The EUR had broken through 1.25 against GBP earlier this week but the spike was short lived, with the latest Bank of England (BoE) minutes pushing the Pound back above this threshold. The EUR made gains against Sterling earlier this week primarily because UK inflation data came out worse than expected, which in turn pushed the Pound’s value down. This is interesting as it shows when the EUR has strengthened recently it is not because any specific market confidence in the single currency.
Poor Eurozone PMI data released today will do little to change the perception of a EUR, which has been handicapped by a struggling, stagnant economy. GBP/EUR looks likely to remain range-bound between 1.23-1.27 in the short-term and I do believe the EUR will find protection in this range.
EUR/USD rates remain above 1.30 for the time being but with the recent improvements in the US economy, including yesterday’s Federal Reserve minutes, this level could soon be breached.
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The Euro has had a day of declines against many of the major currencies out there by an average of 0.3%
Against the pound the Euro dipped from 1.2475 (0.8016) to 1.2545 (0.7971) in the space of a few minutes after the minutes were released by the Bank of England of their last interest rate decision. For the first time since 2011 2 members from the central bank voted for interest rates to rise. It was a little surprising as we expecting one member at best to vote for the hike. The pound could have easily strengthened by more but cemented itself around the 1.2520 (0.7987) level.
In Europe German PPI dipped and tomorrow we await all the manufacturing data out of Germany and the whole Euro block. In the UK for those trading GBP/EUR the retail figures will have a big impact on tomorrows movement. We are expecting the sector to grow and any change will have an impact on the rates on teh single currency.
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The Euro appears to be on course for future losses which may manifest in the next month or so owing to continued pressure on the Eurozone economy to show some improvements in their economic outlook. Some months ago we were in a similair position and Marios Draghi announced a range of measures to ease liquidity in the Eurozone – that is making money more cheaply available to try and stimulate the economy. Unemployment is still a big problem in the Eurozone and boosting growth will help to combat this problem.
The cutting of their base interest rate has so far failed to ignite the economy and stave off the deflationary pressures in the Eurozone. Last month’s data has so far all been rather worrying and I am of the opinion anyone holding out expecting larger moves back in their favour in the future should beware of the risk involved. If you look at the historic charts the GBPEUR rate used to be much higher in the past flirting with levels of 1.50 – 1.60 for a period of time. Therefore the more favourable recent moves which we have seen could be viewed as an anomaly never to return as the economic recovery in the UK gathers pace.
All in all a strong pound and rising Eurozone concerns seems to indicate to me a deterioration in the current levels for those selling euros for GBP. If you need to make an exchange now or in the future please contact me Jonathan on firstname.lastname@example.org
After the big drop in GBP EUR rates last week following the Bank of England Quarterly Inflation Report it did look as if the pound was making some headway yesterday. However inflation figures this morning showed official figures has dropped from 1.9% to 1.6% whereas they had expected to come in at 1.8%. This lower than expected inflation figure means it is less likely the Bank of England will have to raise interest rates soon and reinforces their position from last week.
However Euro sellers beware as this spike in favour may not last indefinitely with a lot of European jobs and CPI data out next week, all of which is expected to be weak. This could put pressure on the ECB for their September meeting and see the Euro slip so if you are selling Euros I would be inclined to take advantage of current levels either on spot or forward contracts.
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Following last weeks run the Euro has lost ground against the pound shifting back above 1.25. This comes on what was a relatively quiet day in the euro zone and the UK.
Should you be looking at the GBP/EUR pairing then much of this week will be dominated by UK data starting with UK inflation figures tomorrow at 09:30. This will be followed by what i my view is likely to be the biggest market mover this week in the form of the Bank of England minutes on Wednesday at 09:30. These minutes will show how the nine members of the monetary policy committee voted at the interest rate meeting held at the start of the week. For me it is highly likely the vote will have been 9-0 in favour of keeping the base rate on hold at 0.5% – however should any member have voted for a rate hike then expect a strong day for the pound.
This week data from the euro zone is relatively light with the most notable data being consumer confidence figures on Thursday at 15:00. Figures are forecast to fall further into negative territory. I would expect the euro yto lose some of the gains seens last week.
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Sterling has had a torrid couple of days against the Euro following Mark Carney’s comments at the Bank of England Quarterly Inflation. EU inflation figures yesterday weren’t particularly robust and GDP was slightly lower than forecast but the Euro was able to hold on to most of its recent gains despite this. However it was not exactly a glowing endorsement that events in Europe are turning around, so I suspect the Euro will remain very vulnerable.
With UK GDP revisions due out today it could provide a small boost for sterling as long as the figures are at least on or above expectations, but I don’t think the pound will go shooting up in the short term as it is unlikely to affect the markets view on UK interest rates given Carney’s recent comments. Next week we do have UK inflation and the Bank of England Minutes, but again I do not expect either to have a significant effect on the pound unless the minutes show one of the MPC voted for a rate hike this month (again unlikely following the inflation report and that all 9 voted to hold for the last few months).
