Monthly Archives: March 2011
Unemployment, unemployment, unemployment
Over the next 36 hours we have key unemployment figures being released from both Europe and the US. This morning we have already had the German release. As the strongest economy across the Euro-zone, German data is watched closely, seen as a key indicator to the area as a whole. European figures are released tomorrow at 10:00 with US data following at 13:30 (both unemplyment and non-farm figures.) German figures showed a marked improvement to 7.1% from 7.3% last month. The consensus was expecting 7.2% so we are currently experiencing a spike in the market.
I would not be surprised to see the Euro continue to gain today against both the Pound and the Dollar as the UK makes their monthly payments to the EU. I would expect a 6 month high against sterling and perhapes a new high against the dollar. For more information on how to take advanatage before the speculated interest rate rise next week contact your broker today.
Irish Bailout Threat to Euro Strength?
The Irish Republic will today announce results of the Irish Stress Tests. They are expected to show a shortfall of €30 bn! Much of the shortfall is likely to be attributed to mortgages and private pension funds which have decreased in value. Indeed Irish Life and Permanent the UK’s largest provider of pension and mortgage funds is expected to be nationalised.
One of the greater concerns for the Irish is the conditions of the loans received from the Eurozone and the IMF. With Interest Rates averaging 5.8% across all of the loans handed out there is a danger that the governments commitment to cutting expenditure could throw the country into a never ending debt spiral that would endanger the Euro.
Only time will tell and at present the markets do not seem phased by these developments. GBPEUR is still in the low teens at 1.1377. It appears the prevailing sentiment relating to interest rates and economic outlooks are presiding over current GBPEUR trends.
If you are buying or selling a property abroad, have business transactions to carry out or simply need to get money overseas for any other reason and want the best exchange rates, just fill in the form below and one of the experienced traders that write on this blog will be in touch shortly. Alternatively, if you would like assistance in finding your dream home abroad then feel free to visit www.overseaspropertysearcher.com and let one of our property experts make the hunt much easier for you.
EURO news – could GBPEUR reach 1.10?
Consumer confidence was released earlier today from the EU and shows a worrying result. It was expected to show a slight fall through this month although in reality, it was released significantly worse. This is probably down to Portugal and Ireland who are both rumoured to be looking to negotiate some sort of bail out/support. This resulted in the first EUR/GBP and EUR/USD loss for some time with the Euro dropping nearly half a percent against both.
It again creates more speculation about the potential interest rate rise coming as soon as next Thursday. The ECB speaker Makuch spoke yesterday and pointed out that the April rate hike is very likely although of course not a certainty. In my opinion although Consumer Confidence figures dipped a rate hike in April remains likely.
Goldman Sachs announced earlier this year that the GBP/EUR pair could reach 1.10 and that now doesn’t look beyond the realms of possibility.
If you are looking at either buying or selling Euros timing will be key as interest rates hang in the balance.
Sterling Euro weakness – Euro strength or Sterling weakness?
The euro remains very attractive against the pound and the dollar despite the ongoing problems presented by European Debt and the probable bailouts or defaults. I have read today of a report by the BBC which stated two thirds of European economists surveyed expect Greece to default on their debt.
Last year such an announcement would have had the markets in absolute turmoil, indeed much of last years weakness on the euro was due to the debt crisis.
This year despite the well publicised problems in Portugal, Ireland, Greece and Spain the Euro remains a very unattractive prospect for those looking at buying overseas property. This is due to a number of factors:
– EFSF – The European Financial Stability Facility is designed to act a safety net for indebted European nations. The fund has recently been made permanent and has given the markets the confidence that the ECB and stronger Eurozone members are serious about coming to the financial aid of the weaker members – a criticism levied at many members. As discussed European Debt concerns had been a major weight on the euro last year but now the issue is well known and appears to be being dealt with confidence has been restored. It is worth noting that longer term this is likely to be the issue that could present Euro weakness as concerns arise over the inability of the indebted nations to repay their debts.
– Interest Rate Decisions – The UK looked almost certain to have a rate hike in the first quarter of this year and the pound made strong gains on the euro as investors positioned themselves for the event. We then had a barrage of data releases showing that in all probability the UK wasn’t ready for a hike and as such these positions were unwound and led to sterling weakness. Conversely the Eurozone has been floating the prospects of an interest rate hike as soon as next month. With unemployment falling it appears the Eurozone may have turned a corner and will be the first to stomach a rise in the base rate. This has compounded the problems for the GBPEUR rate as investors have taken up stronger positions on the Euro. The US economy whilst growing is still incredibly weak and due to the amount of cheap loans issued to stimulate recovery cannot afford to go raising rates. They are still administering the latest round of Quantitative Easing and will need to fully assess the effects before committing to a rate hike.
