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Showing posts from October, 2017

Pound/Euro spikes on Barnier comments

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The Pound has strengthened today on comments from the EU chief negotiator Michel Barnier. He said that he was ready to speed up talks with the UK, and that in the next few days the dates for the next round of talks would be held. This hint of progress has helped Sterling gain against the Euro and other major currencies today.

The comments sent the Pound higher, nudging up to around €1.14 vs the Euro and $1.3250 vs the US Dollar. The chart below shows how GBP/EUR has moved today. (For live graphs on all Sterling pairs click here.)


This shows how unexpected events and even small comments can affect the currency markets. The current Pound/Euro rate is now very close to the best it has been in 5 months.

If you need to buy Euros and would like to get a quote and take advantage of the current levels, then get in touch today. We can help any business or individual that needs to move £5k+ on a bank to bank transfer basis. Even if you don't need your currency now, you can freeze the curre…

Sterling pushes to a 14 month high against the New Zealand Dollar

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Sterling has posted some strong gains against the New Zealand Dollar in recent weeks pushing through the 1.93 level and reaching its highest level since July 2016. In fact the pound has now rallied nearly 10 cents or just over 5% in the last two weeks creating some much better buying opportunities against the Kiwi Dollar.

Why has the NZD weakened?
A combination of sterling strength and NZD weakness has caused this recent move. The pound is starting to see some gains against a number of currencies on rumours that the Bank of England will look to raise interest rates on Thursday and the Kiwi has been steadily devaluing post the elections held in New Zealand at the end of September.

Following the elections New Zealand PM has threatened to put significant bans on the amount of foreign investment coming into the country, particularly in the property market, something that her opposition has argued will have a significant impact on the economy. To compound this unemployment levels are high …

How will BoE Interest rate rise affect Sterling?

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Sterling remains supported against both the Euro and the US Dollar ahead of this week's interest rate decision from the Bank of England. GBP/EUR in particular has also continued to be supported by the fact the Euro is weaker due to the problems in Catalonia.

The question we're being asked at the moment is, will the Bank of England raise interest rates this week, and if they do, will it strengthen the Pound further and push exchange rates higher?

If the bank raise rates, how might it affect the Pound?
I believe that the Bank of England will raise rates by 0.25% up to the 0.5% level. The markets are also widely expecting this, and this has already been priced into the value of Sterling. What will be key to whether the Pound moves higher or lower, will be: how many of them voted for a hike, what they say about future interest rate hikes, and any forecasts they may give about inflation and growth in the UK.

There are 9 members of the Monetary Policy Committee (MPC) at the BoE tha…

Sterling overview, what is in store for the pound next week?

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On a relatively quiet day and a quiet end to the week for the pound, below I have outlined what data to look out for next week.
Monday also looks as though it will be relatively quiet with the only release of note being the M4 money supply Monday morning at 09:30, for those with an interest in the euro then look out for Euro Zone consumer confidence data at 10:00. This is expected to stay at -1 so in theory will have little impact on exchange rates but it is one to look out for all the same.
On Tuesday there is no data of note but look out for GSK consumer confidence released overnight Monday/early Tuesday. 
Heading into Wednesday, again it will be relatively quiet, but look out for Markit Manufacturing figures at 09:30. These are expected to increase slightly from 55.9 to 56.1 and could see a slight level of support for the pound.
Thursday will be the key day for anyone looking at sterling. Firstly we will see the release of PMI construction data at 09:30 before the main release of …

GBP/EUR rises slightly after ECB announcement

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Sterling initially fell against the Euro today following a poor report about UK Retail Sales, and this pushed GBP/EUR into the mid €1.11's. However following the European Central Bank policy announcement, rates have recovered to €1.1233 at the time of writing.

ECB announcement causes GBP/EUR rates to rise by half a cent
The ECB announced a reduction in their stimulus measures, announcing QE would continue at a reduced rate of €30bn per month. The fact that they extended the measures until the end of 2018 was the key point, and this weakened the Euro slightly, making it cheaper to purchase and pushing Pound/Euro rates up slightly.

Will the Pound rise if the Bank of England raise interest rates?
It's not a massive increase however, and as we've outlined in recent posts significant downside risks remain for the GBP/EUR pair due to uncertainty caused by Brexit. The only thing on the horizon that might push the rate higher is next week's BoE decision on whether they will p…

AUD/NZD and ZAR fall sharply

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Sterling has posted some significant gains against the so called higher risk currencies in the past two days with the pound reaching a near 4 month high against the Australian Dollar and New Zealand Dollar and a one year high against the South African Rand (ZAR)

Moves against the AUD and NZD, which loosely track each other, came following poor inflation figures in Australia yesterday
reducing the chances of an interest rate hike by the Reserve Bank of Australia and causing a sell off for both currencies.

