Monthly Archives: June 2012
The Single Currency Fights Back
After months of anguish and dispair for members of the EU, has the tide finally started to turn or is this just another false dawn for the single currency?
Friday has seen some of the most significant moves for the euro since the turn of the year and has brought some much needed confidence back to the markets. We have seen the EUR gain almost a cent on GBP and a staggering 2 and half cents against the USD by close of European trading. Personally I felt this current spike was long over due and it did feel like we had almost reached a tipping point with confidence so low in Europe. Quite frankly things couldn’t of gotten much worse from an investor standpoint, without the eurozone going into a unstoppable spiral of decline.
These market movements have come about primarily due to the current EU summit and the annoucnement by leaders that they have in principal agreed to use the eurozone’s bailout fund to directly support struggling banks. This has been viewed as somewhat of a breakthrough by investors and has given the euro a significant boost across the board. We have also heard Mervyn King give a damning verdict on the UK banking sector, which is also helping the euro gain against sterling.
This news has boosted global market confidence and as such investors have pulled funds away from the ‘safe haven’ USD and this is one of the reasons it has weakened so significantly against the EUR.
Whether this agreement is sustainable only time will tell but it is certainly a step in the right direction as far as the powers that be are concerned. If you have an upcoming currency transfer that you would like to discuss, or are keen to be kept up to date with all the latest market information then pleas feel free to contact me directly at mtv@currencies.co.uk or on 01494 787 478.
Euro exchange rates are weak as the EU summit begins, where now for the Euro?
Euro exchange rates have remained relatively weak falling below 1.25 (close to a 4 year low) against the the pound and hovering just belowthe 1.25 mark against the USD. But what now for the Euro? Today is the start of the latest EU summit in Brussels in which the finance leaders of Europe will discuss the current Euro Zone crisis and what policies they need to adopt to avoid its breakup. We have been down this road before with little outcome, and I would be surprised if anything concrete was to surface from the summit – indeed Angela Merkel, the German finance minister, was quick to dismiss any chance of a common Euro Bond, something many of the other ministers are pushing towards. As mentioned I would be surprised if anything as to come from the Summit and I personally feel the Euro will remain under pressure until a formal agreement is made between the powers that be in Brussels. I would certainly expect EUR/USD to head back towards 1.24, however I feel GBP/EUR will remain range bound between 1.23/25 as the weight of further quantitative easing in the UK is likely to curb any further short term gains for the pound.
Should you have a requirement to buy Euros then the current levels should certainly be of interest to you. In particular GBP/EUR rates are looking positive, being just 0.5 cent from a four year high. Should you wish to take advantage then please contact Mike on mgv@currencies.co.uk
Data for the rest of the week to watch out for
Today/tomorrow – EU Summit in Brussels
Today – UK GDP data 09:30, final revision for Q1 – expected to stay at -0.3% – any deviation expect volatility for GBP/EUR this morning
Today – EU consumer confidence figures at 10:00 – expected to show a small fall and likely to weaken the Euro as a result.
Today13:30 US GDP data – for anyone with a EUR/USD requirement you should watch this with interest. Figures are expected to fall from 2.2% to 1.9% and may cause a short term spike in EUR/USD rates.
Tomorrow at 07:00 – German Retail Sales, expected to dhow a fall month on month from 0.6% to 0.1%
As you can see there is plenty of data as we close the week affecting Euro exchange rates. Should you wish to discuss the potential implications they may have on your upcoming transfer then please contact Mike on mgv@currencies.co.uk or call 01494 787478
I work as a senior dealer at currencies.co.uk assisting clients move anywhere from a couple of thousand into the millions. If you currently do not use a currency broker or you feel you could get a better price or level of service than you are currently getting then do not hesitate to contact me.
GBP EUR Rates And The Week Of Weakness
Pound euro exchange rates over the next few months could well be determined by events over the next week with the EU Summit at the end of this week, and the expectations of a move by the Bank of England next week, so if you want to sell euros then read on!
