Pound Euro Exchange, Foreign Currency professionals here to provide all the latest news and analysis for those buying or selling Sterling/Euro. We update on a daily basis with exchange rate movements and market trends keeping readers informed of what is happening and why in the volatile foreign exchange markets.

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Weekly News

The bank holiday has brought some sunshine to the UK at last, and the Pound has also been basking in good rates for those of you sending money abroad. The Euro in particular has been held at cheaper levels by the European Central Bank’s decision last week to cut interest rates in the single currency area, which as regular readers will know usually weakens a currency’s value. The Euro has not been cheaper since January.

In the USA, the Dollar was not affected too much by Friday’s better-than-expected employment figures, and rates for sending USD, as well as pegged currencies such as AED, remain around their best since February.

There have also been improvements in rates for sending South African Rand, Australian Dollars, and Canadian Dollars in the last week.

Focus this week moves to the Bank of England. The monthly policy announcement on Thursday is unlikely to bring much change to British monetary policy, but any further rumours of Quantitative Easing will be likely to bring grey clouds back to the UK economic outlook. The surprisingly good recent GDP figures are also subject to revision in the coming weeks, so the Pound is unlikely to be surging ahead just yet.

With all this in mind we think most exchange rates are good value at the moment for those of you sending money abroad. There is little other data out this week so we might expect a quiet week on the markets – as always though there is crystal ball and caution may be wise in the current climate.

If you would like to take advantage of any movements in your favour, simply call Simon Eastman (01923 725725)

Weekly Update

The Pound has moved higher, after last week’s GDP figures showed that the UK has not fallen back into recession – yet. Growth for the first quarter of 2013 came in at 0.3%, better than expectations and crucially a positive number, where a negative would have confirmed another period of recession.

We now have the best rates for sending Euros since January, and the cheapest USD rates since February, while rates for buying Australian, New Zealand and Canadian Dollars have all improved too.

While the Chancellor insisted the GDP figures showed the UK economy is getting back on track, this is far from certain, as there will be revisions to the GDP figures in the next couple of months which may raise the recession question again. Meanwhile the Bank of England is still expected to extend Quantitative Easing in the coming months (its next policy meeting is next week) which is likely to hurt sterling too.

This week we have a bank holiday in much of Europe on Wednesday, followed by the UK on Monday 6th. There is plenty of data out which could move exchange rates however, notably the main monthly labour market numbers from the USA on Friday, where we also have the trade balance (Thu) and personal expenditure (this afternoon).

In Europe, the monthly interest rate decision and press conference are always of interest, and are announced on Thursday.

With a lot going on as we approach the end of the month, there could be some volatility in rates. If you would like to take advantage of any movements in your favour, simply call Simon Eastman (01923 725725) or reply to this email and let Currency Index watch the markets for you. You can also place orders to buy and sell particular currencies if a pre-set rate is achieved in the market.

Our blog is also updated throughout the week with a daily outlook on the markets.

Currency News

After the Easter break, there are finally signs of spring in the UK, and the Pound is also looking relatively bright at the moment. With a lack of important data out last week, and the Cyprus situation out of the headlines for now, sterling fell back slightly against most currencies late last week but remains at much better levels then pre-Cyprus crisis particularly against the Euro. The Pound also still managed to end the week slightly up against the Canadian, Australian and New Zealand dollars.

The main economic release last week was the American non-farm payrolls, which is the main monthly jobs data in the States. The figures were disappointing, as analysts had expected 200,000 new jobs in March, whereas only 88,000 new positions were registered. The figures are notoriously volatile and usually affect the US Dollar, which weakened on Friday afternoon to its cheapest level against the Pound for around 6 weeks.

The Euro was also kept at cheaper levels by worse than expected retail sales on Friday. David Cameron this week is seeking to garner support for EU reform, and will tell Eurozone counterparts that British support for EU membership is at an all time low. The result of talks, and a possible referendum after the next election, will undoubtedly affect sterling’s value against the single currency in the medium term.

We have very little important data out this week, although the ECB’s monthly report on Thursday will be of interest as their first monthly report since the Cypriot bailout. We also have the Federal Reserve minutes on Thursday evening, which may paint a better picture in the US and bring some dollar strength. Otherwise, we await next week’s Bank of England minutes and then UK GDP the week afterwards, to bring some clarity as to the direction the Pound will move in next.

Weekly Currency News.

