Inflation in the UK went up in June by 0.2% to 2.6%, in a surprise rise. The increase was mainly put down to higher air fares and increased housing costs. The pound benefited slightly against a basket of currencies, with pound/euro rates increasing by less than quarter of a cent.
An expected drop in inflation was leading to speculation concerning further QE by the Bank of England so the pounds boost came as a rise in inflation quashed these fears, for now at least.
For the economy as a whole a rise in inflation is not good news as the cost of living has increased, squeezing families further still on household bills and leaving less for spending elsewhere of course needed to help growth. Upcoming retail sales this week will give an insight as to whether the inflation has knocked on to the high street spending.
The BBC quoted a Treasury spokesperson stating “Inflation has halved since its peak in September, but any increase is disappointing.”
“The government knows how tough things are for families at the moment and that is why we have reduced income tax, and frozen both council tax and fuel duty.”
August 14, 2012 | Categories: Best Exchange Rates, Economic Data, Pound Strength, Uncategorized | Leave A Comment »
Yesterday’s trading saw a similar pattern to what we have seen over the past few months as European debt concerns continue to dictate which way the markets swing. The pound was down against the broadly stronger dollar as investors remain on the fence as to whether or not the ECB will actually, as many hope, support the faltering euro before it gets too late.
On the data front, mortgage approvals were down on the UK but this did little to dampen the GBP/EUR rate and many investors feel that until the eurozone crisis gets closer to a resolution the pound will continue to be used as a safe haven. However with the ECB potentially to re-start their bond purchasing this week we could well see a resurgence in the strength of the 12 bloc currency.
“It’s getting tougher for sterling It’s holding up well against the euro, but things become a lot less certain towards the end of the week with quite a weight of expectations around the ECB,” Simon Smith, head of research at FxPro.
“If they do something more aggressive or bolder than before, that has potential to improve the euro at sterling’s expense.”
Therefore the week ahead is all geared to the BoE’s and ECB’s policy meetings which conclude on Thursday. If the ECB announce they are to resume their bond purchasing, don’t be surprised to see a euro rally and although we are unlikely to see any surprises from the BoE with a worsening UK economy a further rate cut or more quantitative easing could be seen later in the year.
On a more positive note to GB acquired their first team medal in the men’s gymnastics for 100 years which brought joy following Tom Daley’s disappointment. Not a 100 year high but just short of a 3½ year high still means we are at great levels to buy euros and waiting too long could see the pound dive if the ECB takes action and just like Tom Daley it may not be able to recover!!
July 31, 2012 | Categories: Best Exchange Rates, Buying Euros, Economic Data, Pound Strength, Pound Weakness, Selling Euros, Uncategorized | Leave A Comment »
Last week’s headlines concerned the shock 0.7% contraction in the UK economy from April to June, announced on Wednesday. The Pound took a tumble as the UK recession extended into a third quarter with a much worse figure than expected, becoming the worst contraction since 1955.
With talk of interest rate cuts and even more quantitative easing, the next few weeks could be tricky for the Pound.
Nonetheless, the well reported problems in the Eurozone continue, with no long term solution or major policy change now likely until September. Inspectors in Greece are close to agreeing the final terms of their bailout, but with Spain increasingly making the news for the wrong reasons, we could be about to enter a crucial phase of the Euro’s history. We would expect the Euro to remain weak, unless Spain avoids the need for a bailout, which could strengthen the single currency and bring exchange rates back down from their current excellent levels.
Finally in Europe, last week’s higher hopes of Eurozone/ECB action to keep debt costs down has filtered through to a lower cost for the Italian government on the bond markets this morning. Rates were 5.96%, lower than the previous auction which cost 6.19% on average. Is this a temporary blip, or does Mario Draghi have something planned to at least delay the current debt problems until the Eurozone leaders return from their August holidays?
Do speak to us at Currency Index if you have a transaction coming up. Just call Simon Eastman on 01923 725725 or reply to this email and we will help you run through your options.
July 30, 2012 | Categories: Best Exchange Rates, Buying Euros, Economic Data, Pound Strength, Selling Euros, Uncategorized | Leave A Comment »
Leaders in Greece have agreed the majority of cuts imposed as conditions of their bailout package, as the ‘trioka’ of lenders (EU, ECB and IMF) are staying on in the country to conclude talks. They are due to visit again in September before a final decision on extra funds is made.