Following German inflation data this morning which was higher than expectations, the market is pretty quiet today for Euro and UK data but tomorrow is a very different story. Germany publishes it’s unemployment rate and expectations are for an increase of 3,000 but no change in the overall rate of 6.7%, however any increase in these figures would spell Euro weakness if the biggest country in the single currency which is pretty much bankrolling the debt crisis shows signs of stumbling. Not long afterwards we see the final revised figures for Q1 UK GDP, and if this were to show that the UK is actually deeper in recession than previously published it could spell sterling weakness; great news if you are looking for a short term spike to sell euros! Finally we see US GDP tomorrow afternoon and again this will be seen as a barometer of global confidence. A strong growth figure may dispel some uncertainty and actually see the Euro strengthen a touch ahead of the EU summit.
The EU summit starting tomorrow is another key event as there are increasing signs that the divisions between Germany and other member states will not be bridged by the weekend and the markets will therefore not get their credible plan to solve the debt crisis. If no resolution can be found, or if anything proposed is seen to be limper than Dale Winton’s left wrist, then I would expect to see more prolonged Euro weakness as contagion may spread further following the news Cyprus has asked for a bailout.
Next week the big focus will be the Bank of England decision and whether the BofE increase the Quantitative Easing program or possibly even cut interest rates. Mervyn King voted to increase QE this month and has publicly stated how much worse things have become in the UK since the Bank published it’s May Quarterly Inflation Report, so markets are expecting something to happen but a rate cut would seriously weaken the pound despite the backdrop of crisis in Europe.
So as you can see much will now depend on which currency can perform weaker this week! In my view the UK economy is still in serious trouble and more measures are likely needed to kick start growth, measures which will weaken the pound. However, I still feel that sterling represents the lesser of two weevilsand this move is likely only to be temporary as the underlying weakness underpinning Europe and its failure to tackle the debt problem keep coming to the fore. As such if you are looking to sell euros I would be inclined to prepare to move in the next week or two. If you would like more information or want to see how we can actually help you change euros at a good rate then please feel free to contact Colm at cmg@currencies.co.uk and quote ERF in the subject matter and an overview of what you want to do. Eurorateforecast.com is designed to give you information to help your currency exchange but also gives you the option of saving you money on currency compared to your bank or existing broker http://www.currencies.co.uk/
Market Pressure on the Single Currency Continues
The euro has continued to come under pressure throughout Thursday’s trading, following the announcement that Cyprus is the latest country to officially request a bailout. This comes hot on the heels of Spain’s annoucnement last Friday for a similar (although much larger) bailout for its banking sector and will only add to continued pressure on EU leaders to find a long-term fiscal solution, that will go someway to restoring market confidence amongst investors.
Although both of these announcements were somewhat expected, the markets still reacted negatively and the single currency fell away sharply againt both GBP and the USD throughout today. At time of writing GBP/EUR had gained over half a cent and was sitting comfortably above 1.25 at the end of European trading, whilst EUR/USD rates were sitting just below the 1.25 mark.
Whilst this latest news is just another blow for the eurozone, I do feel that market sentiment will improve following the formation of a Greek government and today’s announcement by European authorities, which has in fact unveiled their ‘vision for the future’. It is described as a 10 year plan designed to strengthen the eurozone and prevent future crises (tongue in cheek), including a European treasury, which would have powers over national budgets.
Whether this is enought to boost market sentiment only time will tell but with the pound set to come under pressure over the coming weeks, as further Quantitiative Easing (QE) is mooted, I do feel we could see an opportunity for euro sellers. Likewise, with fresh concerns arising over the US economy and its apparent economic stagnation, we may find there is an unexpected opprotunity for those looking to make a EUR/USD transfer.
If you have an upcoming currency transfer to make and would like to ensure you do not miss one of these of these opportunities if they become available, or would like to be kept up to date with all the latest market movements, then please feel free to contact me diretcly at mtv@currencies.co.uk or on 01494 787 478.
How Will Euro Exchange Rates Be Affected By A Cyprus Bailout?
