Monthly Archives: September 2010
The outlook for Sterling
Over the last few weeks there have been a number of mixed comments regarding the outlook for the pound and where currency forecasts will go in the future. Generally there have been good results for the growth of the UK but in real terms I believe they just show that we have improved, as expected. There has really been very little to jump up in celebration about.
I think over the coming 4 months we will see sterling fall in value for a number of reasons;
• Members of the MPC are talking about QE once more
• The UK growth forecast has now been reduced 3 times for next year
• Next month we have more cuts planned
• Many expect Unemployment to rise and consumer confidence to fall
• National public sector strikes are now planned with mass walk outs
So the question stands that if you are buying currency in the coming months should you buy now. Well there are tools available to limit exposure and try to catch the top rates. These are what I would suggest.
For more information and to discuss how the next month could change your situation feel free to contact us today.
Will the Euro strengthen further?
The Pound has weakened again in early morning trading presenting continued good opportunities for those selling euros.
The real question is will it keep dropping? Yesterday Andrew Posen a respected member of the MPC came out and said further quantitative easing looks highly likely. This coupled with the budget cuts we are expecting to see in October could present a real challenge to sterling strength and it may be the case that we are now seeing these threats being priced into the market.
The spotlight is off the euro for now. Against the dollar it is at a high not seen since March of this year and against sterling a high not seen since May.
There are still deep rooted problems within the eurozone however, some of which may attract some media attention today. There are numerous strikes planned across Europe against austerity measures by the national governments. Whilst this may not immediately weaken the euro, it does show the public resentment against the measures and these are not the first wave.
There is large potential for a major weakening of the euro, but with sterling generating lots of questions marks, it could be sometime before it impacts the GBPEUR rate, and those buying euros may wish to consider this.
To find out more about the best deals on euros against the pound or to find out more about award winning rates of exchange for any currency, please fill in the contact form.
Increased Money Supply weakens Euro?
The sterling euro rate has found some stability today following wild fluctuations last week. Movement from high to low of over three cents presented some great opportunities for those with a sharp eye.
Data today has shown an increase in the money supply in europe. The information is seen as an important measure of inflation and this could set the pace for future interest rate decisions by the ECB.
As discussed in previous posts, any calls for the ECB to raise interest rates will generate instability in the eurozone due to the varied state of the eurozone economies. On one hand you have German powering ahead and growing it’s economy, while on the other you have troubled economies deep in debt, with shrinking growth. How can you apply one coherent policy to effectively manage such varied economies? This is the trouble the ECB will face and it is easily argused that an increased money supply in the eurozone (at this level typcially a sign of strength) actually weakens the currency.
Tomorrow we see UK GDP figures. Following strong results earlier in the year, this should be interesting as a guide to the GBPEUR rate for the rest of the year. Stay in touch with the ERF blog to see what happens!
To secure the best deals on euros against the pound and make the most of any foreign currency bank to bank transfer, please contact us.
Increased Investor Risk Appetite helps Euro?
The Federal Reserve of Bank of America has decided to keep interest rates on hold in the US. No major suprise really. With rates at 0.25% currently and the US economy still needing a major boost due to ‘sluggish’ growth a rise was highly unlikely.
Equally a drop in rates was not anticipated. Instead the Fed have committed to further economic stimulus in some form. This has helped weaken the dollar for two reasons.
- The prospect of further stimulus is a sign of a fragile economy, and having to inject liquidity is not encouraging.
- The fact the worlds largest economy is boosting it’s own helps improve the global economy and hence other more riskier investments become more attractive – eg other currencies.
This last point is interesting for the euro because as a ’riskier’ currency it has been trading very strongly against both the dollar and sterling. Poor house sales figures, lower mortgage approval numbers and lower lending levels to business have all lend to sterling weakness this week. The difference between the high and the low on the euro in the last month is 3.98%.
How fair this term riskier currency is to the euro is certainly debatable since as the world’s second most traded currency after the dollar it does eschew stability. As stated in previous posts the eurozone will not be allowed to just collapse following the debt crisis and currently the markets are very much admiring the euro. If this continues and the UK’s economic woes continue to shine – which is likely considering the budget cuts due to be announced in the coming month – I would expect GBPEUR to push much closer to the 1.10 level eradicating all the gains we have seen this year.
Those with future euro requirements should note we have lost nearly 2.5 cents since Monday. On a £200,000 transfer to euros, this would equate to a €5000 loss. Those with future buying euro requirements should consider how this could affect the value of your transfer.