Of the three currencies the ZAR in particular has seen the most significant fall with it having now lost just shy of 4.5% since Wednesday, pushing GBP/ZAR up massively.

Finance Minister Malusi Gigaba painted a bleak picture of the state of the country’s finances in his first mid-term budget on Wednesday, with growth and revenue set to fall well short of projections made in February. This has heightened risk for further credit rating downgrades and confidence in the Rand has significan…

Pound/Euro higher after strong UK GDP growth

GBP/EUR up on UK GDP figures
Sterling/Euro has recovered its losses from the last few days, rising back to €1.12. The reason for the gain was this morning's UK GDP figures which came in above forecast at 0.4% for the quarter. The better figures show again how the UK economy is resilient to the Brexit uncertainty. It also means there is more chance of an interest rate hike again next month, but the actual decision will probably be a fine line.

If ECB announce tapering, GBP/EUR could come under pressure
We now look ahead to tomorrow's ECB decision and any possible hints that they will be ending their stimulus measures. If they do, expect the Euro to strengthen pulling Pound/Euro rates back down again. If however they continue with their QE measures the GBP/EUR rates may be supported.

Developments in Catalonia could push GBP/EUR higher
The other thing that could affect Pound/Euro rates in the short term are any developments from Catalonia. The regional government there are due…

UK GDP figures the focus for the pound today

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Sterling has started the day on the back foot against most majors, posting losses against the Euro and US dollar. This comes ahead of this mornings latest UK Gross Domestic Product (GDP) data at 09:30.

Figures month on month are forecast to remain at 0.3% - any deviation from this and we could see some sterling movement.

What movements will we see for the Pound?
Should we see a lower figure from today's GDP figures then sterling is likely to come under pressure as it makes it less likely we will see an interest rate hike in November. Interest rate movements, along with Brexit negotiations will dominate the market in the coming weeks and months. Recently speculation has been increasing that the Bank of England (BofE) are ready to raise rates, with some analysts believing this could happen as early as November.

Some doubt was shed over these thoughts yesterday with the BofE Deputy Governor Jon Cunliffe suggesting the timing of the UK's first interest rate rise since 2007 is an &…

Pound/Euro drops again on Interest Rate uncertainty

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As you can see from the chart below, GBP/EUR rates have edged lower throughout today. I pointed out in my last post that despite a slight gain for the Pound, significant downside risks remain, and that has pushed the Pound lower:



Why has the Pound fallen against the Euro?
To understand why the Pound has fallen against the Euro, you first need to look at why it's risen 5% since last month. This is due to a little more positivity about the Brexit negotiations, and rumours that the Bank of England would be raising interest rates next month. However the case for a November rate hike is now in doubt, with the BoE/s deputy governor today raising doubts about a move, saying that it's an open question. Markets had been pricing in a rate hike soon, but the latest comments mean it might not happen. Couple this with the continues uncertainty about Brexit, and you have the reasons that Sterling has been unable to hold on to its recent gains.

Getting the best exchange rates
Exchange rates…

Pound recovers after Brexit progress

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Sterling bounced back on Friday after the news that EU leaders have said they would begin preparations to move Brexit talks to the second phase. This was a positive move, and contrary to the 'deadlock' that had been mentioned previously. It now looks like trade talks will begin in December, and this removes much of the uncertainty that had been keeping the Pound subdued. As a result, the Pound rose against the Euro, recovering much of the losses we had seen due to the weak economic data outlined in my last post.

However, the gains have been limited due to political uncertainty here in the UK. There were news reports over the weekend that outlined divisions in the Conservative party which threaten the limited progress made in Brexit talks so far.  Encouraging signs of a little progress for Brexit talks then, that have helped the Pound rise a little, but not much.


Will Pound/Euro rates go up or down this week?
This week there are a number of things that will be key to where the …

Pound/Euro lower on Retail Sales and Wage Growth data

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The last 24 hours have not been kind to Sterling. Firstly we had wage growth data yesterday showing that wages are rising at a rate of 2.1%. However, inflation is running at 3% so in real terms, incomes are being squeezed. These figures mean it's less likely the Bank of England will raise interest rates and the Pound fell yesterday.