- Economic Outlooks - The economic outlook for the Euro has improved this year with enouraging signs in manufacturing and factory orders. Unemployment is falling and the overall picture remains bouyant despite the problems of the PIGS. The UK is suffering from very low growth and the immediate future does not look rosy either. It could be months or a year before the economy is deemed strong enough to be able to handle a rate hike and even then if the Euro has already had one, it is unlikely to be a major mover.
Despite the grim news for those buying Euros, such a trend is excellent news for those selling euros. Movements this month of over 5% in your favour are presenting a great opportunity to maximise those property sales.
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For an unbiased, informative and possibly lucrative discussion of current trends why not fill in the contact us form and you can speak to an experienced currency trader who will be able to explain all the ins and outs of safely, securely and profitably transferring funds overseas.
Speculation continues for EURO interest rate hike
I personally believe once of the biggest drivers for exchange rate movement this year has been the race between the UK, US and the Euro zone as to who will raise interest rates first. At the beginning of the year the UK looked the strongest with economic figures showing a marked improvement however recently inflation has climbed along with unemployment changing the growth forecast in the UK and therefore weakening the likelihood of a rate increase.
The Euro zone has recently become the clear favourite and many are expecting a rise as soon as next week which in turn has strengthened the euro to the strongest rate against sterling for nearly 6 months. This has been down to continue growth in the largest countries and rising inflation as prices worldwide continue to climb. Next week could see rates improve further for the euro so anyone with a GBPEUR or USDEUR may wish to avoid the risk of further losses.
On the other side of the coin you have Portugal as mentioned in Jonny’s blog below that could raise risks across the Euro zone and could push back a rise for yet another year. Either way I cannot stress the importance of using a broker over the bank on all money transfers. They can normally provide savings of up to 4% and can help you time the exchange you need to maximise the exchange rate.
Portuguese Crisis not affecting the Euro Rate
Despite Portugal appearing to be in line to be receiving a bailout we are not seeing any weakness for the euro. Infact what we are witnessing is strength on the GBPEUR rate due to the problems with the UK’s economy. EURUSD remains very strong as well.
Why is this?
It is wlll known that there are problems with debt levels in the eurozone. If you, I and every other headline is talking about the dire straits of some eurozone countries it is no suprise the markets are aware too. And let us see the state of these countries in the light of the position of say the UK and the US. Both these countries are in the mire too! The difference for investors at the moment with the euro is the prospect of an interest rate hike. Trichet has hinted at a hike next month and on balance it does appear the eurozone is the best placed to handle a hike.
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Euro confidence today expected to fall
Later today the Euro zone releases the two largest key reports of the week, namely the Industry New Orders and Consumer Confidence. These are both expected to be weaker than last months so Euro weakness is widely expected. Over the last month the inflation figures have been growing across the globe due to food and oil costs but also growth forecasts across Europe have contracted, all this results in many people being concerned about future tax and cost increases. This is a large part of why expectations are for falls today.
The Euro is currently trading close to a 6 month high against Sterling and the Dollar, so it may be prudent to look at trades before the releases with your chosen broker. However also keep an eye on the UK today as they release Bank of England minutes and their 2011 Budget through today. The US also has an important release today which is US new home sales due at 2 pm GMT.
Important Day for the Euro Sterling Rate
We know the Euro has been particularly strong recently climbing to a 5 month high against the pound. This was helped by a pound weakened as the prospect of an interest hike was removed for the UK.
Yesterday Inflation data for the UK was released showing a much higher than expected increase in the price of goods in the UK. And it was not just due to overseas commodity prices and oil prices that inflation rose. ‘Core’ Inflation which measures the change in price of goods excluding volatile goods such as food and fuel was shown to have risen to 3.4%, well above the 2% target set by the Bank Of England.
This is worrying for those seeking a weak GBPEUR rate as it counters the prevailing sentiment on the MPC that inflation is only high due to high oil and commodity prices and increases calls for a rate hike by the Bank of England.
Sterling euro rose close to a 1 cent between the high and the low yesterday presenting a good time for those buying euros.
Today at 09.30 we have the UK Bank of England Minutes which will tell us how the MPC voted in the last Interest Rate setting meeting. Then at 12.30 the chancellor will announce the UK’s budget focusing on growth.
