Euro exchange rates are still slipping after the weekend’s news that Greek PM Papandreou admitted Greece cannot meet its burdens to receive the next bailout tranche. Whilst it seems inconceivable that Greece could be thrown out of the Euro it seems ever likely that a controlled default may be the only option. Added to the fact the ECB may cut interest rates on Thursday in Trichet’s last stand, the Euro should remain under pressure this week. The only saving grace if you are selling Euro and buying GBP is the possibility of and extension of the Bank Of England’s Quantitative Easing program- a move that could seriously damage the pounds recent run against a host of currencies.
Sterling Euro exchange rates have slipped following the Bank of England Minutes this morning. Whilst Quantitative Easing was not extended this month the minutes this morning said the decision was finely balanced and the economic conditions were increasing the likelihood of its introduction. It means October’s meeting may see large volatility on rates as markets try to second guess if and when it will be introduced. Combined with Jean Claude Trichet’s speechcoming up on Friday, and the fact that the ECB may cut interest rates at their next meeting, this currency pair is likely to remain volatile. Further announcements on Italy and Greece’s financial positions are also making analysts lives very difficult. If you have a requirement ot buy or sell either currency then feel free to e-mail email@example.com or call 01494 787 465 and I would be happy to discuss your options.
A former advisor to China’s central bank has said China should stop buying Euro bonds and should only do so if certain conditions are met. Whilst Yu Yongding’s views may not represent official Chinese policy, and China has regularly expressed confidence in the Eurozone, they have yet to lay out any concrete support package should the single currency remain in trouble. China holds over a quarter of its FX reserves in Euro and so its approach to this could be instrumental in any long term solution.
Euro Dollar exchange rates have moved around 6% in the greenback’s favour over the last few weeks as the Dollar has strengthened amidst a new flight to safety, especially as the alternative option, the Swiss Franc, has been made a lot less attractive by the Swiss National Bank.
Bank of England Minutes are released in 25 minutes so will be key to short term GBP EUR rates- be ready to move quick on any news of Quantitative Easing being discussed or not.
GBP EUR exchange rates will be very much dependant on the Bank of England Minutes due out tomorrow morning. Whilst the BofE didn’t increase their asset purchase program of Quantitative Easing this month it is unclear how close they actually came to doing so; the Minutes will reveal all as to what was discussed and the markets will use the information to forecast future bank policy and price this into the exchange rate.
As a result if following some very poor UK data some members of the Bank’s Monetary Policy Committee have pushed for an increase in QE then sterling Euro is likely to fall significantly. However should the bank remain optimistic about a slow but steady recovery in the UK then the pound may claw back some recent lost ground against the single currency. As the outcome is an unknown, and the scale of the movement in exchange rates potentially very large indeed, please do not hesitate to e-mail me for information once the news is published- firstname.lastname@example.org
It will come as no surprise that the riots witnessed across the UK over the last 3 nights appear to have put an end to the Pounds latest rally. On the surface it is easy to see how the costs of repairing many of Britain’s major cities is going to have an effect on our already fragile economy but the underlying impact could be much worse as investors from all corners of the globe make the decision to invest in more stable economies.
As a result we have already seen GBPEUR rates drop by nearly 3 cents from the highs seen only last Friday and at the time I write this the downward trend seems to be continuing. The impact of a 3 cent movement on a €200,000 transfer could be in excess of £4,500!
This negative movement could be further enforced next week as we await the minutes from the latest meeting of the Bank of England’s Monetary Policy Committee where it is unlikely that we will see any change in the voting pattern of the members in regard to interest rate movements but we could see that there was a more “lively” discussion surrounding quantitative easing and the potential possibility of the Bank of England printing more money to boost our thriving economy.
To find out more about the Sterling Euro rates whether you are buying or selling feel free to contact me directly at email@example.com.
The Euro has had a tipsy turvy week against the Greenback, falling around two and a half cents on Monday after the US agreed their debt deal. Although this was as most speculators expected the threat of the US potentially defaulting was so severe we still saw a movement that was this sharp.
Over the last few days speculation has continued that the US may still suffer a credit downgrade and yesterday Fitch put their credit rating up for review. Again I would say this is unlikely but another very notable threat to the USD. Certainly I would argue that the Dollar is quickly (if only temporarily) losing it’s safe haven status.
Expect serious volatility between this currency pair as both economies deal with potentially crippling issues. The EUR/USD currently sits at 1.4276 and I foresee the outlook for the US to be more bearish towards the end of this week and I could see EUR/USD retrace towards 1.44 by the Close of Business on Friday.
The Swiss Franc has been the ‘safe haven’ of choice over the last few months as American problems continue to escalate. However finally the SNB (Swiss National Bank) have decided that enough is enough and have put their foot down to artificially weaken the Franc by slashing their interest rates.