With news of Cyprus now requesting a bailout (on top of Greece, Portugal, Ireland, and the Spanish banks) the question that most people with an interest in currency exchange are asking is how will euro exchange rates be affected? In truth the scale of the bailout is minuscule when compared to the Eurozone crisis as a whole, and was largely expected given Cyrpus’ status as Greece’s little brother with the contagion flowing from the Greek banking problems. However the main concern for European leaders is more symbolic as it highlights the “contagion” that many fear could trigger a collapse of the Euro if they cannot put sufficient firewalls in place. The news also places additional pressure on the upcoming European summit, scheduled for the 28th and 29th June, to provide assurances or some form of credible solution to the crisis- this looks increasingly unlikely at the moment with divides between Germany and other member states still very evident. My view is that this is not another nail in the coffin of the Euro as I expect the single currency to come through the crisis but I think it is another sign that Euro weakness will likely continue and, as if it wasn’t already obvious, there will be no quick fix to the problem. It also highlights the importance of other major powers and their approach to the Eurozone with Russia already pumping in €2.5bn to prop up Cyprus and Chinese investment in Cypriot projects are a major influence in the region.
With sterling euro exchange rates I expect the pound to remain relatively robust against the single currency due to the overriding pressure on the Euro, but there may be opportunities to get a good exchange rate to sell euros in the coming days on the back of UK economic data. With the expectation of more Quantitative Easing in the UK already being priced into the market, Thursday morning could still be a game-changer if the UK GDP figures are once again revised down and show the UK economy is worsening. I would be prepared to take advantage of any spike in exchange rates this creates rather than waiting for rates to come down consistently as I am not convinced they ever will. In the immediate future look out for the Public Sector Net Borrowing figures due out in 35 minutes for a possible quick fix on rates if UK borrowing has increased sharply.
With EUR USD rates I expect the Dollar to remain strong against the single currency and possibly even improve on current rates of 1.25 if Europe cannot provide the credibility and united leadership required to navigate current economic conditions. All this comes against the backdrop of “Operation Twist” which is an extension of the Federal Reserves Quantitative Easing program- in calmer times this would normally see the Dollar weaken sharply, but it just goes to show how bad the Euro problem is if money is still pouring into the greenback due to the flight to safety.
If you are looking at a currency exchange and would like to find out more about how we work and what we can save you then please feel free to email Colm at cmg@currencies.co.uk and quote ERF in the subject matter.
Currency rates summary – Stories this week
The Spanish banking plaster, rather than solution, has now been officially requested by the Spanish banks resulting in widespread losses across Europe. Bank shares led the stock markets as they fell dramatically along with the Single Currency that fell nearly a cent against Sterling in trading today. The real question still stands which is what is coming out of Europe this week. There are a number of big economic releases as well as political expected. This ranges from a Cypriot bailout, banking unity, the creation of project euro bonds and how to continue to provide the drip feed to the Spanish and Italian economy. It is these stories that will drive markets this week, overall I expect a tough week for the Pound and I would be surprised if we end the week with rates against both the Euro and Dollar as high as they are now. This could be as large as 3% so GBPEUR under 1.21 and GBPUSD under 1.53.
In the short term I personally expect GBPEUR to start to fall early tomorrow (Tuesday,) with the release on UK public net borrowing figures. This is due to a large expectasion that UK borrowing figures went up, meaning the UK owes more.
The best way to keep up to date with all this economic information is to visit our blog page every day or contact me directly on hse@currencies.co.uk or by calling me on 01494 787 478 I look forward to hearing from you
Will the Euro finally get its house in order? I am not holding my breath in the short term…
What a difference a week makes! Only a few days ago we braced for the possible financial armageddon of a Grexit in Europe. Last week we saw a raft of Euro positive statements although the market did not do a great deal and whilst the markets were calmed by the prospect of Greece remaining in Europe, by Friday the spolight was firmly back on Spain, having hit that ’7%’ rate payable on its debts. This rate of interest on government borrowing is seen as unsustainable and more importantly this is the level at which Greece, Ireland and Portugal had to seek bailouts. Now Spain had a bank bailout last week but a government bailout now looks likely. What a mess!
The weekends positive news however is the €130 bn package to promote growth in the Eurozone. I am surprised the rate has not reacted more positively but it is clearly due to the fact as with previous Eurozone summits, that not enough is being done. The opportunity has been missed to capitalise on Eurobonds and closer intergration. This I believe is however now inevitable down the line. It has been made clear to the markets that Germany will not just let Greece or Spain go. They will do the minimum necessary to keep everything ticking over and react when they need to. Germany has never been particularly forthcoming in its vision and strategies to deal with the headaches investors are suffering at the hands of the Eurozone crisis, so I don’t know why we should expect anything different now! This is one ‘Euro’ club England can today be pleased to not be in 
The important point for me is that it has now been shown that the Troika (ECB, Germany and IMF – the ‘powers that be in the Eurozone’ whose decisions will dictate how this crisis is handled) will respond when they need to. This should calm investors nerves and I think it makes it less likely the Euro will suddenly weaken dramtically again at the hands of worse Eurozone news.
