The table below shows the difference in the currency you would have been able to purchase buying at the high compared to the low over the last 2 months.
Currency Pair % Change Difference on £200,000 GBP/USD 3.63% $11,350 GBP/EUR 2.78% €4,800 GBP/NZD 5.32% NZD 20,000
Why are Sterling rates falling?
Over the last 3 days Sterling rates have tumbled against all except one of the 16 major currencies. As mentioned in yesterday’s report, (which you can read again by clicking here) UK inflation fell dramatically on Tuesday which resulted in a drop in the value of sterling as it increases the possibility of further stimulus by the Bank of England (BOE).
This speculation built more still yesterday when the BOE latest minutes were released and confirmed that 3 out of the 9 MPC members voted for further stimulus this month. On top of that we have also seen poor figures being released in the Retail Sector and the amount of money the Government borrowed last month also climbed. This all paints a worsening picture for the UK economy which has been reflected in its strength. GBPEUR and GBPUSD exchange rates have dropped by 2% this week adding £2,000 to a $150,000 purchase & £2,500 to a €150,000 purchase.
This quick change in the fate of the Pound highlights how important it is to keep your personal broker up to date with your requirements. They can be your eyes and ears on the market, helping you avoid or even take advantage of these market swings. If you would like to contact us to be appointed a personal broker please click here.
GBPEUR Outlook and forecast
Later today we see key UK GDP figures which is released at 9:30 BST. This is expected to show an improvement which should push Pound prices back up giving Euro Buyers and USD Buyers some light relief.
European Consumer Confidence is also released at 15:00 BST today help GBPEUR as a contraction is expected which could weaken the Euro. My view is that GBPEUR rates will remain range bound between 1.16-1.1850 over the next fortnight.
Will Cable fall under 1.50?
Yesterday poor US Home Sales Figures stopped the fall of GBPUSD before the crucial 1.50 barrier but I expect this to be tested over the coming weeks as the US continues to show a stronger economic forecast.
Ben Bernanke also confirmed his intent last night to continue with stilulas until US jobless figures improve making the case for the dollar to gain stronger.
Overall the dollar has gained nearly 3.5% against Sterling in May and I can’t see many reasons why we could not see a similar fall through the next 30 days. As a result clients looking to buy the USD may want to move sooner rather than later. (To see all the contract types available please click here.)
GBPNZD continues to gain strength
The GBPNZD has changed dramatically compared to 2 months ago, gaining the near 3% loss through the month of April. A majority of these gains were seen following the change in risk appetite and the intervention by the Reserve Bank of Australia at the start of the month which has had an impact on a majority of currencies in the region.
The IMF still predicts that the NZD is overvalued by upwards of 10% but I don’t expect any correction in the near future. This evening NZD Trade Balance figures are released and is expected to show an increase which could make the NZD more expensive to buy. As a result NZD buyers may want to limit their exposure through today before this release.
For more information about how the market could change in your situation email me directly – Steve Eakins – HSE@Currencies.co.uk
This report will address the factors that are likely to affect exchange rates today if you are buying abroad or making a currency transfer. The table below shows the difference you would have received when buying £200,000 at the high compared to the low over the last 7 days.
Currency Pair % Change Difference on £200,000 GBP/USD 1.31% $3,980 GBP/EUR 1.65% €3,880 GBP/AUD 1.76% AUD 5,460
Sterling negative following poor inflation figures
Following a brief respite from Sterling’s negative tone against Euro and Dollar late last week, Sterling’s back to its usual self after inflation data released yesterday came out worse than expected setting a negative tone moving forwards.
The lower than expected inflation rate came down to the recent drop in fuel prices realised in April and Sterling reacted by immediately falling 0.0126 against the Dollar and 0.0107 against the Euro, opening an opportunity for those selling GBP.
There is some potential room for improvement later this week however with the release of GDP expected to show an improvement for both quarterly and yearly figures. If the figures comes out better than expected this could boost Sterling against most currencies.
But like everything with currency anything can happen on the day, so contact your account manager this morning and ask about a stop or limit order, which can act as a safety barrier and protect you should the unexpected occur. Click here to find out more.
Will GBPUSD fall further?
We have been saying for some time that a move towards 1.55/5600 would be a temporary correction for GBPUSD and that pressure will gradually start to build on lower levels as we move throughout the summer months, which is now well under way.
