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Feb 10
Greece Agrees Bailout
By Tom Higham
Last night Eurozone finance ministers announced that they have made requests for Greece to get €130 billion in bailout funds which is required to prevent Greece defaulting and potentially leaving the Eurozone. Before this is finalised the Greek parliment would have to approve the terms of a number of cuts and other austerity measures with both the International Monetary Fund (IMF) and the European Union (EU). Greece have until Wednesday to find a further €325 million in budget cuts which could mean a reduction in the minimum wage, more job cuts and a reform of pensions all of which has led to 48 hour strike which is due to begin today. It is not unsuprising that following these cuts (which are not the first the country has experienced) that the Greek public is unhappy and these strikes place more pressure on the government and despite the bailout funds likely to prevent Greece from a default their economic crisis is still far from over. So, if you need to buy Euros then speak to one of our currency brokers today so they can discuss the current rates and the market outlook with you in detail and discuss the options available to you.
In other Euro news we have heard this morning that German inflation is still over target at 2.1% with rising energy prices attributed to the current level. Despite the figures not reaching the target of below 2% it is still an improvement on previous months and is seen as quite good news for the whole EU economy. So, with the Greek debt issue momentarily showing some signs of stability and the German economy showing steady inflation levels confidence may start to return to the single currency economy.
If you need to transfer money abroad call us today on 0800 328 5884 or email info@currencies.co.uk
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Feb 9
Bank of England Announce More QE
By Tom Higham
The Bank of England (BoE) have today announced that they are injecting another £50 billion into the UK economy through further Quantitative Easing (QE) in an effort to stave off recession in a widely anticipated move. This means that once this latest round of QE is completed the BoE will have injected a total amount of £325 billion since it began in 2009. At the same time the BoE kept interest rates on hold at 0.5% a record low. While QE is usually seen as negative for the countries currency on this occassion there was a momentary spike as it seems the amount of QE had been over estimated, though as we approach the close of business for today Sterling exchange rates are ending on a negative trend. The outlook is gloomy for the UK and the fact they have had to inject more funds into the economy does not help, in fact it could signal that over the coming weeks and maybe even months we could see Sterling weaken against the majority of currencies.
In the past analysts have stated that QE does help boost growth but its impact is not instantaneous so this move may have come too late to stave off recession which is being so heavily predicted. Should the UK enter recession then we could see Sterling weaken considerably even with the issues in Greece.
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Feb 9
Interest Rate Decisions
By Tom Higham
Today sees the announcement of both the UK and Eurozone interest rate decisions, one of the most eagerly anticipated data sets this month. The rumours in the market are that in the UK we could see further Quantitative Easing (QE) announced following the news that UK inflation has fallen last month and that the UK economy had shrunk in the last quarter of 2011 by 0.2%. Over the last few years when we have seen QE announced it has led to Sterling weakness, in some cases the movement has been more dramatic than others and with analysts split over whether the Bank of England will announce QE or not there could be room for movement today. The announcement in the UK is due for midday so if you have a currency transfer to make please speak to us this morning to discuss your options.
At 12:45pm today we will see the Eurozone interest rate decision. Since he became the President of the European Central Bank (ECB) Mario Draghi has cut interest rates twice and they are now at 1% and there have been some rumours that there is room for another interest rate cut. However, with the Greek coalition government failing again to come to an agreement and a new deadline imposed by the ECB to have the agreement finalised and signed off by the 15th February giving the country less than a week to overcome all the hurdles that have so far delayed this agreement being finalised.
If you need to transfer money abroad then it is important to stay in contact with your currency broker here at Foreign Currency Direct plc so they can keep you inform of all the market movement and the options available to you. Call us today on 0800 328 5884 or from abroad +44 1494 725353 or email info@currencies.co.uk
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Feb 8
Greek Talks On Hold Again
By Tom Higham
Talks in Greece have been postponed again as the pressure continues to mount on the Greek government to come to an agreement with private creditors to write off 50% of Greek debt in order for the debt laden country to receive its next bailout tranche. However, Greek PM Papademos has stated that a draft agreement has been written which if correct, could mean we are soon to hear from Greece and once this is resolved it could lead to Euro strength. However, in Germany figures showed exports hit a new record high at one trillion Euros in 2011 showing that Europe’s largest economy is still performing well which was good news for the rest of Europe. Euro exchange rates have remained relatively flat against Sterling over recent weeks as the two economies have had mixed economic news released showing that both economies are close to a possible recession meaning both currencies are under pressure.
