Market Summary
This report will take a look at the cost of sending money overseas and factors that could affect your currency transfer, focusing on:
- Euro news- when to buy euros?
- UK bank lending starts – GBP currency update
- USD update – Breaking News
- ILS update
The table below shows the percentage movement of exchange rates over the last 7 days along with the extra currency you could have bought if buying with £200,000.
| Currency Pair | % Change | Difference on £200,000 |
|---|---|---|
| GBP/EUR | 1% | €2500 |
| GBP/USD | 1.6% | $5050 |
| GBP/IRL | 3% | ILS 37,500 |
Euro news- when to buy euros?
GBPEUR rates have been falling recently all in anticipation for the the Interest Rate decision from Europe due later today. Due to high level meetings across the single state also including the US, speculation has been building that a fundamental change will take place which all started on Friday when the European Central Bank President, Mario Draghi, pledged that he is well positioned to resolve the crises.
Yesterday European Unemployment was released showing yet another increase in the number of people without a job which added to the above expectation creating EURO STRENGTH. An additional 112,000 people lost their jobs in the run up to summer, pushing the total up to 11.2% or over 12 million across the single currency block, the highest since 1995. Spain remains the worst at 24.9% followed by Italy. Interestingly Germany, the Eurozone’s strongest nation, also saw an increase to 6.8% which is a record high.
However, will any fundamental change be announced later or is it just another unified front with no real change? All I can say is that it is in the Euros interest to reinstall confidence. So anyone with a currency exchange to make should review their calculations, and their risks, making sure you are covered before NOON TODAY. As if there is no change or a limp release I would expect repercussions, all the euros gains will probably evaporate in minutes.
If you are buying the euro, I would hold off but limit risk. If I was a seller of euros I would not take the risk and move before hand on the expectation of change.
UK bank lending starts – GBP currency update
A part of the Bank of England’s plans to boost the economy was launched yesterday, a cheap loan facility to banks under the Funding for Lending initiative. This allows banks to borrow funds under market value at just 0.25% on the promise that they lend more with penalties if they don’t.
I am a fan of this program and can see it making a good impact on the poorly performing house market which has reported falls in both house values and mortgage approvals recently.
I would expect this to improve the UK housing market and therefore the currency market in the future, but probably months rather than weeks. The real short-term forecast for sterling depends on the Interest rates decision today. This has been well reported over the last few market reports as there are expectations of either more Quantitative Easing (QE) or an interest rate drop buy the Bank of England. I would not expect a drop in interest rates as they are at their lowest for 315 years, plus I think it is too early to see results from the last round of QE. Either way I would expect sterling to either gain a little today or lose a lot by the close of the day against a basket of currencies.
USD update – Breaking News
Last night the US Federal Reserve said that they are ready to act against a weakening US economy but as expected stopped short of any further aggressive measures for now. I personally think that the FED held fire on releasing any new policies due to the key meeting in Europe happening later today. They did however confirm that they have pushed back the expectation of an interest rate hike to 2015.
Overall the US is still slowing down as fears of another financial crisis are thought to have kept business and consumers under spending on US products worldwide. Cable prices have been driven by traders risk appetite over the last week but as we enter a new month the amount of data being released should make the dollar a little easier to forecast. Later today we have US Factory Orders and on Friday Nonfarm Payroll, Unemployment & House Earning.
Currently these are all expected to fall for the dollar so as a result we could see GBPUSD up towards 1.58 by the close of tomorrow. Either way make sure you are working smart and timing your transfers; contact us today on 01494 725353 for more information to help with this plus access to award winning exchange rates that normally save clients between 2%-4% against the banks.
ILS reach near 3 year high
I thought I would remind you that here we trade over 30 different currencies including many that do not get a regular mention. One of interest currently is the Israeli Shekel that is at a near 3 year high following intervention by the Bank of Israel. The shekel has taken a knock recently due to regional security concerns, an increase in the budget deficit and after their growth forecasts have been revised down.
If you are trading any currency make sure you contact Currencies.co.uk to make sure you are getting the best exchange rates.