This morning we saw the latest UK Retail Sales numbers, and these came in significantly below expectations, also pulling the Pound down against other currencies.

The below chart shows the GBP/EUR movement over the last 48 hours. It's worth remembering that last month, GBP/EUR was as low as €1.07 before shooting up to €1.14 on rumours the BoE would soon be raising rates.

I think however this was simply the BoE 'talking the Pound up' to try and limit any further losses. The latest data does not suggest to me that the BoE will be raising rates in November, and that's why the Pound is giving up its recent gains and dropping back away.


Lack o…

Australian Dollar rallies overnight

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Overnight the Australian Dollar has strengthened against a number of currencies including the pound, pushing to a near one month high against sterling.
Recently the Australian Dollar has weakened due to some poor figures from China, its biggest trading partner. As China is a net importer of raw materials from Australia, the Australian economy tends to perform well when China performs well, and when figures are poor, or growth down, this has a direct impact on the Australian Dollar.

What is in store for GBP/AUD?
However following yesterdays uncertainty surrounding UK interest rates, the pound took a tumble against most majors, and this fall has continued overnight against the Australian Dollar.
Should you need to buy AUD then the current move and the uncertainty surrounding interest rates and Brexit should be a worrying one. If, as like many, you are hoping an interest rate hike by the Bank of England (BofE) will lend some support to sterling then you may get a surprise. I for one fee…

Pound falls after Mark Carney speaks

Despite inflation hitting 3% as outlined in my earlier post, Mark Carney was a little dovish in his comments to the treasury select committee earlier. While he did say that the case was probably there for a rate hike in the coming months, the Pound has moved lower following his words. It's often the case that when Mark Carney speaks the Pound falls, and this is what has happened again. I think that markets had priced in a rate hike for November, but it's now looking more likely that a move up in rates won't come until December. He re-iterated the usual case about sluggish wage growth.

So with little prospect of interest rates going up next month, coupled with a deadlock in Brexit negotiations, if nothing changes on these 2 fronts then it's likely the Pound will continue to fall against other currencies. Today, GBP/EUR has dropped from €1.1300 to €1.1225. Those who need to buy Euros in the next 3 months should not be too disappointed however, as just last month the pair…

Inflation at 3%; Mark Carney to hint at interest rate rise?

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Inflation at 3% as expected
A few minutes ago the UK released it's latest inflation numbers, and the key Consumer Price Index (CPI) number came in at bang on forecast at 3%.

Some other measure were slightly lower than expected, however as the main release matched what the markets were expecting, it has had little effect on Sterling.

Inflation is now running at the highest level in more than 5 years, so it does make it more likely that that BoE will have to raise interest rates sooner or later in order to curb this rising inflation.

Mark Carney to hint at interet rate rise?
Later on today the Bank of England governor Mark Carney gives a speech to the treasury select committee. If he makes any comments that hint at an interest rate rise, then expect the Pound to rise against other currencies.

Brexit Negotations ready to move forwards to next stage?
Elsewhere, last night Theresa May had a working dinner with Jean-Claude Juncker and EU negotiator Michel Barnier, along with Brexit Se…

UK inflation figures the key release for sterling this week

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Of course on going Brexit negations will continue to have a significant impact on the pound,  however the key release for sterling will come on Tuesday morning with the release of UK inflation figures at 09:30
Recently Mark Carney and the Bank of England (BofE) have hinted at the need for an interest rate rise due to due to rising inflation. Indeed if the core inflation figures, in the form of Consumer Price Inflation, reaches 3% or more, Mark Carney has to write a letter to the Chancellor explaining why levels have increased significantly above the BofE of target level of 2%. 
What impact will an interest rate rise have?
Tuesdays figures are forecast to reach this 3% level, an increase on the previous month of 2.9% - should this occur will we see a rate rise? Some have suggested the Bank of England have simply been hinting about a rate rise to give sterling a much needed boost and would argue due to stagnating wage growth the economy could not handle a rate rise, however the Central …

Pound/Euro rates rise to €1.1250

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Yesterday was a strange one for the currency markets and GBP/EUR in particular.

Initially we thought it would be central bank speeches that would be driving the market, but has often been the case recently, political events instead dominated proceedings, causing some large swings in the GBP/EUR rate that were largely unexpected.