This week we have German Unemployment data and Retail Sales but it is the EU summit which is key for me. This event will play out over the course of the week so if you have any transfers to make and would like to be kept up to date with what is happening please feel free to contact me for a discussion of all of your options and what you should beware of. You can call me on (+44) 01494 787 478 or email jmw@currencies.co.uk
This week’s Sterling summary and predictions for GBPEUR next week
Last night the Credit rating agency moody downgraded 15 banks across Europe. This was widely expected in the UK following the QE announcement last week however some of the European banks was a surprise. As a result the euro weakened making it cheaper to buy with your pounds. The reason behind this is that like you and I banks have a credit score that determine how expensive it will be to borrow. As this has deteriorated those banks will have more costs to run at the same level and as a result weaken.
News from Europe over the last 24 hours includes a full estimate of how much the Spanish banks will need to weather a serious downturn of the economy and the losses in their books. The amount was upwards to €62 billion! This news also improved the costs of borrowing for key members on the bond markets. Spain’s 10-year government bond yield fell back under the 7% to 6.93% and the equivalent Italian bonds fell to 5.77%. (A rate above 7% is considered to be unsustainable, however these levels are still too high)
The other main topic in the Eurozone this week was Greece and worries subsided following the elections that took place on Sunday. Antonis Samaras has now formed a Government but the former economist will get little opportunity to savour the victory, he now has the task of pulling Greece out of a five-year recession and renegotiating a bailout deal with unwilling creditors across Europe. This is a task that will almost certainly affect exchange rates in the coming weeks. When reviewing the situation I’m sure winning the election will be seen as the easy bit.
Summary for next week
If you are in the position needing to buy euros at the moment I personally expect rates this time next week to either be slightly better or a lot worse. Why do I think this?
Well we have to remember that it is in the Europeans interest to resolve the crisis and significant steps have been made forward this week to get there. I would not be surprised to see the banks across Europe become more integrated this next week and a solution coming the week after at the beginning of July. Either way I am 100% convinced that GBPEUR rates will continue to move over 1% a day, equating to thousands of pounds of difference on the cost of a property, service or product. If you want to maximise your trade you need to know when data is expected to be released, as this allows you to make the educated decision when trying to forecast the peak of the week. This is information a currency broker can provide. If you want more information feel free to contact us directly or keep reading our blogs. We aim to update you all twice a day with breaking news and predictions for the days ahead.
Either way if you are trading in the next week a wish you the best of luck!
Have a good weekend and watch out for Germany vrs Greece this evening in the Euro 2012 competition. It should be interesting to see what happens when the fans mix….
Do You Need To Transfer Euros?
Do you need to transfer Euros and want to get the best exchange rate? If so then you have come to the right site. eurorateforecast.com is a blog written by experienced currency traders who work for a company Foreign Currency Direct Plc www.currencies.co.uk who specialise in helping private clients and SME’s to transfer money at the best exchange rate. The aim of the site is to give people information and guidance about the news and events affecting currency often in a light hearted fashion.
Whilst the information is entirely free of charge and represents the personal views and opinions of the individual dealers many readers can use the information to maximise their exchange rates by picking the best time to exchange. However some readers also take advantage of the exchange rates Foreign Currency Direct have to offer by obtaining quotes through our brokerage service which are better than what they would receive through their bank or existing currency provider. If you would like more information about the brokerage service and how it can save money on your currency exchange then please feel free to e-mail Colm at cmg@currencies.co.ukand quote ERF (EuroRateForecast) in the subject matter.
Currently the Euro remains under pressure due to weak economic data, concerns over the current debt crisis in Greece and Spain, and a nervousness surrounding what European leaders may announce at the next EU summit this month. Whilst sterling is not out of the woods by any stretch, recent data has been a little more optimistic with the unemployment rate officially coming down three months in a row and inflation appearing to be coming back under control. This has helped sterling maintain very strong levels against the backdrop of crisis surrounding the Euro- even the prospect of more Quantitative Easing in the UK hasn’t dented GBP EUR much (4 out of the 9 member Bank of England MPC voted to increase levels of QE this month).