The next big milestone will be a move through 1.51 however the FOMC minutes being released today at 18:00, could reveal changes to US monetary policy moving forward and therefore push the pair higher or lower depending on an optimistic or pessimistic outlook for the US.
For the time being we expected GBP to struggle to make any meaningful gains against the USD and with the US economy moving from strength to strength, we feel the long term outlook for the pair is negative with the 1.50 region being brought back into focus as we move through summer.
For those buying dollars we would recommend covering your exposure now ahead of these lower levels and for USD Sellers to hold off a little longer for below 1.50. The suggested best course of action for Buyers would be to deploy a Forward contract, which allows you to secure a rate for up to a year.
Keep an eye out at 6:00pm today for US FOMC Minutes which could shake things up for the pair. Alternatively call our Corporate Desk for help reducing your risk to currency by calling 0800 328 5884 or email me directly by clicking here.
What to expect from the Euro
This week there’s a lot of data out for the Eurozone and its members later this week but the ones which should attract the most attention will be German PMI as well as Eurozone PMI and consumer confidence, released between 7:30am and 8:00am Thursday. Short term volatility could ensue depending on a positive or negative result.
The 1.1900 level is proving a tough nut to crack as GBPEUR continues to trade in listless conditions, oscillating within its 1.14/1.1900 parameters. Unless there’s a clear breach of the 1.19 level, we feel that a move lower is still on the cards, potentially down to 1.15 moving through summer. Give us a call to find out more by calling 01494 725353.
Australian Dollar Outlook
Since 2009 the AUD has strengthened by over 50 cent against Sterling, primarily due to a worsening UK economy and Australia’s booming mining sector that’s bolstered its economy through this time of global economic uncertainty.
Today the story is much of the same, although the Aussie dollar has lost some strength to Sterling recently. Short term I think Sterling will have a hard time pushing back through 1.60 and I can only see the Dollar strengthening moving forwards making a good opportunity for Dollar sellers. For those with an AUD buy exposure it may be prudent to cover your requirement above the 1.55 region by forward contract or limit order.
If you need help managing your currency exposure, set up an account with us by clicking here and let us be your eyes and ears on the markets.
The following report will look at how GBP exchange rates are currently performing and the affect this may have should you be buying foreign currency. It will look at the following areas:
- UK Forecast
- GBP/EUR rates surrounded by uncertainty
- Where next for GBP/USD rates?
- Could the NZD be on the move?
The below table shows the market movements for a number of currency pairings for transferring £200,000 in the last 30 days:
Currency Pair % Change Difference on £200,000 GBP/USD 2.66% $8,080 GBP/EUR 1.79% €4,180 GBP/CAD 1.8% cad 5,560
GBP/EUR rates have been fairly stagnant as of late and bar a much unexpected announcement coming out I can’t see this changing too much in the near future. The main data releases to look out for this week will be, for the UK, Consumer and Producer Price index figures both released today at 9:30am and The Bank of England (BoE) meeting minutes coming out tomorrow at 9:30am.
Consumer and Producer Price Index figures are a good measure of inflation and if these deviate from the expected then I would expect some short term volatility for Sterling rates. When The BoE release their meeting minutes tomorrow we will find out how their members voted for and against further Quantitative Easing in the UK. Quantitative easing has the potential to rock the markets and any hint that this may be on the agenda could have a large effect on GBP rates. I don’t expect there to be any more votes for QE than there was last time round, 6 voted against and 3 voted for further QE, but this is definitely worth keeping an eye on.
If you are worried about market movements then we have a number of different contracts to safeguard your funds which can be seen by clicking here, alternatively call 01494 725 353 to talk with one of our specialised currency brokers.
We saw Sterling rally against the Euro at the back end of last week after Governor of The Bank of England Mervyn King announced improved UK growth forecasts and a host of poor data across the Eurozone including France going back in to a recession. The trend however hasn’t continued in to this week. It has been a fairly stagnant start to the week with regards to GBP/EUR rates, there was only a handful of data out yesterday and no major announcements to gaze over. Yesterday’s interbank rate coming in at a low of 1.1805 and a high of 1.1839, a difference of 34 pips.
