Tag Archives: sterling forecast
Will the UK avoid another recession? GBP/EUR rates could be on the move. (Alistair Ryan)
Since the start of 2013 Sterling has lost a lot of ground against most major currencies and I believe that a defining aspect to whether we will see the pound fight back will be whether the UK can avoid a Triple Dip Recession. When Gross Domestic Product (GDP) figures are released at the end of this month we will know whether the UK has avoided the dreaded recession. At present analysts are split on their opinions as to whether it will be avoided, I for one believe that we will stay out of a recession but it is going to be very tight. Gross Domestic Product is a measure of how much an economy has grown or shrunk over a certain time period, in this case it will be for the first quarter of 2013. In order for us to avoid a Triple Dip Recession the figures must come out at 0% or above, anything negative would mean that we are officially in a recession. The last estimate for this detailed that the GDP figure would come in at -0.1%, revised up from -0.3% the previous month due to some positive data coming out of the UK…..this is how close it is going to be! Since these last estimates were released we have seen some slightly more positive data coming from the UK but with a few weeks left until the release there is still time for something else to come up.
My general opinion is that whichever way this goes we will see the markets move. If it announced that the UK has avoided the Triple Dip Recession then I would expect to see some Sterling strength off the back of this, alternatively if we do go in to a recession then I can see Sterling weakening against most major currencies.
Markets are so volatile at the moment that even the smallest announcement, that would usually have no effect on the markets, is moving rates significantly. Building up to the GDP announcement I think there will be a lot of uncertainty in the markets with investors very wary of where their funds are going. We have to remember that whilst this is going on in the UK there is still vast global uncertainty with the situation in Cyprus, Italian government elections, US debt ceiling and the general state of a host of major economies.
So, if you have an upcoming currency requirement, even if it is not in the imminent future it is worth speaking to me today as we have a number of contract options that can help safeguard your funds against market movements. If you would like to speak with one of our highly professional, experienced currency brokers then please contact me direct at atr@currencies.co.uk
Euro zone recession to continue but the best rates for selling Euros to buy pounds for 15 months. Gains may continue this week. (Ben Amrany)
The single currency has been on a roller coaster ride since the turn of the year. One of the most volatile currency pairings has been GBP/EUR with the Euro gaining over 7% with high to lows over the course of a trading day often in excess of 1%
Comments from the European commission on Friday stated that the Euro zone recession will linger well into 2013 while Germany posted their GDP figures which showed a contraction of -0.6% for Q4 2012. With Germany being the strongest economy within Europe this does not paint a pretty picture for the European economy.
Looking ahead to this week the political uncertainty in Italy may just help the Euro weaken against the US Dollar but concentrating against the weakening pound I feel the Euro will continue to strengthen due to events over in the UK.
The timing of the news by rating agency Moody’s, to cut the UK’s AAA credit rating would have only stopped the pound falling through the floor on Friday night. I imagine the losses for the pound will continue on Monday and I would not be surprised to see over a 1% dip for the pound moving GBP/EUR to sub 1.14. This will bring about even better opportunities for those that need to sell Euros to buy the pound. This week you could really capitalise on the pounds demise. I would not get to greedy though as events in Italy may halt the gain for the Euro but it should mean that you can sell your Euros at over 1.5% better than on Friday just gone.
If you would like more information on the options that are available to you please do email me directly at bma@currencies.co.uk and I can talk you through the different contract options that may be suitable for your circumstances.
If you are looking at buying the Euro for your business or possibly completing on a property I would urge you to test us to make sure we can offer you the most competitive rate on your exchange. With the pound down over 7% this year, that property completion is becoming more expensive. At least we can go some way by making your purchase cheaper by offering you the best rate on the market. We will strive to beat your bank’s rate and your current currency broker if you are using one. Why not compare the rate we can offer by emailing me bma@currencies.co.uk with your requirement and contact details. I am certain you will be pleasantly surprised at the savings we can offer you. Or just call our line, ask for Ben and I will talk you through how easy it is to benefit from our excellent exchange rates.
Ben Amrany
When should I buy Euros. this Friday could be key for the pound and Euro.
The Euro took a slight decline yesterday as comments from Germany’s Bundesbank stepped up criticism of a potential proposal that the European central bank will start to re buy government bonds to quell the regions debt crisis. The comments from the Bundesbank came after the German magazine Spiegel reported that the ECB is considering setting a yield cap/limit on Euro bonds and was supposedly considering buying debt issued by vulnerable countries if their interest rates rose too high.
After the report from the magazine the ECB denied the speculation about potential market intervention to contain the euro zone debt crisis, dashing recent investor enthusiasm for risk which tuned Euro negative. An ECB spokesman said it was misleading to report on decisions that still had not been taken.
Looking forward it is very difficult to decide what to make of the comments from the ECB after the magazine’s report. There is never any smoke without fire and if I was looking at buying Euros I think I would buy what I need as soon as possible. The mere mention of how the ECB will solve the debt crisis seems to be Euro positive. At some point in September the ECB are going to inform the world what their plans are. If the magazine’s report is correct then it could bring some Euro strength as it will certainly boost investor sentiment in the short term.
When should I buy my Euros?
This afternoon we have witnessed the Euro reverse yesterday’s losses with the rate gaining over 0.5% against the pound, and is up 1% against the USD. Regardless whether you are buying or selling the pound, this Friday you may wish to consider securing your currency before the National Statistics release their second revised GDP figures for Q2 of this year for the UK. Recently it has been reported that the UK economy has contracted by as much as -0.7%. The general consensus is that the markets are expecting a contraction of -0.5% slightly better than -0.7% that was recently published.
