Showing posts from January, 2017

Pound falls on data, Euro rises and Dollar falls on risk of currency war

Sterling fell further today, briefly dipping into the €1.15's vs the Euro, after much weaker than expected consumer credit figures. The lower number suggest that the UK economy may finally be slowing a little after surprisingly robust performance over the last 6 months. The figures showed that borrowing slowed for the first time in nearly 6 months. You can see the effect on GBP/EUR rates in the graph below:

Rising inflation to cause Pound to fall further this week?
A strategist at Credit Agricole pointed out that consumer credit doesn’t usually affect GBP rates that much, but seem to have been the trigger for the fall in the Pound on this occasion. Initially the Pound didn’t react, but pretty soon as investors digested the news the sell-off began. Investors are worried about something that I mentioned in a post earlier this week; Inflation. A weak Pound causing inflation that is not matched by wage growth will eventually result in consumers tightening the purse strings, and it loo…

Sterling/Euro fails to break resistance levels

Last week was a largely positive one for Sterling/Euro rates, with the pair recovering its losses from earlier in the month. The rate climbed to around the €1.18 mark before dropping away on Friday:

The gains were due to a continuing stream of positive economic data, including 2 consecutive quarters of 0.6% growth and consumer confidence remaining high. It’s the latest in a stream of indicators showing that the vote to leave the EU has not unsettled consumers, yet.

Despite this, the rate doesn’t seem to want to break the levels it’s tested 5 or 6 times in the last 6 months. We’re seeing a trend where rises to these sort of levels, before investors book their profits, selling GBP and causing it to drop back away again, and this is exactly what we saw last week. Those that need to buy Euros should therefore consider this, and think about locking in a rate and taking advantage of the 4% over the last fortnight.

Will Pound/Euro go up or down in 2017? 
Whether you are buying or selling pro…

GBP/EUR & GBP/USD 2017 forecast - getting the best FX rates

A few moments ago we saw the latest UK GDP figures, showing the the economy grew by 0.6% in the last quarter, much better than expected again again confirming that despite the uncertainty caused by Brexit, the economy has not been affected as most of the experts had predicted. Since last week, we've seen GBP/EUR rise from €1.13 to €1.18:

UK Economy robust despite Brexit fears
Before the referendum there were many saying that a vote to leave would mean rising interest rates, negative GDP leading to a recession, that stock markets would fall and in general the economy would suffer significantly. While the Pound has fallen against the Euro and US Dollar, the other fears have failed to materialise. Indeed the UK economy continues to perform robustly, confirmed again by today's GDP figures.

There is also speculation that in this weekend's meeting between Trump and May the foundations will be set for a UK/US trade deal, that would benefit the UK significantly.

What could happen t…

Supreme court ruling and its effect on GBP/EUR

As expected the government have lost its appeal in the Supreme court against a ruling that will make it necessary to consult parliament before formally triggering Article 50, and starting the process of talks with the EU. The court ruled by a majority of 8-3, and the Pound had rallied slightly against the US Dollar and Euro as a result.

Any gains are likely to be limited however, as the decision was widely expected and the currency markets had already priced in a defeat for the government. The fact that the government had already conceded that Parliament should be consulted makes the decision a bit of a non-event. Clients looking to convert Sterling to other currencies should consider taking advantage of the gains, as we are likely to be entering a period of significant volatility for the Pound once negotiations begin.

Within a few minutes of the announcement, gains are already gone and the rate has dropped back to where we started the day at around €1.16 vs the Euro

If you nee…

This weeks data releases and events that could affect Sterling exchange rates

Good morning. It's been an interesting start to the year for Pound/Euro exchange rates. As you can see from the chart below as the year got underway, the Pound came under pressure due to ongoing 'Brexit' uncertainty. However, once Theresa May outlined her 12 point plan, it removed much of this uncertainty and Sterling recovered some of its losses. It's also worth nothing that economic data continues to impress and if were not for the uncertainty created due to the UK's decision to leave the EU, the Pound would be soaring much higher than it is.

What could move exchange rates this week?
Usually it's economic data that drives exchange rates, however in recent months, this has been brushed aside as politics takes centre stage and drives the value of Sterling. As I touched on above, the UK economy is performing very well indeed. Below I've listed this weeks events that I think will move the currency markets.

If you need to convert one currency to another, then …

The pound holds its ground after Theresa May's speech

Good afternoon,

After the volatility we witnessed yesterday, today has been much more subdued for the GBP/EUR cross, with the currency pair spending the majority of the day bouncing between €1.15 and €1.1550.

GBP/EUR graph

The pound seems to have stabilised following Prime Minister Theresa Mays speech yesterday afternoon, as her comments have provided some much need clarity over how the government plan to tackle the UK's exit from the European Union.