It seems a week is a long time in the currency markets, and even longer for the Cypriot government. A week ago, a levy on all Cypriot bank accounts seemed to have been agreed, only for a u-turn and renegotiation resulting in this morning’s agreement that the island’s second largest bank, Laiki, will now be broken up and a tax on deposit holders with over €100,000 will be made instead. The deal came hours before the ECB’s deadline to cut funding to the island’s banks.

The Euro, which has been cheaper for the last week, has started to gain some value back and we could see exchange rates come down further as the dust settles on the new agreement. The Cypriot people will still have a say in the markets, with banks on the island due to re-open tomorrow – will we see protests and panic, or a reluctant acceptance that the bailout is going ahead?

Sterling is certainly vulnerable to falling back to levels seen a couple of weeks ago, although last week’s retail sales were better than expected, and the Bank of England minutes also revealed that the prospect of further Quantitative Easing is not getting nearer, with 6 of the committee’s 9 members still voting for no change. This was also good news for the struggling Pound.

The US Dollar has been out of the spotlight for the last couple of weeks, and has weakened a little, giving an improvement for rates if you are sending USD or pegged currencies such as the UAE Dirham abroad. Fed Chairman Ben Bernanke gives a speech tonight on current US monetary policy.

This week is shortened by the Easter break, with not much in the way of significant data due out. The revision to UK GDP, announced on Wednesday, is one exception, and UK mortgage approvals, released this morning, were slightly worse than expected.

Cypriot Crisis Inevitable….

Good article from Bloomberg regarding the Cypriot bank crisis, which has bought some respite to the pound against the single currency this week.

 

 

Cyprus Echoes Greece Crisis

Some respite at last for those of you buying Euros, which has come in the form of another bailout crisis, this time in Cyprus. The EU have imposed a levy on all Cypriot bank deposit holders, of up to 9.9%, as part of the terms of a €10bn bailout designed to prop up the Cypriot financial system.

In echoes of the Greek crisis of last year, there is unrest in Cyprus at the perceived unfairness of the levy, which will affect all deposits held in the country. President Anastasiades is fighting to amend the levy demand, and if a deal is not done then banks in Cyprus could be closed tomorrow to avoid mass withdrawals.

All this uncertainty and political wrangling has weakened the Euro over the weekend, giving us this morning the best rates for buying the single currency in over a month.

In the UK this week we have the Budget and Bank of England minutes both out on Wednesday, and even the most optimistic commentators will not be expecting sterling-positive news from either. So we could be seeing a window of opportunity today and tomorrow, for buying many currencies at slightly improved rates.

Retail sales and unemployment numbers in the UK will also be likely to affect the Pound.

For the US Dollar, rates have also improved over the weekend, and there is not a huge amount of data due out from across the pond. The Pound is also up against the Canadian Dollar, South African Rand, and Australian Dollar.

So while exchange rates for sending funds abroad are by no means at their best at the moment, it may be prudent to consider locking in to a rate now, given the recent negative sentiment in the UK and upcoming budget and Bank of England minutes. The minutes will show how many of the Bank’s committee voted for further Quantitative Easing earlier this month, and any sign of more QE in the pipeline is likely to undermine the Pound further.

Weekly Currency News

Last week’s most anticipated event, the Bank of England’s Quantitative Easing decision, went the right way – in theory – for those of you sending money abroad, with the committee voting to keep the current asset purchase scheme unchanged. Unfortunately the boost this gave to the Pound was short lived, and we soon saw the familiar theme of a weakening Pound continuing. We will find out next week how close the vote was, and whether more QE is expected in the coming months.

The US Dollar continued its resurgence through the week, with Friday in particular seeing gains for the greenback, when the main monthly employment figures came out much better than expected. The increasing value of USD has now given us the worst rates for buying dollars in nearly 3 years, with no sign of any imminent improvement.

Similarly the Canadian Dollar became more expensive as their unemployment figures were also better than expected, giving us the lowest GBP-CAD rates since 2010.

Against the Euro we saw more rangebound trading last week, with the trend for lower rates continuing showing a drop of 1.5c through the week. Eurozone retail sales came in better than expected, and GDP was on forecast, allowing the cost of a Euro to creep up through the week.

With data around the world showing improvement in other major economies, the Pound is struggling to find any momentum at all, with the budget coming up and continued fears over a third period of recession. The first estimate of Q1 GDP is announced on April 25th.