There is still a lot of uncertainty surrounding the Eurozone and I think it will be something unexpected rising from this uncertainty that will be the next big thing to rock the markets. We saw over the weekend that Fitch upgraded Greece’s credit rating, although they are still struggling tremendously this does show that there could be some light at the end of the tunnel for them. Couple this with the protests against cuts in Italy, France entering in to recession and a host of other Eurozone members struggling to build their economies the Euro seems to be in a tug of war with itself.
I personally feel that in the near future we are more likely to see the pound gain against the euro as we are seeing a lot more positive data come from the UK as of late. Improved Construction, Manufacturing and Services data recently shows that the UK is working its way to improving its struggling economy.
Where next for GBP/USD rates?
The greenback has been on a fight back against Sterling recently and I can see this trend continuing in to the near future. The US economy is steadily improving at present and although this may be slow it is still growing none the less. The UK may have had its growth forecast improved but the economy in the UK is so up and down I think that we will see GBP/USD rates slowly ticking down.
There is a lot of data out for the US this week so there is the potential for some significant movement on USD rates, depending on how these releases come out. This week we will see US Existing Home Sales data, New Homes Sales data, Manufacturing PMI and a speech from Ben Bernanke but I feel that the data releases with more potential to move the markets will be the FOMC minutes on Wednesday and Durable Goods data on Friday.
The Federal Open Market Committee (FOMC) meet up assess the economic and financial conditions in the US. When their minutes are released this will give us a good indication on exactly how the US economy is fairing at present. Durable Goods Orders always has the potential to move the markets and if it comes out anywhere other than the expected 1.1% then I would expect some volatility with regards to USD rates.
Could the NZD be on the move?
The Canadian Dollar is generally regarded as a fairly stable currency but lately it has been through a very volatile time. Within 2 weeks we saw GBP/CAD rates move nearly 4 cents, a very large movement in a short amount of time. There are two key data releases out this week regarding CAD. First off on Thursday the UK bound Bank of Canada governor Mark Carney will hold one of his final speeches on how he sees the Canadian economy.
We have seen some fairly negative data coming out of Canada recently with poor manufacturing data and Core Consumer Price Index and Consumer Price Index figures falling below estimate. I think that Mark Carney will want to finish his time in Canada on a high so I believe he will put a positive spin on the Canadian economy and we could see CAD rates strengthen off the back of this.
The other key data release will be Retail Sales on Wednesday. It is expected that this will show a small gains of 0.2%, although this is a gain it is still down from the 0.8% seen last month so definitely worth keeping a close eye on this release.
- Greece in sixth year of recession
- US Job Prospects
- Data this Week
- Australian Dollar News
Currency Pair % Change Difference on £200,000 GBP/EUR 1.75% €4,100 GBP/USD 1.2% $3,600 GBP/AUD 2% AUD 6,000
Greece in sixth year of recession
Recent data showed that Greece has now entered its sixth straight year of recession as austerity measures continue to affect the country. With unemployment hitting record highs and government cuts things look bleak for the Greeks. Last week credit ratings agency Fitch however decided to upgrade their credit rating to show clear progress on reducing their deficits. This could be seen as a positive for the Eurozone as one of its worst affected countries appears to be on the long road to recovery.
Prime Minister Antonis Samaras is due to visit China this week in an attempt to persuade the Chinese to look at investing in Greece. Economic indicators are starting to improve but personally I think there is a long way to go before Greece gets back to where it should be so do not expect the Euro to suddenly start to strengthen against either Sterling or the Dollar owing to this news.
US Jobs Prospects help the Dollar
Quantitative Easing in the US, which is currently at its third stage, now has, according to many, helped the US job market get back on its feet. The figure of 50% more jobs created since the first round of QE has proved to many that the scheme has certainly given rise to more jobs which in turn has helped to strengthen the Dollar and provide US GDP figures of in excess of 2% recently.
The Dollar has performed well in the last two weeks particularly off the back of the recent jobs data so if you have a requirement to buy Dollars you may wish to secure your currency by contacting us on 0800-328-5884 or if calling from abroad 044-1494-725353.
With QE being reacted to so positively this could see the next round not too far away. If QE for the US does take place next month we could see some Dollar strength as more stability comes back to the world’s leading economy. For information about contract types that might suit your currency requirement click here to find out more.