September will be a crunch month for the Eurozone, with a German court due to to make a ruling which could neuter the Eurozone rescue funds, Dutch elections which may lead to an anti-bailout Netherlands government, and Italy and Spain potentially requiring bailouts too. With many European policymakers taking their summer breaks in August, we are unlikely to see any major policy changes until September, by which time Spain could be in serious trouble, so the weak Euro is likely to remain for the coming weeks.
This week as we head to the end of July, we have an Italian bond auction at 10am, at the same time as some Eurozone consumer confidence figures. There is no major data due out elsewhere, so the Euro is again likely to dominate headlines and exchange rate movements.
July 30, 2012 | Categories: Best Exchange Rates, Buying Euros, Economic Data, Pound Strength, Uncategorized | Leave A Comment »
Bad news for sterling yesterday, as figures showed that the UK economy contracted by 0.7 percent during the second quarter, its sharpest decline for three years, and more than three times the 0.2% fall anticipated by many economists – with most of the fall being attributed to a slowdown in the construction sector. However, the Office of National Statistics was quick to note that the contraction may have been exacerbated by the poor weather of the previous few months, as well as the extra bank holidays in June. This had led some to believe that the fall does not signal as much disaster for the UK economy as the figures state. Nonetheless, it has displayed the weakness in the economy, increasing the predictions for further QE, causing the rate for exchanging sterling to euros to fall away slightly from the 3 1/2 year highs we’ve been seeing.
However, the weakness in the Eurozone causes sterling rates against the European currency to remain strong, with many now looking closer at Spain’s worries. Many analysts now fear that Spain may require a full bailout in the near future, especially since the austerity measures introduced by the Spanish government have been incredibly unpopular with Spanish citizens. Both Spain and other EU countries realise something must be done about these concerns before the situation can get any worse, with both the French Finance Minister Pierre Moscovici and the Spanish Economy Minister Luis de Guindo saying in a joint statement – “The swift implementation of the financial assistance programme is essential to restore confidence and recreate conditions for growth”. However, Germany, seen over the entire crisis as being the economic powerhouse of Europe, seems to be having its own concerns, with ratings agency Moodys threatening to downgrade Germany’s credit rating. The problems in Greece seem to have taken a back seat, as German Economic Minister Philipp Roesler, saying: “If Greece no longer meets its requirements there can be no further payments…a Greek exit has long since lost its horror.”
The Euro did see a small increase against the US dollar on Wednesday, which, in turn, gave sterling a small boost against the American currency. However, these small gains were in turn reduced on the announcement of negative UK data.
Anyone concerned about the weakness of sterling caused by the latest releases, and how it may affect any currency requirements in the future, should call Currency Index for advice, and to ensure they get the best rate when the time comes to make a transfer.
July 26, 2012 | Categories: Best Exchange Rates, Buying Euros, Economic Data, Pound Strength, Pound Weakness, Selling Euros, Uncategorized | Leave A Comment »
| Yesterday’s news was dominated by further developments in the Eurozone, with various releases showing that any hopes of a recovery in the short term are very farfetched.
The Spanish were forced to pay the second highest yield on short term debt since the Euro was established, which is just a continuation of the rising rates of the last few weeks, but critically they are now having to accept 7%+ repayment terms. They did manage to sell all the bonds they intended to, but at these rates the market’s are very uncertain as to the sustainability of this level of borrowing.
Further fears were also cast on Greece’s future in the Eurozone, with inspectors due to visit Athens from the EU, ECB and IMF. EU officials have said that the inspection is likely to conclude that Greece cannot keep to the terms of its bailout, with fears that if Greece did have to exit the Euro then the hit of almost €200 billion that the Eurozone would have to take, would almost certainly push Spain over the edge, and possibly Italy too.
On top of this, the ratings agency Moody’s decided to lower its outlook for Germany, Holland and Luxembourg from stable to negative, and warned that the ratings of the triple-A European countries could come under threat if Greece were to leave the Euro, and that support for Spain and Italy needs to be increased.
So all in all a very gloomy outlook for the Euro, but is the UK in a much better position? We are still in the grip of recession and cannot ignore the ramifications of the Eurozone crisis on our own economy. While Ed Balls often points the finger at the government, accusing them of causing the recession, the effect on our imports and exports and overall economy from the Eurozone problems cannot be ignored. This morning’s GDP data release will provide a clue as to whether growth is starting to improve, but with the consensus amongst investors being a minor improvement from -0.3% to -0.2%, the markets are unlikely to be overwhelmed with excitement.