If the SNB are going to stand by this decision then they may well be prepared to sell off some of their own assets if rates start to climb back. If this is the case then the Franc will struggle to make much further gains against all majors as they are fighting the Swiss Bank who are trying to keep Swiss imports more affordable.
Following the lead of the Swiss Franc the Japanese Yen has today also artificially weakened their currency by selling off their own assets. They have sold off around $127 billion worth of JPY and this has meant EUR/JPY has gained around 3% already this morning and is now trading at 113.91.
This now begs the question that with the US economy potentially facing a downgrade, QE3 on the cards and the Swiss & Japanese both artificially weakening their currency where will be the preferred safe haven going forward? Safe options will generally do well in times of uncertainty and it seems we are facing a time of extreme uncertainty.
If you are looking to purchase Yen or Francs from Euros then it is an ideal opportunity after the initial effect of governemental efforts have set in. Normally after the initial effect these sort of currencies will go back to gaining. I think this will certainly be the case with the Swiss Franc as it had very little reliance on it’s interest rate to keep it’s exchange rate strong.
You can contact the author directly in order to discuss your requirement and receive a live quote in the market on 0044 1494 725 353.
Credit rating agency Moodys downgraded the Greek rating from Caa1 to Ca, a three notch downgrade which now only leaves them two short of a ‘default’ rating. Despite this cut Moodys remained upbeat about the long term prospects of Greece despite reinforcing that any debt swap would be considered (at least by them) as a default.
It seems now that a Greek default has pretty much been agreed and whether they are let to be labelled that by rating agencies is just a matter of time. However as strange as it sounds this really could lead to some Euro strength. If the Greeks are having a controlled default then contagion is less likely to spread and this has been the number one concern for people with money in Euros. For that reason I think we may see some short term Euro strength this week, especially against Sterling which may suffer from some potentially miserable GDP figures tomorrow.
So what about that long term?
Do not be fooled into thinking contagion is now a dead issue. In my mind these problems will flare up again, it is not just Greece that is in trouble in Europe, despite planned restructuring of debt here and also in Portugal and Ireland, other countries such as Spain and Italy pose more of a threat to the Eurozone as a single entity than the other countries combined and others such as Belgium also sit uncomfortably in terms of debt to GDP ratio. Whilst bonds reman affordable for these countries and debt is long term enough they are likely to remain in an ok position, but we have seen with Greece how quickly you can go from at first needing a bailout, to a full default 200 billion Euros later.
Consider the state of the Eurozone like a disease, whilst at the moment the powers that be are doing everything they can to null the pain and contain the virus, no-one has a firm plan to stop this from spreading. This restructuring of the debt is the first roll of the dice, as an experimental cure goes but I don’t believe anyone expects this to completely solve the issue.
This is a step in the right direction but it is not the end of these problems. If you are hedging your bets on what may happen with the Euro then I would predict some strength for the Euro this week and in particular to be 1.12 or below against Sterling and around 1.45 vs the USD, but I still believe the Euro to be vastly overvalued at the moment. If you are waiting for rates to peak or head back to 18 month highs be careful you are not trying to stretch it too far. You can fill in an account application to the right and either myself or one of the other eurorateforecast.com team will get back to you to provide you market commentary and live trading prices.
Personally I just cannot believe we continue to see the Euro gather strength, I have seen all sorts of comments today like the Eurozone is like a patient post a major operation and will still need intense help for the recovery along with 24 hour care… that was my favourite!
The general feeling right now is that investors are feeling comforted that everything including the kitchen sink has been thrown into a solution but my opinion is just what do they do next when this doesn’t work… surely they are completely up sh*t creek without a paddle and this whole thing is really going to blow up.
The Euro may hold firm in the short term due to Chinese buying, general investment and the halo that currently somehow is staying above it, however I feel we are now looking at Europe carrying out a major plate spinning excercise – sooner or later one of the plates will fall and we all know the Greeks love to smash plates!
If you have a pending transfer and really would like to know just what is happening and why, along with ensuring you get the very best rate of exchange you can for your transfer contact me directly firstname.lastname@example.org or call me during office hours on +44 (0)1494 787 462 I will be more than happy to help. Media quotes are also welcome just feel free to get in touch.
The Euro slipped yesterday as Portugal were downgraded to ‘junk’ status – this has added to market fears of contagion as GBP/EUR approaches 1.12 and EUR/USD headed back under 1.43.
The US Dollar is likely to be the main benefactor (in my opinion) of Euro weakness from contagion fears as again proved yesterday. However I don’t feel this will be truly considered by the market as heads turn back towards interest rate speculation in the short term. Moody’s – the agency who cut Portugal’s rating actually came under heavy criticism for exasperating European problems, Barnier (the commisioner for European financial regulation) stated that the agencies need to ‘tread carefully’ and that they can have their license revoked if they do not follow EU law.