As my colleague Michael outlined in his post yesterday afternoon, comments from the EU chief negotiator initially caused the rate to slump into the €1.10's, before more positive comments from him sent Sterling surging higher. This trend has continues this morning and GBP/EUR currently sits at around the €1.1250 mark - this within 1.5% of a 4 month high:

Getting the best exchange rates
Yesterday's movements show how quickly the rate can change due to unexpected announcements. This is where using an expert currency broker can help you save thousands of Pounds. Unlike a bank that usually offer 'daily' rates that don't change, we buy live from …

Michel Barnier gives sterling the runaround

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Today's movements for the pound have been dictated to by comments from the European Unions chief negotiator, Michel Barnier. This morning his comments lead to sterling falling to a 3 week low of 1.1085 as he said there had not been enough progress to move to the next stage of Brexit talks. He said there was "new momentum" but still "deadlock"

David Davis and Barnier have been speaking at the fifth round of Brext talks in Brussels and following his comments the pound fell nearly 1 cent.

Pound goes back up against the Euro
However, come the afternoons session Barnier surprised the market by indicating he may offer the UK a two-year transition stay in the EU market, although his offer was tied to the UK meeting exit obligations.

As a result sterling this afternoon rallied against a number of currencies, pushing to 1.12 GBP/EUR and 1.35 for cable (GBP/USD) - a potential buying opportunity in this uncertain market?

Should you have an upcoming money transfer to arran…

Central Bankers to affect Sterling/Euro today?

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Over the last few days it has been political uncertainty largely driving the Sterling/Euro pair. Today however focus shifts to comments from central bankers, and these comments have the potential to move Pound/Euro rates over the course of today.

Bank of England
First up we have Andy Haldane, the Bank of England's chief economist and member of the Monetary Policy Committee giving a speech at 2pm this afternoon. He was previously one of the BoE's more dovish members, helping to keep interest rates at a record low for many years.

In recent months however he has gone against the Governor Mark Carney in signalling that he thought the BoE should consider raising interest rates. If he drops further hints today that he thinks the time is approaching to tighten monetary policy, then it's likely it will give Sterling a boost and GBP/EUR could rise above the €1.12 mark. (A currency generally strengthens when there are rumours of an interest rate hike, due to the higher return on off…

Political unrest and Brexit to dominate sterling vs Euro

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Sterling is once again on the back foot. Followings its resurgence from 1.07 to 1.14 in just over a month, sterling is once again is falling due to political uncertainty within the Conservative Party and on-going issues surrounding Brexit.

We have now seen a near 4 cent slide with GBP/EUR sitting at 1.1150, a 4 week low. We are continuing to hear of unrest in the Conservative Party, with some senior Tory members looking to oust PM Theresa May following her difficulties at the political party conference last week. 
To compound this the on-going Brexit scenario will undoubtedly remain as a focus for any investors looking at sterling. Earlier this week Chancellor Philip Hammond said taxpayers money should not be spent on preparing for a "no-deal" in an attempt to deflect away from the government plans for a Brexit scenario without a trade deal. 
For me the only ray of light for sterling in the short term will be whether the Bank of England decide to raise interest rates. Mark C…

Strong UK data supports the Pound

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Strong UK data supports the Pound
Sterling has risen both yesterday and today following some robust UK data that increases the chance of interest rates going up. Firstly, the Office for National Statistics revised up Friday's UK jobs numbers, after making a mistake in their calculations. The numbers were actually better than they had originally stated, giving the Pound a decent start to the week.

This morning, further encouraging numbers in the form of Industrial and Manufacturing production numbers were also much better than markets were expecting, which again shows the UK economy is resilient to Brexit uncertainty and ticking along rather well.

Last week the Pound had faltered a little on political uncertainty, but this week it looks very unlikely that Theresa May will face any sort of challenge, and instead is likely to re-shuffle her cabinet to re-assert her authority. This has removed some of the Pound's weakness.

Brexit negotiations; time for the EU to start negotiating?…

Whats in store for the pound this week?

As we begin the start of a new working week we have already seen the pound get off to strong start this morning having rallied against a number of major currencies, notably posting a 0.85% gains against the Euro and 0.7% against the US dollar. These moves come off the back of a poor week for the pound last week with sterling having fallen from recent highs of 1.14 to sit just below 1.12 against the euro, and down to 1.3150 from 1.36 against the greenback.