In my view early July will be key to Euro rates as we will know more about the measures, if any, the ECB and European leaders are taking to safeguard the Euro and consolidate European economic unity. At the minute markets are finely balanced but should the Bank of England embark on further QE in July we could see slight sterling weakness with a move down to 1.22, however I expect in the longer term for the problems in Europe to keep coming to the fore as I cannot at this stage see a viable economic solution to the problems of the PIIGS without major investment in their respective economies. To compare sterling euro rates I would use the old be simple mariners analogy:
“Two sailors who were cast adrift in a dinghy after their ship sank have been at sea without food or water for 30 days are close to giving up hope. Suddenly two weevils scuttle out from between the planks of the dinghy; one is a big fat juicy one, and the other is a scrawny speck. The sailors, starving and desperate for protein draw lots as to who gets which bug to eat. The winning sailor immediately reaches down and picks the tinnier insect and devours it- why? Because in a time of crisis you should always pick the lesser of two weevils! BOOM BOOM” On a serious note whilst sterling is still in a very vulnerable condition I feel it is certainly the lesser of two evils compared to the Euro on the whole in this current crisis. If you are looking to sell euros and want to be kept up to date with any significant breaking news then let us be your eyes and ears on the market- simply e-mail Colm at cmg@currencies.co.uk with the amount of Euros you are looking to sell and your timescales and I will help you get the best exchange rate.
Will the Euro get any weaker?
There have been a few indications that things are not quite as bad as some have imagined in Europe which is why GBPEUR has fallen from its lofty highs, and EURUSD is back in the upper 1.25′s.
Why then has the Euro strengthened this week? After a few weeks of investors seriously considering and planning for a Greek exit from the Eurozone, sentiments have changed slightly with markets hopeful of some kind of resolution or at least strategy for managing the route back to prosperity within the Eurozone.
- Spanish Bank bailout
- Pro Bailout Greek Government in Power
- Italian and Spanish bailouts
It all now hinges on whether or not Germany will become more forgiving in its approach to dealing with the indebted nations. The utilisation of the EFSF and ESM is a good idea to help shore up their finances as it is in everyones interest to have a strong Eurozone.
I would not expect the Euro to weaken much in the coming week particularly with a Eurozone Finance Ministers meeting and these more improved sentiments of late. If you are considering any currency transfers we can help assist with all the information required to secure the very best exchange rates. Confidence in the Euro has improved slightly but of course, this may not last!
If you would like any further information please do not hesitate to contact me personally on 01494 787 478 or email jmw@currencies.co.uk
Are you on of our 20,000 regular readers? Have you contacted me yet for help with your currency exchange?
I have been dealing with private and corporate clients with the need to transfer currency for years now and have built up a high understanding of the currency markets and what may happen when certain circumstances arise.
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Click the following link to do this: www.currencies.co.uk/referral.asp?F_ID=1603
Opening a trading facility incurs no costs and carries no obligation to trade through us, it simply puts you in a position to book out a rate should you wish to.
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Greek Coalition looks likely today – temporary strength for the Euro?
The Greek Coalition is expected to be agreed today which may lead to another short term boost for the Euro. The only reason I say short term is because I still feel there are just so many different factors that will weight the Euro down inclusive of the banks in Spain and the problems with the PIIGS of Europe, not to mention many other troubled economies.
We saw a minor spike for the Euro on Monday morning following the Pro Austerity party just edging the election however by the end of the trading day those gains had indeed been lost, I personally expect a fairly similar pattern for the Euro in the coming days and if you have Euros you are looking to sell it may be prudent to take advantage of a spike should it actually occur.
The G20 meeting will also be key as anything could essentially come out of that, and anyone with an interest in the Euro/Sterling pairing may wish to take note of the Bank of England minutes due out this morning. The BOE seem to be extremely good at weakening the Pound and it would not surprise me to see them bring something into place that may weaken the Pound back a little.
If you have an upcoming currency transaction to carry out involving the Euro or indeed any other major currency then feel free to get in touch with me directly, we offer much better rates than the banks and can beat any other brokerage – I can be emailed directly on djw@currencies.co.uk and would be more than happy to add you to my growing list of thousands of clients.
