Monthly Archives: December 2011

GBPEUR Forecast – Should I sell Euros now?

This is a question i am being asked almost daily by clients. GBPEUR has moved massively against all those people looking to sell Euros in the current climate and most are not hanging around.

Should I sell Euros now?

I personally see it going only one way at present and that is against you. It is not just the Euro crisis causing this. The ECB (European Central Bank) cut their interest rate by 0.25% last week. This is the second rate cut in two months and just shows the ECB desperately trying to promote growth, it is also a complete about turn from previous economic policy, they have had two rate hikes already this year! There are serious problems at the core of the Eurozone and investors are worried, as are many of our clients.

Interest Rate Differentials

Interest rates are one of the key drivers on exchange rates. A higher interest rate for a currency will attract investment and keeps the currency strong. A lower interest rate will cause investors to look for alternative investments. This is very similar to interest rates with bank accounts. Savers (investors) will generally look for the best place (highest rate) to put their money. Please excuse me if you were aware of the impact of interest rate differentials on exchange rates but this is one of the fundamental reasons the Euro has been so strong against the pound recently and why most people believe that period has now passed. Two rate cuts in two months is not common for many currencies. When it follows two rate hikes a matter of months previously alarm bells should be ringing.

Therefore the Euro is now weakening significantly and the expectation is it will continue to. Most clients in this position are not hanging around. I even have clients selling property next year booking todays rates on forward contracts. If this applies to you and you would like a no obligation discussion of all your options please contact me direct on jmw@currencies.co.uk

Is there no hope?

It is of course not totally one sided and all the problems in the UK and the loose expectation of some kind of consensus in Europe could move things in your favour. But being realistic you need a complete overhaul of the current failing policies across Europe and even if the events I mention in this paragraph do start to work in your favour, I would not expect such dramatic movement. The Euro most people believe is now in such a sorry state that emergency summits and conferences are not enough. Huge fundamental differences in the economic policies required for different member states are causing friction and serious concerns over the future. The bottom line is no one knows what will happen but it is not boding well.

One further thing to point out is that current Euro rates are still historically very strong compared to say the 1.40-1.50 range. Whilst a few months ago 1.15 would have been achievable I would be really surprised to see it now considering the major change in the global economic outlook.

If you are holding onto your Euros following recent events and would like to ensure you maximise the exchange rate you achieve we can help secure commercial rates of exchange. We can also book rates forward for up to two years, so if you have business or personal Euro requirements in 2012 and are concerned about how things are shaping up, why not also get in touch. My e-mail is jmw@currencies.co.uk and I look forward to hearing from you.

Crucial couple of days for anyone looking to make a currency exchange

With the global economy at practically standstill, I believe European events in the next few days will be key to shaping the short and medium term movements of exchange rates not just on the Euro, but also the Pound, the Dollar and all majors. Two key decisions today could more specifically also help move GBPEUR, GBPUSD and EURUSD. An exceptionally volatile few months have cooled slightly this week, but I feel things could be pushed one way or another depending on the outcome of the European summits. If you have any transfers to make it is well worth considering the impact of these events. As specialist currency brokers we can help with tools designed to protect your exchange rate. Read on to find out more about what I think will happen and how we can help limit your exposure in these uncertain times. 

12.00 BoE Interest Rate Decision – The Bank of England will today announce the outcome of their latest policy meeting. Whilst no change in interest rates is expected we could well see a further round of QE announced which could cause sterling weakness. If not this month, then it is likely in the New Year. Anyone looking to sell the Pound in the New Year should really be aware of the impact this could have, it may mean your transfer is much more expensive in the New Year than now. We can book current levels forward with a forward contract. I have really seen a rise in this type of contract this week, particularly on GBPEUR as we are so close to the 9 month high. Speak to us to find out more.

12.45 ECB Interest Rate Decision  – The European Central Bank will then announce their decision. It is likely we will see an interest rate cut today which could well lead to Euro weakness. This could provide the perfect buying Euros opportunity, particularly if the outcome of the summit is Euro strength (and no QE is announced in the UK!). The markets may however have already priced in a cut in rates so any movement may be fairly limited.

Movement around this time is likely to be quite volatile as investors try to second guess decisions. If you have a transfer to make and would like to be kept up to date at this time speak to me today on jmw@currencies.co.uk quoting GBPEURO and I can keep you posted.

We also have the ongoing events in Europe with European leaders meeting for another ‘key’ summit. This session could well go on into the weekend and I think the general theme on the markets will be in one of two directions:

Signs the Euro crisis will be tackled – If the markets receive well what the leaders are discussing we should see the Euro strengthen. Signs that the crisis is being tackled should also give rise to US Dollar weakness as investors move out to other riskier assets. We should also see a strengthening of the Kiwi, Rand, Aussie and also the Canadian Dollar. Anyone looking to sell one of these currencies to buy sterling may well wish to take advantage of any spikes against the pound at this time.

Signs the Euro crisis is not being tackled – If the markets do not receive well events in Europe a reverse of the above will likely happen. We will probably see the Euro weaken and the US Dollar stregthen as investors fears over the global economy cause a flight to safety. There will also be a knock on effect on the currencies mentioned above which will weaken as investors move to other assests like the Dollar.

The last six months have been a very difficult time for anyone making currency exchanges. The pound has rallied and fallen against all the majors as global events cause shock and panic. One of the major drivers on all exchange rates has been the Euro crisis and the possibility this will be tackled or not should cause a move in one direction or the other as stated above.

