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Euro Exchange Rates Under Pressure Again As Uncertainty Continues
The Euro was once again under pressure today due to a combination of uncertainty over what and when the ECB will announce to damp down current concerns over Eurozone debt, as well as a strong set of Minutes from the Bank of England which helped support sterling.
It looks as though something will have to happen soon (September) if Draghi’s recent comments about doing enough to save the Euro are to retain their credibility and prevent the Euro plunging further. He has bought some breathing space with his staunch defence of what the ECB, other policy makers and politicians are doing behind the scenes, and it is pretty much expected that nothing would be unveiled in Europe during the August holiday season. However the delays and uncertainty over what will happen are continuing to leave a dark cloud over the price of the Euro.
Personally I expect some measures to be done come September, or Draghi will risk losing face and credibility, and as such the Euro may strengthen back a touch following this. Sterling has had a good boost in the short term by Bank of England Governor Mervyn King confirming an interest rate cut in the UK would be counterproductive at the moment (with all 9 members of the MPC confirming this in the Minutes). However I am not convinced the Olympics will provide the huge boost in GDP that some commentators are reporting, and whilst the unemployment rate in the UK dropped again today, I suspect much of this will be down to temporary jobs created around the Olympics. As the decision on whether to extend QE or not was a difficult one for many of the MPC members, I suspect that before November there will be further signs of increases in QE in the UK so sterling may slip back as we head into the Autumn.
If you need to transfer euro into pounds (or any other fx transaction for that matter) then by all means feel free to contact me by e-mailing Colm at cmg@currencies.co.uk and quote ERF in the subject matter with a brief overview of what you need to do.
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/
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.
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.
Euro Data Thin Today But Watch Out For Events Across The Pond
With German CPI coming out as expected there is very little scheduled data to be released from the Euro zone but this doesnt mean the markets will be quiet. Currently GBP EUR exchange rates are sitting around 1.21 and EUR USD rates have been hovering just over 1.31. Two factors make me think this afternoon could see some volatility.
Firstly, we have the release of US Inflation data which could have a big impact on rates depending on how it comes out against expectations of 2.7%. It seems unlikely the Fed will waiver from its commitment to low interest rates into 2014 given the view was reinforced only this week, so unless we see a very high, or very low figure, don’t expect this long term strategy to be influenced. However it could provide a lot of short term movement for many currency pairs if it affects global confidence. A more confident global economy usually sees the Dollar unwind a touch as investors are prepared to move away from the Dollar in search of “riskier” currencies and stocks with better returns. However if global confidence is dented then, combined with the sharp contraction in the rate of growth of Chinese GDP seen this morning, you could see the Dollar surge back against the single currency so watch for that psychological 1.30 level!
Secondly, with GBP EUR exchange rates of 1.21 being close to an 18 month high, and with a raft of UK data due out next week which could affect this rate, then many more nervous traders may take profit on their positions this afternoon, closing out before the weekend. This kind of trading in itself can cause market movement if the volumes involved are significant enough so it may be worth looking at stop or limit orders to cover yourself over the weekend.
All the bloggers on this site are currency traders with years of experience in the market for physical currency exchange and sending money overseas. We deal with a range of corporate and private clients and assist them to get the best exchange rates but also help them time their transfer to get the most for their money from the market. If you are interested in this type of service, or want to compare us with your existing currency broker, then simply e-mail Colm at cmg@currencies.co.uk quoting ERF in the subject matter, and outlining briefly what your requirements are. There is no cost or obligation in doing this but we can review your circumstances and see if we cannot improve upon your existing arrangements.
Transferring Euros Over Easter
With the volatility of the Euro in the last couple of weeks making the decision on when to transfer Euros very difficult, this situation has been exasperated by the Easter break. With the UK closed for business on Friday and Monday along with most European counterparts, but the US and Asia still trading, it also means the markets may still move whilst you are unable to do anything.
For example we see the release of US Non Farms Payroll Data released on Good Friday. This is a measure of all new jobs created in the US outside the agricultural sector in the last month, and is often used as a barometer for the US economy and global confidence. The better the figure, the more confidence investors have in the economy picking up and the more likely they are to take on riskier positions. This can have a big influence on EUR USD but will also move sterling exchange rates against the single currency as both move relative to the Dollar.