Despite stating in her speech on Tuesday that Britain will give up access to the single market, May's twelve point plan seems to have gone down well with investors, and for the time being at least, has removed some of the uncertainty from within the FX markets.

Does this mean the pound will continue to rise?

Although the move we witnessed yesterday has given the pound some much needed breathing space, I still think it is too early to say that this is the start of a full blown recovery. We are still waiting to hear the Supreme Cour…

Pound/Euro exchange rate falls again

Good afternoon,

Since my last post the pound has been losing ground against the euro, with the GBP/EUR cross currently sitting at its lowest level since the start of November.

This morning saw the currency pair fall to a low of €1.1298, meaning the pound has fallen over three per cent since this time last week and almost six per cent since the beginning of December.

GBP/EUR graph

Why has the pound been falling?
Over the past few weeks talk of Brexit has been dominating the headlines and concerns are mounting over the short-term future of the UK economy.

In an interview with Sky News last week, UK Prime Minister Theresa May hinted that she will look to cut all ties with the European Union and that we could not keep "bits of membership".

Those comments have continued to weigh on the value of the pound into this week, and with May set to deliver a speech tomorrow, investors are preparing themselves for the PM to announce that she will be pushing ahead with a "hard Brexit&…

Pound Euro Still Affected by Brexit Uncertainty

Good Afternoon,
The pound has been having a turbulent time of it over the last couple of trading sessions, as the uncertainty surrounding the current political climate continues to dominate the news, and markets accordingly.
GBP/EUR is currently trading at 1.1520 (mid-market), and todays rollercoaster movement is a reflection of the fragility of the pound.
Why have rates moved so suddenly?
As has been the trend recently, it is not numerical economic data that has been the driving force, but rather news surrounding our relationship with Europe, and rhetoric from governor of the Bank of England Mark Carneys’ views on how that relationship will affect the UK economy. Because this is the case, the market is moving off subjective data, and therefore sentiment can change quickly, as can rates.
How does this affect you?
Just the first half of this week we have seen rates move from a high of 1.1660, to a low of 1.1433, and a lot of movement in between. This movement would have resulted in a co…

GBP/EUR exchange rate falling after latest Brexit comments

Good afternoon,

Today has seen the pound fall across the board, with the pound/euro exchange rate sitting at its lowest level since 15th November.

For the best GBP/EUR rate click here. 
The GBP/EUR cross is currently trading at 1.1534 (mid-market), and today's move means the currency pair has fallen 2.5 per cent since last Tuesday (3rd Jan) and nearly 4 per cent since the middle of December.

GBP/EUR graph. 
Why has the pound/euro rate fallen? 
The pounds value has dropped following comments made by UK Prime Minister Theresa May yesterday. Speaking to Sky News, May hinted she will push ahead with a "hard Brexit" by giving up Britain's access to the single market in order to focus on the country's immigration controls.

During her first interview of 2017, Theresa May said the UK could not hold on to "bits of EU membership", and added that the UK will not be a member of the EU any longer.

Her comments have left investors worrying about the future of the UK…

Pound/Euro exchange rate update

Good afternoon,

It has been a fairly choppy day for the GBP/EUR cross with the currency pair bouncing between €1.1650 and €1.1750 as you can see from the graph below.

GBP/EUR graph

For the third consecutive day the UK economy published a stronger than predicted PMI reading, with this morning's Services PMI survey adding to the positive Construction and Manufacturing readings we saw earlier in the week.

Today's data is yet another example of how the UK economy is still growing and performing above expectations following Britain's decision to leave the European Union in June.

However, the positive economic numbers are having very little impact on the value of sterling, as concerns over Brexit continue to weigh heavily on the pound.

Under normal conditions three consecutive days of strong data would usually strengthen a currency, but with political events still driving the currency markets and talk of Brexit set to dominate the headlines for the next couple of years, it could…

Pound/Euro rising

Good afternoon and Happy New Year.

Today has seen the pound rise to a two week high against the euro after the UK published better than expected Manufacturing figures.

Want the best GBP/EUR exchange rate? Click here
The Manufacturing PMI survey which is published by Markit confirmed the manufacturing sector climbed to 56.1 in December, beating forecasts of 53.3, and means growth in the sector rose to a fresh two and a half year high last month.

The positive reading helped the pound rise across the board and pushed the GBP/EUR cross from €1.1725 to an intraday high of €1.1832, as you can see from the graph below.

GBP/EUR graph
What next for the pound? 
Although the pound has started 2017 on the front foot, any additional gains in the coming months could well be limited.

There are still concerns over how Brexit will impact the UK economy and with the government set to trigger Article 50 by the end of March we could easily see the pound come under pressure before the end of the first qu…