The Bank of England recently stated that they felt growth in the UK will be flat for the remainder of the year and into 2013 so I am not expecting to see a shock announcement of growth. Where you must be cautious though is if the data comes out worse than the -0.5% that is predicted. If this happens sterling could just well fall back towards the 1.25 level against the Euro as their will more than likely be a big sell off of the pound by investors.
If before the decision this Friday, you do not want to take the risk with your currency exchange you are free to secure your funds on either a spot or forward contract. This will give you the peace of mind in knowing exactly how far your funds will go while taking away the stress and hassle of future data releases. If you choose to secure your funds sooner you will be pleased to know that you are trading at close to a four year high against the Euro. If you wish to open an account or would like to speak with us about your requirement you can do this by emailing me at bma@currencies.co.uk. I will then contact you to go over all the options that are available to you.
To give you a quick background I have been assisting both private and corporate clients make significant savings over the banks and other brokers for years. We created this site to give you the reader a brief insight into what is happening with a specific currency pair. Hopefully you will find this site informative and if you would like to speak with me regarding your currency requirement then please feel free to email me bma@currencies.co.uk with your contact details and we can discuss the different options that are available to you. I can help you limit your loss to volatile currency markets through the different contracts that we offer which may just give you the peace of mind you are looking for on your all-important currency conversion.
Thank you for reading
Ben Amrany
UK Public sector borrowing down
This morning UK figure showed a larger than expected surplus on Public Sector Net Borrowing. The figures have been seen as positive for sterling as it is in line with their fiscal targets. In early trading sterling gaining over 0.5% against the euro making a difference of over €1,000 on a £200,000 transfer. The only concern is that the National Statistic mentioned that due to strong January figures Februarys may be lower than normal. So the figures in 4 weeks will give a better “real” outlook of the recovery of the UK with how much revenue it is collecting through tax’s.
The focus on the market still lies with speculation on tomorrows Bank of England minutes and the middle east turmoil effecting commodity prices. I would expect sterling to gain further this afternoon up to the event but be wary as this speculation also happened with the inflation figures last week which was wrongly placed. When the inflation figures were less positive and the markets fell back. This could happen tomorrow so todays rate, close to a 6 week high may be lost.
If you would like more information feel free to contact us and either myself, Jonny or Dan will get in contact.
Will an interest rate in the UK or the Euro help or hinder?
As speculation continues to mount about when the UK will raise interest rates it is worth thinking about what will be the reaction in the currency market.
Generally in the past charts show that when an interest rate is made that country benefits from more investment and that the respective currency normally gains, but these examples are all 2-3 years old before the recent financial crises. The truth is that no one knows what the currency markets will do, hence the saying “more is lost through indecision than a poor decision.” So we have to ask ourselves whether we think that an interest rate hike will actually have a positive benefit to the currency and consequently whether it is worth waiting for a raise. (That is if they do and if they do in the UK before other.)
The facts stand that the UK has double the target level of inflation, new taxes that are yet to be felt by the consumer and that retail figures are key to growth. So it is clear that for the UK to continue to recover money needs to flow and households need to continue to spend. However the average UK household has enjoyed low mortgage payments for a number of years that have helped spending. So I think it is fair to say if mortage repayments go up there will be actually less spending and therefore less growth. You can see the difficulty felt my the market in forecasting whether GBPEUR, GBPUSD and rest will go up if a raise is announced?
It does seem clear though that as speculation continues rates will rise so it may be prudent to take these opportunites if you have a exchange to make.
Sterling forecast 2011
Sterling Exchange rates this year have moved a lot with swings over 16% against the euro and 14% against the US dollar. This highlights the importance of timing transfers as even over the last 2 months an additional USD 15,080 or EURO 15,140 would have be achieved on a £200,000 transfer if you bought at the peak rather than the low.
Next year I think there are a number of large stories that could shape exchange rates.
Firstly the introduction of budget cuts in January across the UK. This ranges from the VAT rise to fuel cost and efficiency target on every area of government. Many are expecting a large increase in unemployment and hence consumer confidence, all key to the outlook of sterling.
Secondly sterling has a vast amount of exposure to the euro zone debt crises so if any other state was to fall and need support that additional money out of the economy is not going to help.
Third we have the issues the Bank of England has with the inflation levels in the UK. Normally this is counted by raising interest rates however this could cause problems with the housing market, and unemployment levels further.
Finally we have the coalition government. Over the last few weeks the government has again come under pressure and could theoretically add political uncertainty which generally weakens the currency in question. Add the above points and how the cracking government handles what’s being called broken Britain and it makes next year very uncertain.
If you are looking or planning to send money abroad next year you also have to look at the currency that you are buying, the other side of the coin and each have their own problems. The US is having major issues with unemplyment, the euro has its debt crises, but most of the other majors have natural resources that continue to be in demand so are gaining making them more expensive to buy. If you would like more information about a particular currency pair then feel free to contact us.
Snowy forecast for sterling
Good morning readers,
On a rather snowy day across the UK many may not consider the effects on the financial sector. However these can be vast and I would not be surprised to see several cents be taken off the value of sterling due to the weather over the coming days. Just look back to earlier this year when snow landed last in February and you can see the correlation.
Many are stuck indoors due to the weather which dramatically drops productivity along with retail sales in the UK. We have talked before about how important these both are to the strength of the UK. With less spending consumer confidence is also hit which can result in more unemployment. We have consumer confidence for the UK released tomorrow morning so if you are reading this and need to sell euro’s and send money abroad get in contact today for a full briefing on what could happen over the coming 48 hours.