One way to deal with this would be to place a stop loss or limit order with your bank or broker to ensure that if the market does move dramatically during the holiday break, your order will still be bought at the level you decide if that price becomes available. If you wanted to achieve a rate of 1.2150 to buy Euros from GBP, but were worried the rate may drop below 1.19 by waiting, then you could place a limit to buy at 1.2150 and a stop at 1.19. This would mean if the rate spiked up, it would buy automatically at 1.2150 if that buy rate became available, but should things go against you and the rate actually drop sharply, then it would be stopped out at 1.19 if the market dropped to this point meaning your rate couldn’t fall any lower even if the market continued to.
Likewise if you are on a property viewing trip over Easter and want to be kept informed of any significant movements that may affect your property purchase, then by all means contact us for our rate alert service. 4 days is a long time to be exposed to currency fluctuation so why not get someone working with you. Our currency service is designed to help get clients the best possible exchange rate in an already competitive market. We do not charge hidden fees or commission and you only committ when you execute an order. If you are looking to buy or sell Euros (or any other currency pair) and would like to find out more about how things work, or compare us to your current provider, then feel free to e-mail Colm at cmg@currencies.co.uk and quote ERF in the subject matter. It is free and will ensure you get the best deal on your transfer.
Euro Weakens On ECB Press Conference
The Euro has weakened further on the back of the ECB press conference today. Whilst interest rates were left on hold there are “serious downside risks” for the Eurozone economy. It is also too early to talk of exit strategies for the current LTRO operations.
The Dollar has clawed back a cent against the Euro and the pound is within a whisker of the 18 month high it saw against the Euro in January. If you do have a Euro requirement to either buy or sell Euro please e-mail Colm at cmg@currencies.co.uk quoting ERF and I would be happy to explain how we may be able to help.
Buying Euro at 1.20
Stronger than expected UK PMI data of late has helped force the mid rate against the pound over 1.20 again so some clients, depending on volume have been able to achieve this rate. The levels have been pretty short lived recently and with the ECB rate decision today and UK services PMI out in less than an hour it may be prudent to move quickly. If you are looking to buy Euros at 1.20 then please e-mail Colm at cmg@currencies.co.uk quoting ERF in the subject matter with a brief overview of what you want to trade.
Whilst Australia didn’t actually cut interest rates on Tuesday they did give their strongest hint yet that this is on the cards and I guess has therefore been priced in. Also Chinese data up to the other day has been on the weaker side but the PMI yesterday was way above expectations which boosted the Aussie. With unemployment in Spain still rising I think current levels to sell Euro and buy Aussie may not be great, but are still unlikely to improve significantly without a hefty cut Down Under next month. We can trade any major currency pair so do feel free to contact us to find out more and if we can help get you a better rate on your transfer.
GBP EUR Rates Flirt With 1.20
Sterling Euro exchange rates have been flirting with 1.20 for the last week with big spikes on Monday and yesterday. Much of the movement has been due to slightly better than expected data in the UK in recent months and continued trouble in the Eurozone with news like Spain’s missing its deficit reduction targets and Ireland re-entering recession. However it has not all been plain sailing for the pound against the single currency with recent retail figures significantly down it highlights the UK economy is by no means out of the woods, simply the tree line has got a bit thinner. The Bank of England Minutes reinforced this view with two members voting for an increase in the Asset Purchase facility (Quantitative Easing). In all I do think 1.20 will be achievable for clients as it has been earlier in the week but I don’t expect the pound to push on much further against the Euro because of the inherent problems in the UK economy. If you are looking for an exchange rate of 1.20 to buy Euros then why not look at a limit order. Get in touch by e-mailing Colm at cmg@currencies.co.uk and quote ERF in the subject matter with a brief overview of how much you want to exchange and timescales. I would be happy to explain our trading process with no obligation placed upon you- just the ability to get a better exchange rate!
The Dollar has weakened against the Euro of late due to an increase in global confidence resulting in investors moving away from the safe haven of the Dollar and looking for higher returns elsewhere due to greater risk appetite. High oil prices and tensions in the Middle East have exacerbated the USD weakness due to US demand on oil – Obama did announce greater levels of oil production in the US but I think this slackening on the Dollar will remain as long events in Europe don’t blow up again imminently. As such trading around 1.32 to 1.33 for EUR USD however if you would like a level above this by all means let us know and on e of the team here would be happy to monitor the rate and contact you at the appropriate time. Simply e-mail Colm at cmg@currencies.co.uk and quote ERF in the subject matter with on overview of the Euro Dollar trade you need to do.