Data this week
Inflation data is due out for the UK on Tuesday morning at 930 for both month on month and year on year. With expectations for 2.7% anything different could cause volatility. We also have the Producer Price Index is also out which is a measure of inflation so this could have a bearing on how the Bank of England next reacts at its monthly meeting. Also, on Wednesday the Bank of England Minutes are out so expect there to be a shift on Sterling exchange rates shortly after this release at 930am. If you have a currency requirement please feel free to get in touch by clicking here
Australian Dollar News
The GBP AUD exchange rate has recently seen resurgence as the rate pushed through 1.56 during Friday’s trading session. The Australian Treasurer Wayne Swan said that deficit would be approx. AUD19bn that has been mainly affected by the recent slowdown in China, which has had an adverse effect on the Australian mining industry.
In recent years the mining industry has helped to strengthen the Aussie Dollar to where it is currently so a slowdown could result in a reversal of fortune for the AUD. Tomorrow see the Reserve Bank of Australia Minutes so keep a close eye of the release for clues as to which was we could see the Aussie move in the short term.
It is important that if you have a currency requirement to stay in contact with your account manager. If you have any questions on how these or any other release may affect your transfers, feel free to call on FREEPHONE 0800 328 5884 or send me an email to firstname.lastname@example.org
The table below shows the percentage movement of exchange rates yesterday, along with the extra currency you could have bought if buying with £200,000.
Currency Pair % Change Difference on £200,000 GBP/EUR 0.4% €1,200 GBP/USD 0.4% $1,240 GBP/AUD 0.9% AUD 3,000
Euro Uncertain on Weak Inflation
The Euro suffered another blow yesterday with a sharp fall in EU inflation. Inflation in the Eurozone fell to a three year low with the headline annual figure at 1.2%, down from 1.7% the previous month. What is most interesting however is that the monthly figure for April was in fact -0.1%, representing deflation. These very low figures really highlight the slowdown in the EU and complement the weak EU growth figures earlier this week and the fact that France has gone back into recession.
The EU did however produce a record trade surplus with a rise in exports and a sharp fall in imports. It gives a new ray of hope that the EU is at least on the right track to eventually seeing a recovery. Although this is positive news, the issue for the EU is that the recovery is still not quite there yet, with growth only expected to take place next year. With a continuously worsening picture the Euro is unlikely to benefit and continued Euro weakness should follow. A move for GBP EUR to 1.20+ should surely be in the offing. With only one very minor EU release today (construction output) and a very quiet week next week, then rates for GBP EUR will be driven by key UK data next week. Register for an account today to access the best exchange rates by clicking here.
USD – US Economic Doubts
The US dollar took losses yesterday after a run of negative data. US jobless claims jumped substantially by 32,000 to 360,000, the highest level in six weeks and at a time when the road to recovery on the whole had been looking much better. More bad data came from the Consumer Price Index which showed falling prices by the largest amount since 2008. Although the US may be further ahead in recovery terms, it is by no means out of the woods yet. Despite the negative data, comments late yesterday from a Federal Reserve chief have been taken as a strong clue that the Fed will taper its asset buying this summer. A move in the short term back to 1.50 for GBP USD seems likely once again. Federal Chairman Ben Bernanke will be speaking next Wednesday which will be useful for added clues surrounding this and should give new direction. For more information on how we can assist with a transfer of dollars then please click here.
Australian Dollar Continues to Weaken
The Australian dollar continues its downfall yesterday losing almost 1% against the pound. For anyone selling Australian dollars the rates are still incredibly attractive but the tables are now turning with a better outlook in the UK and all of a sudden a worsening picture in Australia. At this pace, rates are likely to fast approach and break 1.60 in the coming weeks. Weaker economic growth, further interest rate cuts and the slowdown in China are only going to help see the Aussie weaken further. What goes up must come down. There are also whispers of a key resistance point for AUD USD at 0.9850 which could cause a major sell off on the Aussie. If the resistance point is broken and it gains momentum there could be major weakness for this currency which should see that target of 1.60 for GBP AUD much sooner and some excellent buying opportunities. If you need to transfer money to Australia or have recently sold a property there then click here for more information.
GBP – Looking Ahead to Next Week
Although the economic calendar is extremely bare today with no UK data releases, anyone looking to buy or sell sterling should be well aware of some major data releases next week. The ball starts rolling on Tuesday with inflation numbers, Wednesday sees the Bank of England minutes whilst Thursday sees revised UK GDP numbers. After the last GDP improvement to 0.3%, there is likely to be high volatility and certainly enough data to create some good opportunities.