Recent data for the UK has been confusing to say the least! Industrial Surveys and PMI data has shown improvements for the UK economy while we have had negative growth in the last quarter and yesterdays Public Sector Net borrowing figures were significantly higher than expected too.
After a pretty poor time for the GBPEUR rate and the pound generally, investors will be looking to today’s events to see if we can expect some improvements for the pound.
The next Interest Rate decision for the UK is April 7th so failing anything seismic today, this will probably be the next major marker for the pound that could affect the sterling euro rate.
If you are buying or selling a property abroad, have business transactions to carry out or simply need to get money overseas for any other reason and want the best exchange rates, just fill in the form below and one of the experienced traders that write on this blog will be in touch shortly. Alternatively, if you would like assistance in finding your dream home abroad then feel free to visit www.overseaspropertysearcher.com and let one of our property experts make the hunt much easier for you.
Retail figures surprise GBPEUR
This morning the UK released the first of many reports due over the next 36 hours, the UK Retail Figures. These came out surprisingly better than people had expected and is already changing forecasts for sterling this week. The figures showed an improvement to 5.5%, the highest rate for 20 years.
With the UK Budget and Bank of England minutes due tomorrow this week has the potential to be very busy with huge swings in exchange rates and therefore effecting the cost of money transfers. The UK Budget starts just after the release of the most recent interest rate decision by the Bank of England earlier this year. Many are expecting rates to rise this year but the split of the vote between the 9 members will be key in forecasting when this may take. I personally think it is likely we will see a small rise in the next 2 months with larger increases towards the end of the year. This is on the bases of seeing a 6-3 split to hold rates steady, if they were to come out with a 5-4 split you would expect sterling to gain and Euros to be worth less.
The budget is another matter and really needs to show a clear path to growth in the UK, ideally with more investment in job creation and industries across the country. Many are expecting a fuel cut of some such with a promise of making fuel cheaper by 1 p I don’t think it is something to start jumping about. Plus of course with UK borrowing figures so high we also have to calculate the costs of the new “war” in North Africa.
Tomorrow could be one of the most volatile days for sterling this year for the pound if both the budget and the bank of England minutes combined do not provide a clear or pretty picture for sterling.
Very busy week for sterling euro
I expect this week to be a very volatile one with a number of key bits of data out for sterling that investors will have to digest. For starters tomorrow we have UK retail figures, inflation and Consumer confidence. These in themselves are all going to be watched at with great interest but then on Wednesday we have the Bank of England (BofE) minutes and the UK Budget.
Inflation is expected to climb further to over 5%, well above the BofE target of 2%, Retail figures are expected to climb however many will be wary as confidence levels have been very low. The minutes are expected to show a split of 6-3 against a interest rate rise. With all this information you could expect to see markets move by over 3% between now and the end of the week.
If you are in a position looking to complete an exchange I would suggest you make sure funds are available. Also judging on your risk appetite it may be prudent to secure the rates currently rather than running through the gauntlet of the markets this week. Either way speak to a specialist currency broker as they will be able to provide up to a 4% saving against the standard high street banks. Look back constantly to get up to date information as it breaks or contact us for a personal approach to your currency exchange.
Fantastic Euro selling opportunity
The Euro has touched a 5 month high against the pound which is presenting a great opportunity for those who will be looking to sell euros down the line.
For a small deposit you can secure today’s rates for a future transaction for up to two years! I have had a number of business clients who get paid in euros taking such an option to prevent any movement on the rate affecting their business profits.
Let us look in more detail at why the euro is so strong, will it last?
The prospect of a rate hike next month is well and truly known so there will be no real suprise if the ECB do raise rates. This has therefore already been priced into the market and is one reason the rate is strong. Inflation data remained solid for the eurozone but was not shown to be rising dramatically (as in the UK). It is possible Inflation may have peaked for the eurozone and much like the UK, the main reasons for rising inflation are rising energy costs outside the control (and remit) of the ultimate financial authorities.
We also know that the weaker economies in the eurozone are suffering not only from an inability to repay debts, but an inability to grow their economies. A rate hike would therefore be massively detrimental to the growth in these countries and could see them tipped further into crisis.
It is no secret the rate ‘could’ be raised for the euro and I would therefore not expect any massive movements further down on the GBPEUR rate should this happen.
Why take the risk of rates turning against you? If you have selling euro requirements it may be prudent to book a rate now to maximise your gains. In the last month the rate has moved by 4.14% in the favour of those selling euros. On a €200,000 euro sell back you would now be getting £6,992.02 extra!
As specialist currency brokers we can provide information and offer tools that will give you an advantage in your currency transfers. Speak to us and find out how!