In these unprecedented times, make sure you stay in close contact with your CI account manager, to keep abreast of what is happening and to discuss options such as forward contracts and limit orders, which in a volatile market can save a fortune on an upcoming currency requirement. |
July 25, 2012 | Categories: Best Exchange Rates, Buying Euros, Economic Data, Pound Strength, Pound Weakness, Selling Euros, Uncategorized | Leave A Comment »
Last week saw the Pound hit a new post-2008 high against the Euro, amid Spanish bond auction prices rising again and the lack of any coherent plan to solve the Eurozone debt crisis. Sterling also had a reasonable week against the US dollar (up 1c) and South African Rand (up R0.2), but fell against the Australian and New Zealand dollars. With mixed data in the UK (unemployment fell, but the Bank of England minutes, inflation figures and retail sales were sterling-negative), perhaps a mixed behaviour for exchange rates was to be expected.
This week, the most significant UK data is Wednesday’s GDP revision. The ongoing Libor scandal may also be in the headlines, but as Britain gets ready for the Olympics, there is little else due out that is likely to directly affect the Pound. Could this be the peak for some exchange rate pairs? Much will depend on sentiment around the world and particularly in Europe, where events are really driving foreign exchange markets everywhere.
Eurozone consumer confidence is published at 3pm today, and could provide further opportunities to buy your Euros at unexpectedly good rates. For the latest views and news, whichever currency you are buying or selling, contact your currency broker here for a quote at any time.
July 23, 2012 | Categories: Best Exchange Rates, Buying Euros, Economic Data, Pound Strength, Pound Weakness, Selling Euros, Uncategorized | Leave A Comment »
| Yesterday the pound extended its gains against the single currency as investors continued to look for a safer haven compared to the debt ridden Eurozone currency and despite the UK’s problems the pound is seen as a better bet. Also helping the Euro’s decline were comments from German Finance minister Wolfgang Schaeuble, who said the mere perception of insolvency risk in Spain could cause contagion in the euro zone and a Spanish debt auction which had low demand and higher borrowing costs.
“This is just a return to the sentiment we all know is lurking in the background. People are looking to sell on rallies, there’s no real good news out there for the euro,” said Richard Wiltshire, chief FX broker at ETX Capital.
The pound has been doing well this week despite the Bank of England minutes on Wednesday which showed members talking about a possible interest rate cut in addition to increasing the asset purchase and lower than expected retails sales yesterday which came in at 0.1% compared to 0.6% growth for last month and 1.6% compared to 2.4% for yearly growth.
The view is that any rate cut in the UK is not likely to be on the cards for some months, at least until this current round of asset purchase finishes which is expected to take 4 months. Until that point investors are happy to buy up sterling as a safe bet compared to the ailing Euro so these best rates since 2008 are likely to stick around. With many people worried about the state of the Eurozone we at Currency Index are seeing an increase in the number of UK based people selling their overseas homes and repatriating the funds. This of course is proving costly with the ever weakening Euro but with a typical sale time of a couple of months those who sold on forward contracts have managed to save themselves considerable money. If you are in the same boat, having agreed a sale and you are concerned about the value of the Euro speak with a member of the team today about the options available to you.
Today is fairly quiet on the data front from the UK with just the key Public Sector Borrowing figure being released at 9.30am. Across the pond it’s all about Canada with Producer Price Index figures and Bank of Canada core PPI figures. Will they add to the recent strength of the loony? Those sending money to Canada have seen the pound drop by over 2.5% against the dollar in the past month so any reprieve would be gratefully received. |
July 20, 2012 | Categories: Best Exchange Rates, Economic Data, Pound Strength, Selling Euros, Uncategorized | Leave A Comment »
On Wednesday, Sterling seemed to have a surprising level of good luck. Most analysts would have expected to see the value of the pound drop by a somewhat significant amount after The Bank Of England Monetary Policy Committee (MPC) revealed it had voted 7-2 in favour of increasing its quantitative easing (QE) programme by £50bn yesterday. However, the UK economy was helped significantly when it was announced that unemployment 65,000 to 2.58 million in the three months to May, bringing the national unemployment rate down to 8.1% from 8.3%. Despite us technically being in recession, the value of sterling continues to hold its own, and positive news such as this will only help the economy on the road to recovery.