Meanwhile in the States we have heard that despite Mitt Romney’s recent victories to be the Republican Candidate nominee in a number of States a new candidate, Rick Santorum, has now won three States in a row putting serious pressure on Romney. As mentioned previously on this blog, the long term future of the US economy and therefore the Dollar could could come down to the upcoming presidential elections in America. As new candidates such as Santorum emerge as possible candidates for the White House there economic policies and there plan for the country will be analysed and this speculation could lead to Dollar movement especially the closer we get to the election. So, if you need to buy US Dollars then speak to one of our currency brokers who will be able to keep you informed of any developments in the markets that could effect your money transfer. Call us today 0800 328 5884 or email info@currencies.co.uk
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Feb 7
UK High Street Under Pressure
By Tom Higham
As the UK heads towards another possible recession there was further evidence that the current economic climate was taking its toll on the country with figures showing that the number of empty shops in 2012 is set to rise. Last year saw some major high street names enter recession including Barratts, Focus DIY, Best Buy , Habitat and Lombok. While a weakening economy has contributed to the high streets downfall the research also stated that a rise in online shopping had also hampered sales at traditional high street stores and that this would continue to rise. However, should we officially enter recession it is likely we will see retail figures fall and more boarded up shops in town centres up and down the country as consumers tighten their purse strings. With the retail sector making up a large part of the UK economy any weakness here could push the UK further into the potentially forthcoming recession and as a result could weaken the current Sterling exchange rates.
Meanwhile in Europe an EU commissioner has stated that the Euro would survive should Greece default and leave the Euro. Despite comments from Angela Merkel yesterday stating Germany will not accept Greece going bankrupt this news places more pressure on Greece and the current talks aimed at ensuring Greece get their much needed bailout funds. Talks are on-going in Europe which means there are still likely to be many twists and turns still to come. So, if you need to buy euros and are looking for the best exchange rates make sure you stay in close contact with your currency broker here at Foreign Currency Direct plc so they can keep you informed of any movement in the currency market that could impact your money transfer.
Call us today on our freephone number 0800 328 5884 or from abroad on +44 1494 725353 or email info@currencies.co.uk
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Feb 6
UK House Prices Rise
By Tom Higham
This morning news from Halifax has shown UK house prices have risen 0.6% in January, however compared to the same time last year property prices are down 1.8%. In a statement from Halifax they said “if the UK can avoid a prolonged recession we expect broad stability in house prices in 2012.” As people in the UK have so much money tied up in the housing market any movement in property prices whether positive or negative can have a big impact on the overall economy. So, the news this morning could lead to Sterling weakness however later on today we are expecting more news from Greece.
Later today party leaders from Greece’s coalition government are due to resume talks on completing a €130 billion EU rescue plan. The talks stalled again on Sunday as the Greek PM aims to get support for tough reforms as part of the condition of the bailout but with Greece needing the money by mid March should these reforms bee seen as too strict and are unsuccessful then the country run the risk of a possible default. Also today both the French and German leaders are due to hold further talks so anyone looking for the best exchange rates on buying euros will want to stay in close contact with us today so we can keep you informed of any developments. Call us on 0800 328 5884 or email info@currencies.co.uk
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Feb 3
UK Recession and The Impact on Sterling Exchange Rates
By Tom Higham
A report released from the National Institute of Economic and Social Research (NIESR) has predicted that the UK economy will enter recession in the first half of the year. Last month we saw official GDP figures show the economy shrank in the last quarter of 2011 meaning we are officially halfway to recession and now that the influencial think tank, the NIESR, have prediceted recession it will only go to put more pressure on Sterling exchange rates. The last time we entered recession we saw Sterling lose several cents against all the major currencies especially againts the Euro and US Dollar. With the UK heavily exposed to the Eurozone debt crisis and with a stagnent housing market and rising unemployment the threat of recession has increased significantly, so for those clients looking for the best exchange rates on transferring money abroad the question is what will this mean to the rates of exchange?
