Market Snapshot
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 | 0.27% | €680 |
| GBP/USD | 0.41% | $1,340 |
| GBP/NZD | 0.78% | NZD 3,120 |
This report will take a look at the cost of buying foreign currency and factors that could affect your currency transfer
Sterling overview
Yesterday was an extremely interesting day for sterling exchange rates. We witnessed some much better UK data than what was expected, although we did not witness big movements against the USD and Euro as the table above shows. The pound did hit significant trading levels though against both majors reaching a 4 month low against the single currency and spiking to a 1 week high against the USD. The following will give you an insight into some of the important releases that occurred yesterday.
UK Employment Figures
Sterling exchange rates strengthened against some majors yesterday after unemployment in the UK fell to 7.9% which was better than the original 8.1% expected. Unemployment fell by 50,000 to 2.53m in the last quarter. A culmination of more jobs being created and more people entering the workforce pushed the total number of people in employment to 29.6 million which is the highest since these records began in 1971.
This was welcome news for the pound andUKgovernment as the data surprised many analysts. The better outlook for employment in theUKraised the possibility that the economy may slowly be moving in the right direction. Some cynics have stated that many people are just in part time or temp jobs because they cannot get full time employment.
I am looking at the figures and thinking we are moving in the right direction but with 2.53m people still out of work it can hardly be good news for the pound orUKeconomy.
Next week we will have the first estimate of Q3 GDP (gross domestic product) and this will give us a better understanding as to how well theUKeconomy is performing.
Bank of EnglandMinutes
Yesterday also saw the release of the Bank of England minutes which at the time proved to be more Sterling-positive than some had been expected. The minutes revealed that all nine members voted to keep the base rate of interest on hold at 0.5%
In connection with the Quantitative easing (QE) saga, the members of the MPC were split in their decision to expand the level by £25-£50bn The fact that any increase to the programme appears to be on the ‘back burner’ for now, may help the Pound to strengthen over the next day or so.
As we get closer to Novembers QE decision analysts will look at the indecision of the MPC and analyse next weeks GDP figures to speculate whether they will initiate further stimulus to the UK economy.
If it is deemed that more QE is around the corner then normally this would prove to be sterling negative. For this reason I feel that the pound could lose its recent gains against the USD by early November dropping back below 1.60
Against the Euro there are so many factors that could have an affect on the pound, but I feel we will see the currency pair be range bound from 1.21 to 1.26 towards the end of the year. If you would like to make sure that you know how far your funds will go and do not wish to take the risk with volatile exchange rate fluctuation a forward contract may be ideal for your circumstances.
To be kept up to date with all the currency movements and to find out more about this contract type, please feel free to open an account with us by clicking here or call us on 0800 328 5884
4 Month Low against the Euro
Sterling fell to a 4 month low against the euro yesterday after Moody’s affirmed Spain’s credit rating on Tuesday evening. The fact that they will keep their credit rating gave the Euro a boost against the pound and USD.
A two day EU summit is starting today. They will once again discussing how they can invest in growth and look at strengthening ties between the power house that is Germany with the debt stricken economies of Europe. French President Francois Hollande says an end to the euro zone crisis is “very close” and wants a deal agreed on the first stage of a banking union.
There seems to be some very positive comments coming out of Europe recently and this is a factor as to why the Euro has gained so much in the last month.
With no data to note of for Europe today those looking at buying or selling Euros against the pound may wish to keep a close eye on the UK retail figures out this morning at 9.30. In the past this data release can be a big market mover. We are expecting the figures to come out positively so should they be disappointing the pound may well just fall below the 1.23 level.
AUD & NZD Focus
The Aussie & Kiwi Dollar both significantly gained yesterday on the back of investors becoming more confident towards Spain and in anticipation of data releases from China. Both are high risk currencies which investors will turn to for higher yields when more confidence is pumped into the market. With Spain stating that they would not need as big a bail out as first believed and the Chinese economy stabilising the southern hemisphere currencies have strengthened in the last 24 hours.