Real signs of sterling’s comparative strength were shown yesterday, when the rates for seding Euro payments reached a 3 1/2 year high. Despite the Euro making some short-term gains on sterling after the BoE minutes yesterday, these gains were erased when German chancellor Angela Merkal stated that – “We have not yet shaped the European project so that we can be sure that everything will turn out well”. While it may seem like a minor comment to make, considering that Germany are effectively keeping the Euro running almost single handed, this somewhat negative statement appears to have worried investors, causing the value of the European currency to dip significantly. Any further hopes of a recovery for the day were crushed by the announcement that Spanish banks had 155.84bn euros of loans on their books in May that are at risk of not being repaid. Weakness in the Spanish banks only adds to Spain’s problems, and is beginning to fuel fears that they may end up in a similar situation to Greece. The Euro’s problems aren’t helped by the fact that Sicily is close to financial default, with the Italian Prime Minister calling for the governor to resign. Whilst comparatively small compared to the rest of the Eurozone problems, this shows just how far down the chain the problems reach.
Sterling seems to be holding its breath against the US Dollar for the time being, with no significant swings either way. Anyone looking to transfer sterling to dollars in the near future should note that investors appear to be unsure about the possibility of the US federal reserve introducing further quantitative easing. Analysts predict that it may come within the next few months, but Federal Reserve Chairman Ben Bernanke seems to be unwilling to give a clear answer concerning it.
Considering the rates we’re currently seeing, anyone looking to transfer sterling to euros should definitely consider giving their account manager at Currency Index a call, to see how we can assist you in achieving the best rates since 2008.
July 19, 2012 | Categories: Best Exchange Rates, Buying Euros, Economic Data, Pound Strength, Pound Weakness, Selling Euros, Uncategorized | Leave A Comment »
The Euro fell to its weakest point since late 2008 against the Pound today following media reports by German Chancellor Angela Merkel on the euro project.
Merkel told her own party: “We have not yet shaped the European project so that we can be sure that everything will turn out well”.
This caused the euro to erase earlier gains which followed the Bank of England minutes which revealed a split over additional asset purchasing.
July 18, 2012 | Categories: Best Exchange Rates, Buying Euros, Pound Strength, Selling Euros, Uncategorized | Leave A Comment »
Yesterday saw some very volatile moves on the currency markets brought about by the chairman of the Federal Reserve Ben Bernanke’s testimony in front of a Senate committee, during which he was asked some deep and probing questions about the US’s overall economic policy and more specifically the weapons they have left to combat their lowering growth, raising unemployment and lack of overall liquidity. His answers were obviously well received by the markets, as the Dollar strengthened significantly, causing Euro weakness as well and the Sterling rates against both moved by more than half a percent in less than half an hour. After the testimony had concluded things settled down a bit, and some of the gains/losses were pulled back, but not entirely.
Today sees the release of the Bank of England’s monthly policy statement minutes and also the UK’s unemployment figure. Could another central bank cause significant movements? It seems quite likely as we will get an indication of the bank’s policy towards further Quantitative Easing together with any indication as to whether they have considered following the Europeans in cutting interest rates – both of which would be weakening for the Pound. Unemployment has slightly improved in the last couple of months, so this could cause a bit of Sterling strength if the trend continues, but certainly don’t count on that given the recessionary UK economy.
Have you considered a forward contract for your upcoming currency requirement? We are just off 4.5 year highs against the Euro, with a very uncertain outlook – perfect for booking forward to protect yourself against adverse market movement. Give your Currency Index broker a call to discuss your options. |
July 18, 2012 | Categories: Best Exchange Rates, Buying Euros, Economic Data, Pound Strength, Pound Weakness, Selling Euros, Uncategorized | Leave A Comment »
New 3½ year highs were again seen yesterday for the GBP/EUR pairing as eurozone concerns continued to weigh on the 12 bloc currency. We have yet to see any sort of sustained rally but we do keep seeing further strength seemingly on a daily basis. With the Italian and Spanish banking sectors being the main concern, at least for now, it appears that any leaked reports of what may or may not happen are creating volatility in the markets and I suspect unless we see some concrete proof of how the problems are going to be resolved this pattern may continue.
Against the USD the pound also rose as weaker than expected US retail sales led to further speculation that the Fed may have to follow the BoE’s stance and add further QE but the question of when this will or will not happen remains very much in the air.
So in summary the pound has been winning the currency battle against its 2 most common pairs, the euro and the USD, but one important thing to remember is that this is all on the back of data and rumours coming from Europe and the States. The remainder of the week sees a string of UK data releases and we must remember that only a few months ago we slipped back into a recession and poor data will compound the fact that we are not much better off than our friends overseas so do not be surprised if the sterling strength we have seen in the past few days is quickly erased.
If you want to ensure that you do not fall victim to any negative movements then contact your broker here at Currency Index to discuss your requirements.