If history is anything to go by recession could lead to major Sterling weakness and the current high levels we are witnessing against some of the major currencies (GBP-EUR close to a 16 month high and GBP-USD at around a 5 week high) could be short lived. Recently there has been increased talk of further Quantitative Easing (QE) in the UK to try and stave off recession so next Thursday’s interest rate decision, where QE could be introduced, will be very important for any clients looking to sell Sterling and transfer money abroad. While QE could be used to help reduce the chance of recession it also increases the amount of Sterling in circulation which reduces its value therefore resulting in the exchange rates falling.
If you would like to talk to a currency expert to discuss your requirements, the market outlook and the options available to you please call us today on 0800 328 5884 / +44 1494 725353 or email info@currencies.co.uk
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Feb 2
UK Manufacturing Improves
By Tom Higham
Figures announced yesterday showed that the UK manufacturing sector returned to growth last month and in fact showed its highest level for 8 month, good news for the UK economy and Sterling exchange rates. The Purchasing Managers Index, which showed a figure of 52.1 yesterday, showed that new export orders continued to increase. This can in part be attributed to a weak pound as with Sterling Euro and Sterling Dollar exchange rates remaining at relatively low levels historically it means UK goods and services are much cheaper to import which helps the UK economy.
The main economic data release today is European Producer Price Index (PPI) which is an index that measures the change in the price of commodities, the expectation is for a fall. Should we see a fall as expected in PPI today then it could result in Euro weakness and therefore a good opportunity for those clients looking to buy euros.
Across the Pond today we are expecting to hear from the Governor of the FED as he gives a press conference outlining how he and the central bank see the current US economy performing and their expectations going forward, this can often give a good insight into how the Dollar could perform going forward, this will be especially important with non-farm payroll figures announced tomorrow. So, any clients looking for the best dollar exchange rates may want to stay in close contact with your currency broker so you can be kept informed of all the market movement.
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Feb 1
UK House Prices Fall
By Tom Higham
News from Nationwide yesterday showed that house prices fell in January by 0.2% compared to the previous month with average house prices in the UK now at £162,228. With the UK public having so much money invested in the housing market this information is seen as a very important indicator for the performance of the UK economy. Falling house prices can mean a fall in house sales which means more money can be tied up in bricks and mortar rather than moving through the economy so this news is not good news for Sterling exchange rates and should we see house prices continue to fall it could help push the country into official recession.
In Europe yesterday we saw that unemployment had hit a new record with Spain at an incredibly high figure of 22.9% of the country out of work. This news coupled with the fact that Greek debt talks have not been resolved led to Sterling gaining over 1% against the Euro yesterday which has presented some excellent buying opportunities for clients looking to buy euros. If you are looking to transfer money overseas and want the best exchange rates speak to us today so we can discuss your currency requirements and all the options available to you. Our trading lines are open Monday-Thursday 8:30am – 6pm and Friday’s 8:30-5pm and you can speak directly to one of our experienced currency brokers on 0800 328 5884 or +44 1494 725353 or email info@currencies.co.uk
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Jan 31
UK Refuse EU Agreement
By Tom Higham
Every EU member states except the Czech Republic and the UK have signed up to a treaty aimed at enforcing budget discipline within the Eurozone. The UK refused to sign as it as they had “legal concerns” about the enforcing of the treaty while the Czech’s cited constitutional reasons for their refusal to sign. The aim of the treaty is to have closer economic co-ordination across Europe to help prevent excessive debts building up and therefore prevent more Greek style debt levels reducing the pressure on the Euro. The fact the UK have again not been involved in the latest treaty shows that there is a lack of cohesion in Europe and puts yet more strain on not only UK – EU relations but also Sterling Euro exchange rates.
In France we heard yesterday that France have sut their 2012 growth forecast by half. France announced this due to the declining economic situation in Greece and their exposure to the Greek debt levels. France had their debt rating downgraded recently ans shows that this decision could have been accurate as France, one of Europe’s biggest economies expects to be heading back towards recession levels towards the end of this year. In an aim to create growth French President Nicolas Sarkozy has introduced a tax on all financial transactions .
If you are looking for the best exchange rates then speak to one of our currency broker who will be more than happy to discuss your currency requirements and all the options available to you including spot and forward contracts. Call our dealing floor today on 0800 328 5884 or +44 1494 725353 or email info@currencies.co.uk
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