To my mind this is currently a great selling opportunity for anyone holding euro and wanting to change euro to sterling for example from the proceeds of a property sale in France or Spain. The UK economy will still likely be on track and at some point UK interest rates will go up, it is just a question of timing, and when they do the pound will rise again. In contrast the Euro still has a lot of problems ahead and I cannot see interest rates there going up for years- and there is always the risk that they may change policy and potentially weaken the Euro eg through some form of Quantitative Easing program similar to the UK and the US.
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Today euro zone GDP figures came in at 0.7% as expected causing little movement in Euro exchange rates. Tomorrow it will be the turn of the UK, with figures released at 09:30. As with the euro zone levels are forecast to remain the same as July coming in at 0.8% and should this be the case then I would expect another relatively quiet day, particularly with much of Europe closed for a bank holiday. Of course any deviation from the expected and we could see shifts for sterling in either direction, something to keep you on your toes.
Following yesterdays sharp losses for the pound, the Euro is now trading at close to a three month high creating some good opportunities for Euro sellers. A similar trend can be seen against the US dollar with levels close to the best since May.
With tomorrow a relatively quiet day in the Euro Zone focus for anyone looking at GBP/EUR will be the UK GDP data release and EUR/USD your focus should be on US data at 14:15 with the release of industrial production data. Expectation is for a slight increase month on month from 0.2% to 0.3% and this could lend support to the US dollar to finish the week.
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The EUR has strengthened against GBP this morning, pushing GBP/EUR rates back to 1.25 on the exchange, despite opening the day above 1.26. This positive move for the EUR against the Pound has come about despite weaker than expected Eurozone Industrial Production figures, which indicates this move has been initiated by a lack of investor confidence in the Pound.
Weaker than expected UK employment data, coupled with Bank of England (BoE) governor Mark Carney’s speech, has drained investor confidence in the Pound, which has helped the EUR move away from the recent two year low and put pressure on 1.25. Whether this is a short-term realignment for the single currency, or the start of a longer-term positive trend, is likely to be dependent on the key economic data releases over the remainder of the trading week.
Tomorrow we have a host of key Eurozone data, including inflation figures and Gross Domestic Product (GDP) figures. GDP figures are always seen as key releases by investors, as they give an indication into the relative health of that country’s economy and its growth prospects. With figures expected to come in worse than previous we may find the EUR’s momentum is short lived but any figure above the expected 0.7% is likely to push GBP/EUR rates below 1.25 on the exchange. Friday see’s the release of the latest UK GDP figures and again this release is likely to cause additional volatility for GBP/EUR exchange rates.
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The Euro has weakened over the course of the day against most of the majors on the back of the poor economic sentiment survey which came out of Germany this morning. It has really hindered the single currency and sent GBP/EUR back up towards 1.2584 from the low of the day of 1.2531. Investor morale in Germany is now at its lowest in over one and a half years which is a a further sign that the euro zone recovery is faltering and may reap further pressure on the Euro.
If you are looking at buying or selling the single currency against the pound then tomorrow there is a host of economic releases which will more than likely have an impact on the rates going forward until the end of the week.
At 7 am it all kicks off with all the eagerly awaited inflation data out from Germany which I feel will cause the Euro to weaken as inflation is continuing to fall and a rise above expectation will be needed for anyone looking at selling Euros. The same data is out for France and Spain.
Then in the UK we have the unemployment data followed by the Quarterly inflation report and a speech by the Governor of the Bank of England. The Unemployment data will be key for market movement as any drop in this figure will surely mean further calls for interest rates to rise sooner leading to more sterling strengthen.
I still feel that there is more scope for the Euro to continue to weaken than recover its losses. If you are selling the single currency the sooner you trade I believe the more you will achieve and you will probably look back in a years time and think thank god I traded when I did.
If you do not have full funds available please remember you can always forward buy your currency by lodging a small deposit now and settling the balance at an agreed date in the future. If you would like more information on this contract or anything else to do with our service then please feel free to email myself Ben Amrany at firstname.lastname@example.org
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Sterling has started the week on the right track pushing market levels back close to 1.2550. This week we have a host of data from the euro zone starting with industrial production data on Wednesday (10:00) followed by the important inflation and GDP data on Thursday (10:00), this all follows the ECB monthly report at 09:00. The euro zone is still having issues with deflation and it will again bring into focus Thursdays data. Figures are forecast to fall from 0.5% to 0.4% and if as expected I would look for the Euro to fall and would expect to see GBP/EUR back above 1.26 and EUR/USD into the low 1.33s by the weekend.
Should you have Euros to sell I would be tempted to avoid Thursdays release, likewise should you be buying then it might be worth holding on until Thursday. Although a word of warning for those with an interest in GBP/EUR as the Bank of England quarterly inflation report is released at 10:30 on Wednesday.
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