To discuss how these issues may affect your requirement call us on 0800 328 5884 or 01494 725 353 or e-mail me directly email@example.com
Currency Pair % Change Difference on £200,000 GBP/USD 0.65% $1,980 GBP/EUR 0.73% €1,720 GBP/AUD 0.66% AUD 2,040
GBP Exchange Rate Rally
The move came on the back of an improved forecast on the state of the UK economy by Mervyn King at his final Inflation Report before he hands over the reins to Mark Carney in July. This is the first time data has been revised up in this way since the start of the financial crisis. Whilst he did give warnings that a lot of work still needed to be done, the news is actually little surprise to many (click here to see my last report correctly forecasting the UK would avoid recession) and will help the pound consolidate in the short term.
Jobs data yesterday also showed that whilst the number of unemployed people had actually risen, the overall percentage of those out of work actually fell. The news still highlights a real problem for the government and should provide a real cautionary note to anyone expecting the pound to race up and to this end if you are looking to sell sterling then I would be inclined to take advantage of current levels. Whilst I expect the pound to at least hold its’ own, confidence in the UK is still very fragile, and there is always a risk that if our modest growth figures reversed even slightly then the pound could fall sharply.
USD Recovering As Predicted
Again looking back to April’s forecast (click here) the Dollar has come back strongly after intial further losses. The US economy, whilst not setting the world on fire, does at least appear to be on the right track certainly when compared with European counterparts.
It still remains to be seen what the US will ultimately do with the budget and debt issue but I think an improving market stateside, and continued problems in Europe, will mean the Dollar maintains a range around the 1.50 mark against the pound and test 1.27 again on the Euro. Dollar movements of late have provided perfect opportunities for clients using stop loss and limit orders so to find out more about these please do not hesitate to call 0800 328 5884 and speak to one of our knowledgeable brokers or click here for the web page.
Will The Aussie Trend Continue?
The RBA did indeed cut interest rates earlier this month in an attempt to curb the strength of the Aussie Dollar to assist exports and improve the economy Down Under. Chinese growth figures continue to slacken, and whilst the Greek and Spanish finance ministers would be very envious of such “flagging growth rates”, it conitnues to worry those who feel the Aussie economy is over-reliant on mining exports to the Chinese.
Looking across the Tasman see, New Zealand are also attempting to weaken their own Dollar which has strengthened massively over the last few years by selling off fx reserves. With worries over Asian markets in general and Japan leading the way in trying to force its currency to weaker levels, the uncertainty has caused many investors to sell off Aussie and Kiwi holidings. I suspect this trend will continue at a gradual pace in the short term despite the fact that jobs data in both countries show signs of improvement. If you are selling Aussie or Kiwi dollars and are thinking of holding on it would be wise to remember that levels in the last few months were actually record highs against the pound, so greed may end up costing you even more.
Should you be lucky enough to be moving the other way and escaping the joys of a glorious UK May to the terrors of an Aussie winter then you may want more information about transferring money to Australia so why not click here
Crisis Over For Europe? Don’t Bank On It Draghi!
Well it seems as if Draghi may have spoken too soon in January when he said the crisis phase is over which resulted in the Euro moving to a 1 ½ year high against the pound earlier this year. I for one find it very difficult to see how things will get anything but worse in Europe for some time given that more and more countries are needing bailouts, and growth rates are still heading the wrong way.
In fact France went back into recession yesterday, with italy and Greece deteriorating further, and even the mighty Germany only just managed to scrape a measley 0.1% growth rate! Earlier in the month the ECB cut interest rates- a clear sign that they need to do more to promote growth- but until workers in the EU have jobs and can pay taxes it seems unlikely that the Euro will gain significant strength as this prospect is years away. If you are selling property in Europe it would seem prudent to cut losses on the asking price and try and recoup as much as you can on the exchange rate back to sterling whilst the pound is still relatively weak.
To find out more anything contained in this report then feel free to ring 0800 328 5884 or email firstname.lastname@example.org
The table below shows exchange rate movements over the course of last week – Once again shows how key it is to time your currency exchange correctly.
Currency Pair % Change Difference on £200,000 GBP/EUR 1.2% €2,832 GBP/USD 2.2% $6,698
Important day ahead for the Pound
Following a fairly solid selection of data from the U.K of late, this morning has the potential to either push the Pound up another level against the majority of major currencies, or to see Sterling drop away quite considerably.
