Showing posts from December, 2016

Getting the best Pound/Euro exchange rates

December is often unkind to the Pound and this year is no different. We've seen GBP/EUR rates slip away gradually this week, today dropping to €1.18.  Over the Christmas period, trade is often much thinner and as global investors move funds around to safe havens ahead of the holiday period, the Pound is being sold off and exchange rates have fallen.

It's also the case that as we enter 2017, focus is going to shift back towards what is going to happen when article 50 is triggered. There are likely to be many rumours about what deals may or may not happen, and speculation about what the future relationship with the EU will look like. This is likely to drag on for many months, and will only increase the uncertainty surrounding the Pound.

Over the course of the last few months, GBP/EUR rose 10 cents hitting highs of €1.20, but it now looks like this pair has peaked and rates are dropping back away. In the face of continued Brexit uncertainty, it would be a brave person that gambles…

Sterling losing it's gains and starting to drop

The Pound has been slipping away throughout trading today, and Brexit continues to be the main driver for Sterling. At the moment it's all to do with talk of a transitional deal to ensure that if it takes more than 2 years to come to a deal with the EU, UK businesses won't be adversely affected. Theresa May is due to make a statement to parliament at 3.30pm today about last week's EU summit, which may or may not provide further details about this.  Here's how GBP/EUR has moved so far today:

Will Pound go up or down before the end of the year?
Things are starting to quieten down a little in the currency markets in the run up to Christmas. Trade will be much thinner, and this also means we may see larger moves in exchange rates than normal. It's very important to remember that the Pound is very susceptible to political events, and I think that as we enter the new year, Sterling will start to fall back away again as uncertainty returns to investors minds.

We still hav…

FED raise rates, BoE could weaken Pound today

Last night the US Federal Reserve raised interest rates by 0.25%, pushing them up to 0.75%. This was widely expected so isn't much of a surprise. What did surprise the  markets was the fact they also indicated that they would continue to raise rates next year possibly 3 times. This caused the USD to strengthen, pushing GBP/USD rates lower:

As the Dollar gained strength, the Euro weakened, briefly pushing GBP/EUR rates to nearly €1.20, however the gains were short lived as Brexit came back in to focus amid reports it may take 10 years to agree a trade deal with the EU. This weakened the Pound bring rates back to the €1.19 level where they have sat for some time.

Bank of England announcement today
Today at 12pm the BoE will announce their decision on interest rates. They will be left on hold at 0.25%, but at 12:45pm the governor Mark Carney will give a press conference. Usually when he speaks he's rather negative about the UK economy and the effects of 'Brexit' so there …

Central Banks could move exhcange rates this week

Pound/Euro rates remain supported around the €1.19 mark, but what could affect exchange rates this week? Below I've listed the main economic data releases this week that could affect exchange rates, and there are various central bank announcements that could move exchange rates. Other things can also affect rates that are impossible to foresee, such as political events, Brexit news, natural disasters etc. If you would like a detailed outlook on which currency pair you are looking at, send us a free enquiry today by clicking here.

This week's economic data releases
Monday 12th December 2016 - Today has been quiet on the data front with nothing much of note other than UK House prices. Later today we have a US Budget statement that could move GBP/USD rates.

Tuesday 13th December 2016 - Today we see a raft of inflationary measures from the UK. These are important as they can influence interest rate movements. High numbers increase the chance of a rate hike, and would usually stren…

Euro weakens pushing GBP/EUR to €1.1870

As I mentioned in yesterday's post, there was a chance that the ECB would increase their QE stimulus programme, and this is exactly what they decided to do. They were supposed to have finished the stimulus by March next year, but they've extended this to December.

This means that every month, the ECB will buy €80bn of corporate bonds with newly created money. From March, they will buy €60bn every month. The fact that new money is created to do this weakens the Euro due to the fact it is diluted, and when the Euro weakens, it becomes cheaper to purchase, pushing up the Pound/Euro exchange rate. ECB president Mario Draghi also said that uncertainty persists, and they would increase the scope and amounts next year if necessary, further hampering the single currency.

If you look at the chart below, you can easily see the moment the Euro weakened, pushing GBP/EUR rates up to around the €1.1850 mark:

The current GBP/EUR levels are pretty good considering last month they were down a…

GBP/EUR drops to €1.1750 ahead of ECB meeting today

Pound/Euro rates have slipped back away this week, and currently sits between €1.17 and €1.18, the range within which it was stuck for the latter part of November:

Sterling has weakened after Parliament voted last night to stick to the governments timetable of triggering Article 50 my March 2017. There had been hope in the financial markets that 'Brexit' would be delayed. Personally I think that this news is welcome and removes much uncertainty about when negotiations would start.

Another reason for the fall in rates is renewed Euro strength, making the single currency more expensive to buy. The Italian and Austrian political events are now out of the way, and the next political events in Europe aren't until March next year.

All in all the current levels aren't too bad considering GBP/EUR was at €1.10 last month. The Pound has seen a huge rally in the last 4 weeks but that rally now seems to be running out of steam.

European Central Bank could move GBP/EUR rates today

Pound/Euro hits €1.2050 before dropping back to €1.19

Pound/Euro rates hit €1.2050 overnight after Italy lost the referendum and their Prime Minister Matteo Renzi resigned. It didn't last long however and rates have since come back down to below where they were last week, just below €1.19:

What has caused the volatility in GBP/EUR rates?
The result wasn't much of a surprise, but the fact nearly 60% of people voted 'No' was a surprise. The Euro weakened on the back of the news and became cheaper to buy, pushing the GBP/EUR rates above €1.20.

The move was largely priced in to the market already and that's why after a brief spike, investors decided that they weren't going to sell the Euro in droves and the market has settled down at around the  €1.19 mark. The fact that the Austrian election at the weekend saw a defeat for the far right has also calmed the markets and given the Euro a little more support.

All in all the current levels are still very attractive for those that need to buy Euros, having risen from lows o…

GBP/EUR rises to €1.1940 on softer Brexit hint

Today we have seen the Pound surge higher against the Euro and other currencies, after the Brexit Secretary David Davis hinted that they may consider paying in to the EU budget in order to secure access to the single market. He made the comment in an answer to a question in the house of commons (see below). Despite some poor economic data this morning, Sterling has risen significantly, demonstrating that it's politics rather than fundamentals that is currently driving the Pound. Here's how GBP/EUR has moved over the course of the last month:

What caused the Pound to rise?
This morning the Labour MP Wayne David asked in the commons "Will the government consider making any contribution in any shape or form for access to the single market?"

David Davis replied: "The major criterion here is that we get the best possible access for goods and services to the European market - and if that is included in what you are talking about, then of course we will consider it.&qu…