July 17, 2012 | Categories: Best Exchange Rates, Buying Euros, Pound Strength, Uncategorized | Leave A Comment »
The exchange rates against the single currency have hit fresh highs today despite a downgrade of the UK’s growth expectations by the IMF.
Worries over the ability of the Eurozone to use new powers granted to help out struggling countries reared its head today as Germany set a deadline of September on the decision over whether to oppose the plans thus making investors think any decision would come anytime soon. With Italy and Spain’s souring interest costs and their obvious need for bailout funds to help ease pressures these delays are not helping investor confidence. The pound on the flip side is seen as relatively safe in comparison so the pound’s rally is likely to continue with some analyst thinking we may see 1.3 breached in the near term.
Those needing to bring funds back to the UK may find their return diminish over the next few months so it may be worth looking at fixing an exchange rate now for settlement at a later date (this is known as a “forward contract”)
July 16, 2012 | Categories: Best Exchange Rates, Buying Euros, Pound Strength, Pound Weakness, Selling Euros, Uncategorized | Leave A Comment »
This week sees important data out in the UK, which is likely to determine the short term fortunes of the Pound. Tomorrow sees key consumer inflation figures, Wednesday we have unemployment and the Bank of England minutes, Thursday is retail sales and on Friday the latest public sector borrowing figures.
The fragility of the UK economy has been reflected by falling exchange rates against most currencies in recent weeks, with the exception of the Euro which of course has its own well documented troubles. Any negative news for the UK economy is likely to push sterling lower, even against the Euro.
Rates for money transfers to the USA in Dollars (or for pegged currencies such as the UAE Dirham) fell last week to near their lowest this year. The Federal Reserve have made it clear they will only inject more money into the US economy in quite extreme circumstances, which has given the USD strength compared to the Pound where the Bank of England have extended Quantitative Easing more liberally. Ben Bernanke’s speech tomorrow afternoon will be keenly watched by anyone with an interest in US Dollar rates.
Today there is no important UK data due out, but Eurozone inflation and US retail sales may both affect their respective exchange rates. For a quote on your own transaction and our opinions on the market, contact us on 01923 725725.
July 16, 2012 | Categories: Best Exchange Rates, Buying Euros, Economic Data, Pound Strength, Uncategorized | Leave A Comment »
Today is Friday the 13th and already it appears to be very unlucky for the Eurozone. Overnight the credit rating agency Moody’s downgraded Italy’s status to only 2 points above junk status. With today’s €5.25bn auction of medium and long term bonds due this is the last thing Italy needed and expectations are for the yield on 10 year bonds to move up to 6% – perilously close to the 7% level, which is considered to be where the cost of borrowing has become unsustainable. One analyst said “Italy’s near-term economic outlook has deteriorated, as manifest in both weaker growth and higher unemployment, which creates risk of failure to meet fiscal consolidation targets”.
Today is a very quiet day on the markets data-wise, with only CPI inflation data from Spain and Italy due this morning, and obviously the above mentioned bond auction. The Euro has been at 4 year lows against the Pound and also 2 year lows against the Dollar. With the Italian situation seemingly likely to put only more pressure on the Euro, those of you looking to sell Euros might be well advised to contact their Currency Index account manager to discuss your options and maybe consider a forward contract.
The Tour de France is currently winding its way through the French countryside and mountain regions, and not unlike the Eurozone crisis the Europeans are feeling the pressure of unprecidented occurances. For the first time ever we have a British leader and a Briton in second place, with the highest placed European being the Italian Vincenzo Nibali in third place. While today is unlikely to give the Italians anything to smile about economically, at least they can take some solice from Vincenzo’s performances so far, even if he is struggling to keep up with Wiggins and co…
July 13, 2012 | Categories: Best Exchange Rates, Buying Euros, Economic Data, Pound Strength, Selling Euros, Uncategorized | Leave A Comment »
Yesterday we saw the Euro drop to fresh 3 and a half year lows against the pound as the markets returned their focus to the Euro zone debt crisis. Helping the cause were comments by Italy’s Prime Minister Mario Draghi who commented that Italy might need to tap into the EU fund pot for bond support just like Greece and Spain. This follows a late night EU minister meeting on Monday which failed to come up with any solutions to try and stem the soaring Italian and Spanish borrowing costs. Throw into the pot the upcoming German constitutional court ruling which may put a halt to the plans to dish out rescue funds and the Euro is looking pretty shaky.