Firstly, we have U.K unemployment figures released at 09:30am. These figures have not been particularly great for quite a period of time and this is exactly the type of release that will be picked up in the media, especially if negative.
Figures are expected to come out virtually unchanged however any deviation to these levels could lead to either a sharp spike and a great buying opportunity or for the Pound to tumble giving a great chance to sellers.
If you would like to be kept up to date with what happens then feel free to get in touch with us and one of our experienced and knowledgeable traders will be more than happy to call you straight after the release – You can call us on 01494 725353 or Freephone 0800 328 5884.
Mervyn King to speak at 10:30am
Following unemployment figures we have the Bank of England quarterly inflation report. Inflation is yet another thorn in the Bank of England’s side at present and this will detail inflation projections and an overall assessment on how the inflationary battle is going.
More importantly in my opinion, Governor of the Bank of England Sir Mervyn King is speaking at 10:30am. King usually will comment on our recent economic performance, plans for the future and growth forecasts.
King has notoriously been great at talking the Pound down over the past few years however it would not surprise me to hear him being a little more positive today.
With just over a month before he is due to leave his Bank of England post, I personally feel he will want to leave on a high and a negative speech would certainly not assist that. Should we see solid growth forecasts and a positive speech hopefully Sterling may climb off the back of it and head close to the 1.19 level against the Euro.
Is the Dollar restarting a charge?
A lot of clients are now contacting me asking if the U.S Dollar is starting to mount another charge back below 1.50 and onwards.
Personally I feel that we may see further Dollar strength in the near future for the following reasons:
It appears that Japan are now increasing their holding in foreign currencies and the Dollar is of course a safe haven of choice.
The carry traders that have been investing in the Australian Dollar may be getting the shakes as the Australian economy is starting to perform poorly.
Things appear to be picking up in the U.K in an economic sense and then suddenly we find ourselves with in party political fighting!
The Eurozone still certainly is not out of its mess at present and wont be for a long time.
All of these points would push an investor to favour the Dollar in my opinion and a break below 1.50 in the coming weeks would not be a huge surprise.
If you have an upcoming transaction to carry out involving either buying or selling the Dollar, or indeed any currency pegged to the Dollar it may be prudent to contact us today by clicking here.
Breaking news – France in triple dip recession
Further bad news for Europe as we have heard further news that France are now officially in a triple dip recession. We have key GDP data due out from Europe today so be poised for an extremely busy day ahead for GBP/EUR
Data and Politics all set to move the market
This report will address the factors that are likely to affect exchange rates today if you are buying abroad or making a currency transfer.
The table below shows the difference you would have received when buying £200,000 at the high compared to the low over the last month.
Currency Pair % Change Difference on £200,000 GBP/EUR 0.798% €1,880 GBP/USD 1.969% $6,020 GBP/AUD 1.774% AUD 5,380
Tory’s rebel over EU referendum!
It seems politics rather than data moves the market of late and there is nothing that lowers the pound more than a lack of confidence! The EU remains the favoured export destination for small and medium-sized enterprises that form the backbone of the British economy, and which are essential for an export led recovery and a move away from Britain’s over reliance on the financial sector.
The rebellion will be short lived as it will be out voted by a unlikely alliance of Labour, Lib Dems and ‘under the heel’ Conservatives. What it does do however is erode the Prime Minister authority, highlight Tory splits and damage the party’s image in the polls. International investors waiting to invest in Britain will think twice before committing their money to a country that is trying to sever its ties to its largest trading partner.
US Retail Sales a boon for American confidence
Economists had expected a contraction so there was genuine surprise when the US commerce department reported that retail sales edged up 0.1 per cent in April. This is better than the 0.5 per cent decline in March and the largest increase in 9 months.
Coming on the back of data showing relatively positive job growth this news will only bolster market confidence in the direction of the US economy. This is despite federal budget slashing that has threatened to derail growth. This is likely to turn Cameron green with envy when he meets Obama later today.
The US GDP figure for the first quarter of 2013 was up 2.5%. The US has been performing strongly when compared to the flat lining UK and the ‘ticking time bomb’ of the EU.
If you’re in the market for US dollars it probably best that you get in touch with one of the team. Call our Freephone number on: 0808 163 3654
Cyprus gets EU – IMF boost!