Should you have currency transfer to arrange in the coming days then I have outlined the key areas to focus on this week:
Monday 9th October - a quiet day with Bank holidays in the US
Tuesday 10th October - UK Manufacturing and Industrial Productions figures will be released at 09:30. Manufacturing is expected to fall month on month from 0.5% to 0.3% and Industrial Production is expect to stay flat at 0.2% - should the figures be released as forecast sterling could come under pressure tomorrow morning.
Wednesday 11th October - a number …

Pound/Dollar drops on US jobs data

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The US Dollar has strengthened this afternoon following the release of the latest jobs numbers. While the number of new jobs created was lower than expected, the unemployment rate fell more than expected and average earnings was also better than forecasts at 2.9%.

This data combined with other factors means it's now almost a given that the US Federal Reserve will raise interest rates again in December.

This has pulled GBP/USD rates down to just above the $1.30 mark. In the last 2 weeks the Pound/Dollar rate has fallen from $1.36 to $1.30. The fall is due to a combination of the USD gaining strength and the Pound getting weaker.


Pound falls against Euro
Sterling has also fallen across the board today, falling to the mid €1.11's against the Euro. Part of the reason is UK political uncertainty, due to the possibility of a leadership contest. The Conservative Party conference did not go well, and there are calls for Mrs May to go. The markets would not like the uncertainty that…

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Has sterling's run come to an end?

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Sterling's recent resurgence against a number of major currencies, the Euro and US dollar included, has come to a fairly significant halt. We have now seen the pound fall over 2% against the single currency and 3% against the US dollar this week.

A significant move has been seen this morning as the market digested the aftermath of Prime Minister Theresa May's speech at the Conservative party conference. 
Her speech has not been particularly well received as she struggled with her delivery on a number of occasions and had to deal with a prankster that attempted to hand her a mocked up P45 document. 
Following the speech it has lead to some members of the Conservative Party to call for Theresa May to step down, although many senior members and cabinet ministers, including Boris Johnson, Michael Gove and Jeremy Hunt, praised the speech afterwards.
This political uncertainty has caused a sharp sell off for the pound, a trend that may well continue with continuing Brexit negotiatio…

If interest rates rise, will Sterling go up?

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Sterling/Euro rates have settled down a little, currently sat at around the €1.13 mark. Better than expected Services data from the UK this morning helped to stop the Pound falling and gave Sterling some support. Furthermore EU retail Sales disappointed, weakening the Euro slightly which again has helped to steady the GBP/EUR rate.

Over the last month, regular readers will know that Sterling gave it's best performance in many years, rising by 6% to a 3 month high of €1.14+. With such a meteoric rise it was almost inevitable that at some point it would peak and come back down, and that's what we have seen this week.

Will Pound rise if interest rates go up?
With no progress being made with Brexit negotiations, the only thing that's keeping the Pound supported is the rumours of an interest rate hike in the UK before the end of the year. Tomorrow will give us some further clues on this, as one of the MPC members Haldane gives a speech.

This is interesting as historically he…

Sterling posts losses against the US dollar

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Sterling has had a poor run over the lat few days against the US dollar having fallen four cents in the last 10 days - cable is now trading at a near three week low. 

Sterling has been on the back foot this morning following poor UK PMI construction figures that posted a reading of 48.1 against a forecasted figure of 50.8 and down from last months posting of 51.1. 
These figures are released by the Chartered Institute of Purchasing and Supply and are used as a key indicator of growth within the UK construction sector. A reading above 50 signifies growth and anything below indicates a contraction, therefore this mornings negative reading has lead to a fall in value for the pound.
Looking ahead at the rest of the day and should you have an interest in the US dollar then look out for a speech from Fed member Powell at 13:30 ahead of a key speech from the head of the Federal Reserve Janet Yellen tomorrow evening. Again any clues as to future monetary policy for the Fed and the US and we …

What could move exchange rates this week?

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Sterling/Euro rates have slipped further today dropping to €1.13, around 1 cent below last week's 3 month high. The Pound started to fall after some UK manufacturing data came in below forecast.Sterling/Dollar has also fallen by around 1 cent.

This is a repeat of the trend we saw in the summer, when GBP/EUR also rose to €1.14 before dropping back away.

I mentioned in a post last week that it was highly likely that Sterling/EUro rates would drop from €1.14 and repeat a trend we saw in the summer.

With continued concerns over the lack of any progress in Brexit negotiations, it could well be that the Pound falls further against the Euro and other currencies. On the other hand, the Euro itself could weaken limiting any further losses. The weekend's Catalonia referendum has cast another unknown into EU integration.

What else could move exchange rates this week?
Below I've listed the main economic events for the week ahead that will likely affect Sterling exchange rates.

Monday O…