A gloomy outlook for the Euro but we must remember the UK isn’t doing too well either. In the midst of recession, further QE just administered and Mervyn King the Bank of England governor doing his best to thwart the rise of the pound to Euro exchange rates by stating the British economy is showing little signs of recovery (such negative comments we have seen many times in the past as a strong Pound makes exports to Europe more expensive so anything to try and curb the rise is in the best interests of growth).
Against other currencies the pound didn’t fare as well after poor retail sales figures and housing data. The only reprieve was some better than expected production figures but on the whole the figures showed a fragile economy here in the UK. “Overall the news from the UK is very negative and sterling is still very vulnerable,” said Ian Stannard, head of European FX strategy at Morgan Stanley.
With this in mind, anyone looking to buy currency other than the hard hit Euro should bear this in mind and keep in touch with your broker to make sure you don’t miss any short lived buying opportunities the markets may throw up.
For anyone looking to send money to the Czech Republic it’s worth noting that over the past three months the pound has gained over 7 percent against the Krona! On a 2.5 million Krona property purchase this makes a staggering £6500 difference to the cost. Well worth a look at the potential investment opportunities there are with those kind of savings!
Today will again be all about the Euro, with no UK data out today there are some releases from Italy and France this morning followed this afternoon by a 6 month bill auction in the US and a speech by one of the Fed’s key members. Tomorrow is a much busier figures day with Industrial and Manufacturing production figures along with a GDP estimate from the UK and import/export data from across the pond.
July 11, 2012 | Categories: Best Exchange Rates, Buying Euros, Economic Data, Pound Strength, Pound Weakness, Uncategorized | Leave A Comment »
Last week saw the extension of the Bank of England’s Quantitative Easing programme, as another £50bn was injected into the ailing UK economy to encourage lending and stimulate growth.
Unfortunately for the Pound, QE effectively dilutes sterling and tends to result in lower exchange rates for international payments. The exception was against the Euro, which weakened again after the European Central Bank cut interest rates to historic lows of 0.75% – giving us the best rates for buying Euros since October 2008.
While we don’t expect the Euro to strengthen significantly given the unresolved debt crisis, if you have Euros to buy then now might be a good time to look at securing your rates.
The effects of QE were however felt elsewhere. Rates against the US Dollar and UAE Dirham fell sharply towards the end of last week, and this morning are sitting at their lowest for a month. With the UK economy continuing to struggle, this trend may continue, and sterling has also lost ground recently against the New Zealand, Australian and Canadian dollars, and South African Rand.
This week there is not a huge amount of data due out, although there are some speeches from central bankers around the world. In the UK, the fallout from Barclays’ manipulation of interest rates is attracting headlines but has not yet affected exchange rates, although if other British banks become implicated as events unfold there could be bad news for the Pound, specially if the government sees fit to legislate against the City. Bank of England deputy governor Paul Tucker is appearing before MPs on the subject at 3.30pm today.
In Europe this morning, news that Spanish bond prices again breached the key 7% level, are another warning sign to European policymakers whose attempts to plug gaps in Eurozone debt financing are looking increasingly desperate. Euro exchange rates remain very sensitive to any further developments.
July 9, 2012 | Categories: Best Exchange Rates, Buying Euros, Economic Data, Pound Strength, Uncategorized | Leave A Comment »
Last week brought good news for those of you looking to buy Euros, as we saw the best rates on the market since October 2008. This followed the European Central Bank’s decision to cut their headline interest rate on Thursday, to historic lows of 0.75%, weakening the single currency on foreign exchange markets.
The news came despite the Bank of England’s extension to Quantitative Easing, also announced on Thursday. Usually, we would expect the Pound to weaken after such a decision, but the announcement came as no surprise and was overshadowed by the ECB rate cut. Having said that, the Pound continued to fall on Thursday and Friday against most other currencies, including the US, New Zealand, Australian and Canadian Dollars and UAE Dirham.
The ‘commodoty currencies’ have all gained significant strength recently, giving worse rates for sending money to South Africa, New Zealand and Australia in particular. On the other hand, if you have assets in any of these countries to bring back to sterling, now could be a good time to consider fixing an exchange rate.
This week, we don’t have any major data due out in the UK, and now that Wimbledon and the British Grand Prix are also over, perhaps headlines will all be focussed overseas. Foreign exchange rates are still as unsettled as the British summer, so do let us know at Currency Index is you have a transfer that you would like us to help with in the coming weeks.
July 9, 2012 | Categories: Best Exchange Rates, Buying Euros, Pound Strength, Uncategorized | Leave A Comment »
Following the Non Farm Payroll figures in the US the dollar has been on the up to the detriment of the Euro. Trading has just hit 1.26, but will it stay there…..