Despite the criticism Spanish, Italian and Irish bonds were dropped by investors yesterday – is this the start of contagion? I certainly think if Ireland’s credit rating follows Portugal to ‘junk’ then we will see some very serious concern.
Today however could be somewhat of a better day if you are looking to sell Euros. It is expected that the ECB will raise rates today, and although most analysts expect this is already priced in Trichet could strengthen the Euro further if he has a typically hawkish press conference (straight after the meeting at 2 o’clock). If you are looking to buy or sell Euros then please get in touch for any questions that you may have you always have the option to contact the author directly on 0044 1494 787 451.
GBP/EUR has been particularly volatile as of late, with rates ranging from 1.1555 to very close to 1.11 over the last month. The Sovereign Debt crisis is something that is discussed a lot on this site, as it represents such a threat to the Euro but when moving currency from one to another you must consider both currencies if you are to make the most out of your transfer.
So, in the wake of a fairly slow start to the week for the Euro in terms of economic data we will today have a brief look at what is going on in the UK and how you may make the most of your transfer if you are transferring either Euros to Sterling, or Sterling to Euros. Final Q1 GDP figures are due for release tomorrow for the UK and are expected to remain at 0.5% which isn’t expected to change from the last revision. In the last two months we have seen the figure revised from 0.5% to 0.6% and then back to 0.5% so don’t be surprised if the figure changes again for this final revision.
It is easy to forget that when Soveriegn debt is so readily discussed that the UK economy remains struggling as well and has been stagnant between Oct ’10 and Mar ’11. Whilst the economy in the UK fails to grow and inflation remains high the UK are very much stuck between a rock and a hard place in terms of wanting to raise interest rates. If interest rates are raised it may help to curb inflation but it may also encourage saving over spending and thus push back growth. If you had to peg just one peice of information as the most direct correlation to exchange rates then it would be interest rates.
Interest rate speculation has been driving the markets for the last few months and although this is in danger of being overtaken by the issues in Greece the probability of a rate hike next week for the Euro is likely to keep the Euro fairly strong in the next week or so – at least until next Wednesday one would think.
If you have a GBP/EUR requirement then please do not hesitate to get in touch with one of our UK based specialist currency brokers, you can contact us directly by emailing me on the dealing floor email@example.com or feel free to fill in an enquiry form and someone will get straight back to you.
Unsurprisingly the IMF shortlisted two candidates yesterday for the vacant post of Managing Director – Lagarde and Carstens. Although Lagarde is the front runner for the post Carstens has managed to canvass support from Latin America and does stand a genuine outside chance for the post.
As he fairly points out, during a time when the Euro-zone are heavily dependent on bailouts it may be poignant to have a man removed from the problem (a Non-European) in order to properly tackle these debt issues. The concern for the market is that if the imposed austerity measures are not enough to control spiraling debt then they are a short term fix rather than a long term solution.
Whoever wins the position will have a very difficult job. In my opinion the Euro is under more long term pressure than any other currency. The Greek Credit rating is now the lowest Global rating, only two above ‘default’.
If the pressure does heat up on Sovereign Debt, which it very likely will if Carstens wins the position then expect Euro rates to suffer. It seems to me a bit of a ticking time bomb – fortunately at present interest rate speculation is providing enough of a distraction to keep the Euro strong.
If you are confused as to what you are likely to receive on your Currency Transfer then feel free to email the author directly on firstname.lastname@example.org and I will be more than happy to provide live trading prices, as well as some market commentary which may make that decision on when to move that little bit easier.
Mr. Strauss-Kahn was arrested over the weekend due to allegations of serious sexual assault to a chamber maid at a hotel at which he had stayed. He was pulled off a plane which was due to fly him home before being identified in a line-up by the said chamber-maid.
This potentially could be a double blow for the Euro. Mr. Strauss-Kahn is currently head of the IMF and is attributed to brokering a majority of the bailouts handed out to Ireland, Portugal and Greece. Timing wise then whilst the IMF are now fully involved over trying to restructure Greek debt it is not ideal that there cheif is being detained. So we now have somewhat of a clouded future as a less experienced member is forced to fill Strauss-Kahn’s shoes at a highly pressurised moment in time.
The second blow is for France as an individual state where Strauss-Kahn had lead the polls to follow Sarkozy as their next Prime Minister. France is the second biggest economy in the Eurozone and any political uncertainty will threaten the strength of the Euro as a whole.
Although the Greek situation is unprecendented and we do not know the impact any withdrawal or debt restructuring will have on the Euro any uncertainty is likely to threaten especially whilst Greece remain in the zone and their future remains misty.
If you have a currency requirement in Euros then fill in one of our enquiry forms and a Euro specialist will be in touch to discuss your currency transfer in depth and try to help you make the very most out of moving money overseas.