's ruling that parliament will have a vote on triggering Article 50, the BoE have raised their growth forecasts for the next 2 years. They also voted unanimously to keep interest rates on hold at 0.5%.

As you can see from the chart above, this has helped push the Pound higher, to around €1.1273 vs the Euro at the time of writing. This is 2 cents higher that where the rate was at the open of the London trading session, and presents good buying opportunities for those that need to convert Sterling to Euros. In Mark Carney's statement after the announcements, he said that the weak Pound and market volatility isn't based on actual facts, but rather the judgements the financial markets have made with regards to the uncertainty leaving the EU means for the UK economy. The inflation report and Carney's comments were more hawkish than …

Sterling surges on High Court 'Brexit' ruling

The Pound has risen to €1.12 against the Euro, and above $1.24 vs the US Dollar this morning, after a high court ruling that Parliament must vote on whether the UK can trigger article 50. It's expected that the government will appeal the decision to the Supreme Court. Here's how GBP/EUR has moved this morning.

I'm surprised the Pound has reacted in this way to be honest. It's likely that even if the government lose their appeal, most MPs will vote to trigger article 50, so it doesn't really change much. However, what it might do is delay when article 50 is triggered, due to parliamentary hurdles and red tape. In my view therefore, all this will do is create even more uncertainty rather than just getting on with it. I think that this spike will be short lived when investors realise this doesn't mean that 'Brexit' isn't going to happen, and all it really means is there may be further delays and uncertainty, which of course isn't likely to help the…

Will the Pound keep dropping against the Euro?

The Pound is continuing to fall today against the Euro today, despite a brief spike last night on the news that Mark Carney would slightly extend his term and step down after the 2 year Brexit negotiation period has ended. This gave the Pound a little spike and first thing this morning, mid-market levels were at the dizzying heights of €1.1175. However the spike was short lived, as seems to be the case these days, and at the time of writing we've seen the rate drop over a cent into the €1.10's. it's been quite steady against the US Dollar however, which means the Euro is gaining strength. This is because with the US election coming up, investors are moving funds into the safe haven Euro due to the uncertianty, making it more expensive to purchase.

Pound may fall another 5% when article 50 triggered
Despite decent economic data, nothing seems to be able to halt the Pound's slide at the moment. Analysts polled by Reuters said that they expect Sterling to fall by another…