July 6, 2012 | Categories: Best Exchange Rates, Buying Euros, Pound Strength, Uncategorized | Leave A Comment »
Yesterday was a day lead by Central Banks around the world, with great anticipation the markets awaited news from the Bank of England at midday to see if they would indeed, as greatly speculated recently, increase the asset purchase program known as Quantitative Easing. Noon came and indeed they did, pumping another £50 Billion into the UK economy. Normally this would lead to sterling weakness but with much speculation already the markets had seemingly overpriced in this event and the pound took advantage gaining across the board.
More surprisingly was that at the same time in the Far East, China decreased their overnight lending rate by 25 basis points giving instant strength to those currencies affected by trade in that part of the world. The Aussie dollar went on the offensive, gaining all day against the pound by over a cent. Those looking to move money across to the other side of the world quickly saw their returns diminish. The US dollar also took favour from this making good gains against the pound.
With the markets having little time to digest these moves the European Central Bank made the surprise move to cut their interest rates by 25 basis points to their lowest levels ever, to 0.75 percent. The reaction was instant Euro weakness, a welcome sight for those sending money overseas to the Eurozone. The Euro lost a cent to the pound and similar against the US dollar, giving some great buying levels close to the best levels in 3 ½ years we saw a couple of months ago.
This morning levels open where they closed yesterday and we have a raft of data to bring the week to a close. UK PPI data comes out at 9.30am followed by German Industrial Production. Across the pond Canadian unemployment data and building permits are released around lunchtime along with Ivey Purchasing Managers Index later on.
The main event today though is the US Non Farm Payrolls, always a key release and potential big mover of the currency rates. With the familiar effect of the dollar on GBP/EUR rates we could be in for some volatile trading this afternoon and potential buying opportunities so be sure to keep in touch with your broker at Currency Index if you have a requirement coming up soon.
July 6, 2012 | Categories: Best Exchange Rates, Buying Euros, Economic Data, Pound Strength, Uncategorized | Leave A Comment »
The markets are holding their breath this morning in as policymakers from the Bank Of England meet to discuss the possibility of further quantitative easing. Considering the UK’s flagging economy, and the lack of QE in recent months, analysts expect the bank to announce adding more money to the UK economy today. This move, however, has been widely anticipated, so whilst it will almost certainly weaken sterling to some degree, it won’t be to the same extent as an unexpected round of QE, therefore we shouldn’t see any major drops in the exchange rates. There is always the possibility, however, that the BoE will inject more money into the economy that previously anticipated. This will prove a shock to the markets, and cause sterling to weaken.
Slightly positive news in the Eurozone yesterday, as sales in the euro area edged up 0.6% in May, although this recovery is still seen as sluggish, as sales dropped 1.4% in April. In France, one of the comparatively strong economies of Europe, the recently elected President Hollande announced plans to raise taxes on businesses and the richest households by 7.2bn euros, whilst also raising the taxes on banks and oil companies. Market analysts reaction to this decision has been mixed, and it remains to be seen how the exchange rates will be affected by it, especially as, on Tuesday, the French government was forced to reduce its forecast for economic growth, as well as the entire service sector for the Eurozone continuing to shrink in June as business confidence plunged. Any major drops or gains in the euro/sterling exchange rate were checked by sterling’s own weakness in the face of further QE.
There was very little data from the other side of the Atlantic yesterday, as the United States celebrated Independence Day. However, some might think they have little time for celebrating, as the IMF cut its growth forecast for the US economy to 2% this year from an earlier estimate of 2.1%, calling the growth in the US ‘tepid’. The IMF also warned that the US economy will likely be affected by the ongoing Eurozone debt crisis, reminding people that the concerns in the Eurozone are big enough to affect the entire world. Despite the negative news from the US, sterling rates dropped slightly against the dollar yesterday afternoon.
Obviously the big news today will be the QE decision. Whilst many see further QE as a foregone conclusion, there is no doubt the rates will be affected whatever happens. If you have any currency requirements in the foreseeable future, it may be a good idea to contact your account manager at Currency Index in order to discuss the best options, and for assistance in getting the best exchange rate.