The EU has paid the first instalment of a 10 billion euro bailout package agreed earlier this year. The 2 billion sent over on Monday will go a long way in bolstering Cyprus as it struggles to reform its economy. Another billion euros will be paid towards the end of June which shows the EU’s commitment to the island. On the other hand, the ‘powers that be’ in Europe cant afford to see even little Cyprus fail. They are terribly afraid of its wider implications. Greece is in line for another 7.5 billion euros of its huge 240 billion bailout. Hopefully, good money isn’t being thrown after bad but it certainly shows the EU commitment to its bailout initiatives, this will only help boost market confidence and should prove bullish for the Euro in the short term
If you are selling Euros it may be prudent to contact your specialist broker by clicking here to take advantage of these current lows.
The Aussie dollar hit by Chinese uncertainty
With Chinese industrial figures smaller than expected the underlining worries in the Chinese economy have proved negative for the AUD. Australia is hopelessly dependant on Chinas insatiable appetite for raw materials. As the Chinese economy slows the fall out has showed the underlining weaknesses in the Australian economy. There is also an imbalance in economic performance amongst Australian states. Western Australia is not only keeping the country afloat but its also boosting the GDP of the entire country. This masks the weakness in the east of the country (Sydney, Victoria etc) and comparative slow down in the Australian service sector. The AUD is hovering around the 1.54 mark at the moment, contrasting with 1.50 about a month ago. If Chinese figures continue to slow then negative data could push the GPB/AUD to 1.60.
If you would like to find out more about buying AUD Dollars click here.
Percentage movement and how much more currency you could have achieved trading at the high point compared to the low on a £200K purchase since the start of May 13
Currency Pair % Change Difference on £200,000 GBP/EUR 1.13% €2,700 GBP/USD 1.89% $5,900 GBP/AUD 3.01% AUD 9,300
Last week Overview
With an extremely busy week ahead for the currency markets in general I expect the pound to be very volatile as there is a raft of data out around the globe which will have an impact for your currency pair. Today the PM David Cameron has arrived in Washington for talks with Obama to highlight the benefits to Britain of a trade agreement between Europe and the US.
Why he is doing this though members within his own party Education Secretary Michael Gove and Defence Secretary Phillip Hammond have voiced how they would vote to leave the EU should a referendum occur.
Political uncertainty can be one of the major points to weakening a currency so anyone with a requirement to sell the pound should keep a close eye on how this story pans out as it may lead to some sterling weakness in the weeks ahead.
If you wish to see what lays ahead for the pound today click here for our real time exchange rate movements for free.
Where next for sterling exchange rates against the Euro
So with the pound fairly flat against the Euro last week I expect the trend to continue today as there is no economic data out for the UK. In fact data is a little light for the UK in general this week bar Wednesday when things could really get interesting. The pound will however be very volatile as there are numerous data releases for Europe.
Euro focus exchange rates
For Euro buyers or sellers the next two days could be vital for how GBP/EUR performs. Tomorrow morning at 7am Germany are releasing some key inflation figures followed by the ZEW survey which shows the sentiment between investors and analysts. Often this can be a market mover and I personally feel this may give the pound an opportunity to push up to the late 1.18’s possibly 1.19. If you are selling Euros you may wish to look at securing your funds today before this may occur to stop your recent losses.
On Wednesday we will see some of the major European countries release their GDP figures. GDP is a measure of how their economy is performing and over the last couple of weeks the UK has posted a healthier picture which has strengthened the pound significantly since the Cyprus event with a gain of around 4.5%
All of the countries bar from Germany is expected to show a contraction in their economic growth. So if they do post some better than expected figures then it is on Wednesday morning that I expect to see the Euro gain against a host of majors.
In the UK, Wednesday brings the first significant amount of data with a raft of unemployment figures being released. Unemployment is slightly falling as the slow recovery in the UK kicks into force but with 7.9% still expected to be unemployed we will need to see a fall in this figure for the pound to rise.