Of course there are no hard fast rules on the currency markets and anything can happen! If you have an upcoming transfer, even months ahead it may be of interest to speak to us to find out all your options. As well as booking today’s rates forward for future purchase we can also put orders into the market to trade at certain levels so your exchange doesn’t become more expensive than you had bargained for. Lookout for further updates and analysis on the site today and if you would like any specific information relating to the content on the site or your personal transfers feel free to e-mail me directly on jmw@currencies.co.uk quoting GBPEURO.

Will the Euro weaken? Important Events on the Euro Rate this week

With the official estimate out at 10.00 am this morning for Eurozone GDP (Gross Domestic Product) expectations are that the economy supporting the Euro grew at 0.2% in Q3 of this year. With the rate of growth shrinking this year there are fears that the countries in the Euro could be heading into recession. This release is likely to have an effect on the Euro so if you have any short term requirements do be aware of this release. To be kept up to speed with this release and it’s effects on your exchanges feel free to contact us or me personally.

In other Euro related news Standard & Poor’s the ratings agency has put on ‘credit watch’ all Eurozone members except Cyprus and Greece. The only reason Greece and Cyprus were ommitted is because they are already under credit watch by Standard & Poor’s. We saw last month Germany’s bond auction majorly undersubscribed which was one of the first signs of the crisis hitting Germany. This will come as another blow to Germany who are depserately trying to convince the world that there is a way out of the current crisis.

Thursday sees the Eurozone Interest Rate decision which could also be key in shaping the Euro rate in the coming weeks. Expectations are for a rate cut of 0.25% to 1%, which will completely undo the two rate hikes witnessed this year. The ECB’s stance of raising rates to combat inflation to me now looks out of place. How could the ECB raise rates in the face of massive debt problems by weaker nations? All it has done is raise borrowing costs and stifled growth in my opinion. Growth is really the key issues for the Eurozone, I would expect a poor showing in GDP figures this morning to really underline the need for a rate cut Thursday.

Towards the end of the week we have the crucial EU summit in Brussels between Merkozy to tackle the debt crisis. These ‘emergency’ summits are starting to sound like the boy who cried wolf, and the markets are reacting in a similair way. Italian bond yields are as high as ever and stocks and shares have still not really made recoveries from the dramatic events in the last few months.

This week will in my opinion will really set the pace for the Euro rate before the end of the month. It is not just the many events in Europe to be aware of, but also the UK Interest rate decision (will we see more QE?) and many more. If you have any Euro transactions to make (or indeed any other currencies) it is highly likely these events will cause the Euro rate to fluctuate. It is perfectly concievable we may see some further excellent buying opportunities but we could also see sudden downward movements due to these events. With rates moving every two seconds it may be in your interest to let us know of any expected requirements on the Euro so we can keep you posted on movements that will affect your transfer. We are specialist currency brokers who write this blog for the benefit of our clients, members of the public and anyone who needs to make currency transfers. We have won awards for our exchange rates and levels of customer service and have never had any trouble beating the banks and other currency sources. Why not try me to see?

If you would like to discuss further anything in the post or explore all the options available to you to maximise your exchange rate please feel free to make contact using the form or e-mail me directly on jmw@currencies.co.uk Please quote JMW and GBPEUR in your enquiries.

Is this time to look at selling Euros? Will the Euro survive? Shall I sell My Euros? These are all questions I am now being asked on a daily basis… Here is my personal take on things

Yet another week goes by and once again Euro news has been in the headlines…
Yes for sure there is just so much trouble within Europe and without a doubt
2012 will see some changes that have never been seen before but I cannot see
that even if there is a decision to dissolve the Euro it will be done at a great
pace.

 

When a country has moved to join the Euro in the past, it takes months and
years for the powers that be to track exchange rates between the two currencies
and to decide on a correct and fair level to peg the currencies at, this is why
we always know well in advance that a country is going to join, yet have no idea
what the pegged level will be.

 

In my opinion this matter alone will keep a potential break up from happening
for a long time as ministers and members within Europe will not be able to just
decide on exchange rates for Germany, Greece, Italy and so on overnight, it will
take a huge amount of work and a lot of arguments to come up with a result that
is fair for all.

 

Regarding selling Euros, if you are currently holding funds in Euros then I
would start to become very tempted to look at converting your money back into
whichever currency you will eventually need them in. There is indeed no smoke
without fire, I am aware that the Euro has indeeed been on the ropes for the
last few years now and managed to stay on its feet, however on pretty much a
daily basis something new is in the papers, another summit is announced to find
a solution to the problems or more money is injected into particular economies
or funds to keep things afloat.

 

Sterling Euros rates have been stuck in the same range of 1.1550 to 1.1770
for the past few weeks and I believe investors are sitting back awaiting the
next piece of large news – more than likely although the U.K has plenty of
problems this will be something negative for the Euto that tips the balance
slightly… Of course anything can happen so I may be wrong, but I feel the Euro
at the moment is a ticking timebomb and everything could hit the fan at any
moment over the next few months.

 

If you are worried about what to do I can assist you, not only by getting you
the best rate of exchange when you convert your Euros but with a number of tools
we have available in the market inclusive of Forward contracts (locking in to a
rate of exchange for anything up to two years in advance – ideal for pending
property sales and businesses) stop loss and limit orders, tools allowing you to
aim at a particular rate or set a worst case scenario rate with these automatic
triggers that work 24 hours a day 7 days a week at no extra cost to you.

 

Should you want a further explanation on how these work, or indeed want to
discuss a potential transfer for you or your company (bank to bank transfers
only) then do feel free to contact me, the owner and main writer on this site –
Daniel Wright on djw@currencies.co.uk and I shall be
more than happy to assist you with whatever your requirements are.