July 5, 2012 | Categories: Best Exchange Rates, Buying Euros, Economic Data, Pound Strength, Uncategorized | Leave A Comment »
Following the release of European and UK Services PMI data this morning and then European retail sales, the market’s focus will almost certainly shift to Whitehall and the Treasury Select Committee’s interrogation of Bob Diamond. Mr Diamond resigned yesterday following the announcement of the Libor fixing scandal and Barclays’ part in it. He was one of three senior management figures from Barclays to resign over this incident, and the markets will be keen to see how aware of his traders’ actions he was, and whether he was complicit in any way. Rumours abound that the Barclays’ men had conversations with members of the Bank of England who might have indicated that their traders subsequent behaviour would be acceptable, threaten to tarnish the whole of the UK’s finance industry. Mr Diamond can expect a very in depth grilling with the Treasury Committee, with them certain to take their seven pounds of flesh.
David Cameron also received a bit of a grilling by MPs yesterday on this subject, and any hopes of today’s Prime Ministers Questions going off without a hitch are sure to be slim. He probably wishes he had the time travelling technology of the Men in Black to go back and alter the events on the Barclays trading floor.
It is widely expected that around 18 further banks will be implicated in this scandal. Many of these are spread around the world, with 2 or 3 more UK banks expected to succumb to large FSA fines. So the whole situation looks set to continue for many months, with many more bankers likely to be revealed as enemies of the state.
How this will affect your potential currency purchase is hard to predict, but pressure on the UK’s largest single GDP producing sector can mean only negative things for the UK’s economic outlook, and will certainly require some Ali-esque ducking and weaving to come out the other side too unscathed. So make sure you keep in close touch with your Currency Index account manager.
In other news today is US Independence day, so not much happening on that side of the Atlantic, which could lead to some gains against an otherwise dormant US Dollar.
July 4, 2012 | Categories: Best Exchange Rates, Buying Euros, Economic Data, Pound Strength, Pound Weakness, Selling Euros, Uncategorized | Leave A Comment »
This morning has seen the resignation of Barclays Bank Chief Executive Bob Diamond following the debacle announced last week that Barclays had been fixing the Libor interest rate to suit themselves. It seems one step forward two steps back when it comes to the UK Banking sector but one bit of good news is that the reported £11 million he was due to receive in payouts this year will now be left in the banking sector… so some other fool can play with that now!
After last week’s Euro Summit the initial reaction to the markets in general was positive and we saw the euro recover some of the losses we had seen earlier in the month against both the pound and dollar. Having said that, as seems to be the case time and time again when the dust has settled the underlying factor remains that the 12 bloc currency’s existence hangs very much in the balance and selling pressure again rose yesterday as more details of what the summit achieved were released and it’s clear that although everybody is keen for a resolution soon not all nations are singing from the same hymn sheet.
Despite poor UK PMI data the pound gained against both the euro and dollar as eurozone fears again were the main market movers but the poor data did further increase the expectation that the BoE will increase quantitative easing when the MPC meets on Thursday this week. Though this has been priced into the market we are still likely to see some sterling weakness as the week progresses. Yesterday we saw the typical English summer weather wiping out most of the day’s play at Wimbledon and those of you needing to sell pounds for a foreign currency should note that typically an increase in quantitative easing this week will wipe out all gains that sterling has made over the last few weeks so it would be well worth contacting your currency broker here at Currency Index to ensure you’re not caught ‘out’.
July 3, 2012 | Categories: Best Exchange Rates, Buying Euros, Economic Data, Pound Strength, Pound Weakness, Selling Euros, Uncategorized | Leave A Comment »
The Pound ended June at reasonable levels against the Euro and US Dollar, despite the European summit providing a surprise deal for Eurozone bonds which had strengthened the Euro overnight on Thursday. Rates recovered somewhat on Friday, even though Bank of England governor Mervyn King gave a speech on Friday, which often softens sterling.
With a newly found confidence in the prospects for the global economy, commodity currencies have also performed well against the pound over the last week with the Australian and New Zealand Dollars, and South African Rand, strengthening 2.09%, 1.7% and 3.48% respectively (giving lower rates for sending money to Australia etc).
Today as we enter the new month we have UK manufacturing at 9.30 and also Eurozone unemployment, Swiss retail sales and US construction figures all due out. Later in the week, the key day will be Thursday, when most analysts believe that Quantitative Easing will be extended by the Bank of England – which usually leads to sterling weakness (lower exchange rates), although this may have been factored in to exchange rates to some extent already.
We also have the usual round of monthly data releases, which are detailed on our blog. Check back for our daily market outlook and call us at Currency Index for a quote on your transaction.
July 2, 2012 | Categories: Best Exchange Rates, Pound Strength, Pound Weakness, Uncategorized | Leave A Comment »