What may help the pound is the Quarterly inflation report out at 10.30. It seems that the BoE are slowly shying away from any further QE. If they give any hints in their report that they are happy with the rate of inflation and the slow recovery this could boost the pound and recover some of the losses seen against the USD. Could we hit 1.20 against the Euro? It would be the highest level seen this year and if we do I would highly recommend securing your Euros. Let me know your thoughts by emailing me at email@example.com
Please do be cautious if you have a currency transfer to make. This is one of the key releases which can cause the pound to be very volatile against a host of currencies. If you have a transfer to make in the next few weeks Wednesday’s release may give you an indication if you should hold out a little longer before making your conversion.
Sterling falls to the lowest levels this month against the US Dollar
The pound fell by three cents on Friday against the greenback. From the lows of 1.48 up to a high of 1.56 in the space of a few weeks I suppose it was not a surprise to see the Dollar regain some of its losses. Hopefully you were one of the wise ones to capitalise on this gain.
A healthier set of labour market data showing that the number of Initial Jobless Claims had fallen to its lowest level since late 2007 has boosted the Dollar as the Federal Reserve (central bank) previously stated that they will continue with QE until the American labour markets start to improve. So the Fed’s comments from a week or so ago helped the Dollar on Friday after the jobless claims fell.
I personally feel that there will be small windows of opportunities to gain better levels than where GBP/USD are currently trading (potentially on Wednesday) at but overall I feel the pound may just weaken further by the end of the week testing the 1.5250 level again. To find out more about buying US Dollars click here
The pound has risen to the highest level in three months against the AUD as the RBA cut interest rates this month. The gains may just continue as there are rumours of further rate cuts down under which may enable the pound to strengthen further over the coming weeks. This week data is a little light down under so if you are selling AUD now may be a wise time to trade before the rate deteriorates further.
The below table shows the market movements for a number of currency pairings in the last 30 days:
Currency Pair % Change Difference on £200,000 GBP/EUR 1.9% €4,440 GBP/USD 2.4% 7,240 GBP/AUD 4.95% AUD 14,420
Currency Market Overview
This outcome was very much forecast and the market did very little as a result as many analysts expect little to come from the BofE until new governor Mark Carney takes over from Mervyn King in July. Following this the National Institute for Economic and Social Research (NIESR) released its forecast for GDP for the last three months to include April, the figures showed a stronger than expected level of 0.8% continuing the recent positive tones coming from the UK, something that could lead to sterling strength against a number of major currencies.
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Sterling exchange rates have shown a marked improvement against the single currency since the year low of 1.1370 in March. Since this time the market has peaked at 1.19 (a shift of 4.5%) but has now remained range bound between 1.1750-1.1850 since ths start of May. But what now for GBP/EUR?
For me I believe the pound will begin to find further support and may break through the 1.20 barrier heading into June, however I believe when Mr Carney takes over his reign as the head of the Central Bank then I believe he will look to impose himself immediately and look to extend QE to try and stimulate the UK economy further. Should we see this then I would expect Sterling exchange rates to fall back towards the 1.18 territory as a result. For this reason anyone looking to buy Euros I feel you may get better value in the weeks to come but those selling may wish to consider their options.
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GBP/USD Exchange Rates
As against the Euro, sterling has seen a mini-recovery against the greenback rallying from the year low of 1.489 in March to 1.559 earlier this week. This again represents a 4.5% shift in less than two months and to me represents a strong buy opportunity.
For me I feel GBP/USD is reaching a peak and would expect levels to fall back towards the 1.52/53 level as again the pound is likely to come under threat from future expectations regarding QE. I also feel it is a matter of time before problems in Europe re-surface and the major benefactor is likely to be the USD.
For those looking at GBP/USD in the coming days watch out for a speech from Federal Reserve (FED) Chairman Ben Bernanke this afternoon at 13:30 – positive tones from Bernanke are likely to lend support to the US dollar this afternoon.
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Has the Aussie bubble burst?
In the last month the pound has rallied close to 8 cents against the AUD following weaker sentiment from China, and the Reserve Bank of Australia cutting interest rates earlier this week. This is creating some great opportunities for AUD buyers a trend that may continue.
For anyone selling AUD I would urge you to take advantage of rates that are historically still very favourable. The average trade price for GBP/AUD for the last year sits around 1.54, so with levels currently at 1.52 you are still ahead of the game. For me the current trend and sentiment from Australia is a concern and I would expect rates to move towards 1.55 as I feel the central bank is still concerned about the strength of the Aussie and the impact this is having on the value of Australian exports. I would not be surprised to see another interest rate cut within the next 3 months, something that could devalue the AUD further.
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