This week we have figures released through the week, including the NIESR GDP estimate for the UK tomorrow, and the European Central Bank monthly report on Thursday. The US monthly budget statement is tomorrow, with US inflation and retail sales also released this week, could we see continued increases in the cost of the greenback and the Euro?

Australian unemployment is released in the early hours of Thursday; with the Australian Dollar currently close to its all-time most expensive level against the Pound. Don’t forget that currency markets are trading 24 hours a day through the week, with Asian and American markets open when Europe is closed. As such it can be common to see significant movement overnight.

Weekly Update

March is now upon us, and already in the currency markets 2012 seems a long time ago. Last week saw fresh new lows for the Pound against the Euro (lowest since October 2011), US Dollar (June 2010), Canadian Dollar (July 2011) and Australian Dollar (February 2012).

Friday’s poor UK manufacturing figures were the latest in a long line of negative news releases for the UK and therefore sterling. This week, the Bank of England faces a dilemma in whether to increase Quantitative Easing, after 3 of the 9 committee members, including Sir Mervyn King, voted for an increase in February. If more funds are announced on Thursday, we could see the Pound fall further, which has happened at every previous QE extension. Sir Mervyn is also giving a speech on Wednesday morning, and has not been worried about talking the Pound down in any of his previous speeches either.

This morning’s UK construction industry figures were also worse than expected.

Abroad, we have the monthly Eurozone interest rate decision and accompanying press conference on Thursday too. The Eurozone, fresh from the shock Italian election result, will be hoping for some better news when Mario Draghi gives the monthly statement – but it is still unclear what the effects of a hung Italian parliament might be. The Italian election was one positive note last week, in that for those of you buying Euros, who had a brief improvement in rates.

In the USA, the main monthly labour market figures, known as non-farm payrolls, are released on Friday afternoon. The estimates can be wildly different to the final figures, and can drive volatility in the US currency. Canadian unemployment numbers are announced at the same time.

Looking further ahead, the UK budget on March 20th looks to be an awkward one for George Osborne, and continuing anxiety is likely to keep the Pound weak for now. With new Bank of England Governor Mark Carney not due to take office until July, and Mervyn King pushing for more QE, the next 3 months do not look rosy for sterling.

Moody’s Downgrading Sets The Tone

The big news over the weekend has of course been Moody’s downgrade of the UK’s credit rating from its prestigious AAA status – the first such move since 1978.

The Pound suffered immediately on Friday evening, losing over a cent against both the Euro and US Dollar, reaching 16-month lows against the single currency and the worst against the US dollar since summer 2010.

Will sterling fall further? Nobody knows of course, but Jim Rogers, a long-time investment partner of George Soros, told the BBC that he expected sterling “to continue to go down further in real terms”. With rates now nearly 8% lower than at the beginning of the year, it seems there are very few bets on a recovery in the short term.

Last week’s other news bringing exchange rates down, was the news that the Bank of England were closer to increasing their Quantitative Easing program in February, with outgoing Governor Mervyn King unexpectedly pushing for an increase in asset purchases. QE has always been detrimental to the Pound in the past, so if we see the policy being used again, it would be likely to hurt exchange rates further.

George Osborne will now be working on next month’s budget, which will not be an easy one for the coalition government.

This week is not busy in terms of news due out in the UK, except a few property market releases which can affect exchange rates. We also have the revision to Q4 GDP on Thursday; which should move the Pound if there is any significant revision to the initial -0.3% figure. Further drops in GDP would make a third period of recession in the UK more likely.

Overseas, we have a usual week of data releases due out, including Eurozone inflation on Thursday, and figures from Germany (Consumer confidence, inflation and unemployment) which could influence the Euro. In the States, GDP is on Thursday, and the same news from Canada on Friday.

At Currency Index we always try to remain optimistic but at the moment there seems to be nothing except doom and gloom for the Pound. If you are lucky enough to be bringing money back to the UK from a foreign currency this is obviously good news, but for those of you sending money abroad it is not an easy situation.

George Soros Down On Sterling

Moody’s downgrade included a warning that growth would “remain sluggish” over the next few years. The agency said the government’s debt reduction program faced significant “challenges”.

Jim Rogers, a long-time investment partner with George Soros, told the BBC that he expected sterling “to continue to go down further in real terms”.

He said he was “not optimistic” about the UK economy, but added that several economies, including Japan and the US, were also in “serious trouble”.