As specialist currency brokers we can secure today’s rates for the future on forward contracts. Particularly beneficial for those dealing in property and also business clients where a varying exchange rate can affect profits.
To find out more about the best deals on euros against the pound please fill in the contact form and you will be contacted by experienced currency traders who can save you time, hassle and money.
7 week low GBPEUR
Today we have more information for the UK that could weaken our position. This is the money lending figures and gives us information about the amount of money the UK government is borrowing. This traditionally used to be a small report but with a higher public knowledge of the level of debt the UK is in it gets a lot of interest and can move the markets significantly. Unfortunately the predicted figures show an increase in these figures so I would be surprised if the pound did strengthen today.
This could extend yesterdays loses following news the UK banks are lending less with UK mortgage’s reaching close to a 10 year low. The outlook is starting to match the exchange forecast many had about a weaker pound in the run up to Christmas.
Clients looking to avoid a potential worse rate can use a number of tools to secure a rate sooner rather than later. This includes a forward contract that only requires a deposit to be avalible for a transfer in the future. So in turn can lock in the rate at any point for a requirement in the future.
We have had a lot of enquiries recently around this topic so for more information please get in contact and we will be happy to help.
Euro Rate forecast Readers – Make your Sterling Euro predicitons for September and win £1500!!
Our friends over at Foreign Currency Direct are once again running their fantastic, free to enter competition where you can win £1500 merely by having a guess at where Sterling Euro will be at the end of the month.
It takes no more than two minutes to enter and is completely free of charge so why not click on the banner below and have a go.
I ended up around 1.5cents out last time… not bad over the course of a whole month! My guess this time is 1.1739 – the month ahead I believe may be tough for Sterling – Lets try and get the first Euro Rate Forecast winner this time round, you have nothing to lose!
The week ahead
Morning Readers,
This week there are a number of key reports people that are looking to complete a money transfer should be aware off. The largest in my opinion is Wednesday with the Bank of England minutes being released. This could really weaken the pound if Quantitative Easing (QE) is mentioned once more. This is the process of printing money which was used last year to restart growth in the UK, at the time we saw severe looses for the pound which we could see again. So this could really change exchange rates and currency forecasts. It is thought this will be one of the only options left for the government as many are expecting larger unemployment on the run up to Christmas.
Euro traders should also watch the EU industrial orders also on Wednesday. Both Germany and French economies have kept the EU afloat in 2010, predominantly through their manufacturing bases so this could be key.
GBPUSD reached close to a 5 week high on Friday and their key release this week is their interest rate decision tomorrow. I would image this to stay steady at 0.25%, but like the UK there is an outside chance of more QE.
For more information feel free to contact us using the enquiry form.
Question marks over the UK’s economic recovery have again been raised following poor retail sales figures and an increased unemployment benefit claimant count.
This is really not encouraging when you consider that the budget cuts for the UK are still to be announced and still to come into effect. This probably explains why we have seen sterling weakness lately and particularly against the euro, a very poor show.
I would expect this to continue for the forseeable and when looking at the GBPEUR rate it could be a lesser of two evils. What will be worse the UK’s worrying and unpredictable outlook, or the euro’s uncertain debt position.
The Eurozone has upgraded it’s growth forecasts for this year so this may be a sign that the eurozone will outperform the UK and we could therefore be about to enter a period of pound weakness. This time two years ago, we saw the start of severe sterling losses against the euro and the rates have been very unpredictable.
What we can do is assess your requirements professionally and analyse the market and look to when may be the best time to make your transfer. This is achieved by analysis of upcoming data. So not only can you get a rate that is exceptionally close to the market rate, you can also do this at a time that seeks to get the most from the market. To find out more about the best deals on euros please get in touch.
7 week low for the pound against the euro
Yesterday after far poorer retail sales figures for the UK than expected the pound reached another low. It lost against most of the major currencies as figures showed retail figures had shrunk for the first time since January. This fuelled thoughts that the UK could enter a recession once more and caused a mass sell for the pound. Pound euro forecast seem to becoming true with as the pound has now reached a 7 week low against the euro. The Dollar however is still weakening generally and pound dollar forecast is still unclear after the recent news from Japan.
I am still concerned that the UK could either be heading towards the recession or perhaps the BOE are aiming for a weaker pound to help our trade balance and exports.
For more information around this topic and how it could change your position please contact us today.
