Monthly Archives: June 2012

Will The Bank Of England Weaken The Pound

After the Bank of England Governer Mervyn King talked down the prospects of the pound again today it looks increasingly likely that the bank of England will extend QE next Thursday which could really weaken sterling exchange rates.  However much will depend on the outcome of the two day EU summit which has so far been rather mixed.  If European leaders can come up with credible plans to present to the market then I would expect sterling to slide next week in the run up to Thursday.  On the other hand, if the markets view the latest moves as another damp squib then any losses for the pound could be tempered by euro weakness.  Expect a lot of volatility early next week because of this much like the market was in the last 2 days with a 1.5% swing in GBP EUR rates.

Interestingly with Barclays miss-selling King said “From excessive levels of compensation, to shoddy treatment of customers, to a deceitful manipulation of one of the most important interest rates and now news of yet another miss-selling scandal we can see we need a real change in the culture of the industry.”  If you would rather have a broker looking out for your interests to get the best exchange rate rather than a bank please feel free to e-mail Colm at cmg@currencies.co.uk and quote erf in the subject matter.

Cyprus bailout, what happened to the euro?

In a week of backwards steps for the Eurozone, UK banks have been hit with yet more bad press. This following miss-sold PPI the news that broke yesterday added more shame to the industry. This is the news that greedy traders in the banks have been artificially changing key figures that affects borrowing cost for companies and mortgage borrowers in a bid to make more money.  The economical picture in the UK is generally bad as everyone is feeling and other news highlighted this again this morning. The data released by the National Statistics showed a worse than expected picture of growth with revised GDP figures. Q4 of 2011 was revised down to 0.4% rather than the previse estimate of 0.3%. While the economy contracted by an unchanged 0.3% in the first quarter of this year. The figures mean the current double dip recession in the UK (defined as two or more quarters of declining GDP in a row,)  is more severe than first thought.

However as people looking at the currency market can see that the pound is currenctly very strong, especially against the Euro, but why?

The answer to that is simply, the Eurozone continually miss performs and the people in control of its destiny continually fail to introduce any confidence that things are changing for the better. Traders as a result are less likely to hold euros, selling them for the pound making and therfore making the euro cheaper to buy for you and I.  They are currently held up in Brussels at their 20th emergency meeting since 2010 trying to introduce change. Even though it is likely that nothing significant will come out of it, we have to remember that it is in their interest to resolve the matter and it should be only a matter of time before they do, and when they do the euro should become more expensive!  The real question is when will they move forward. For example if we knew it was two weeks away we would buy our euros beforehand of cause we would, right?

That is the crystal ball question that everyone is trying to forecast.  If you are in that position, needing to move currency the easiest way to avoid disappointment is to buy before the markets move. There are a number of contract types that can be used that are not available from banks that could make your decision easier. For more information contact your currency broker or feel free to ask here. Either feel free to call on 01494-787-478 and ask for me Steve Eakins or email me directly at hse@currencies.co.uk quoting PEF in the subject title and I shall be more than happy to assist you both in terms of getting the best rate of exchange and a high level of customer service for your currency transfer.

So in summary, watch out for any news from Brussels this week, however slim. Plus the Bank of England Governor Mervin Kings who is speaking tomorrow morning at 10:30.

GBP EUR remains flat after what had the potential to be a volatile week – Sterling Euro exchange rate forecast and update

This week has been extremely flat for Sterling Euro exchange rates even though we have had quite a bit going on. We have had a bailout request from Cyprus, Public Sector Net Borrowing figures for the U.K were poor, mortgage approvals fell to a 13 month low for May and we have a European summit in action today which could throw absolutely anything into the mix.

Rates have been range bound between 1.2450 and 1.2540 which has not really awoken much for us to talk about and probably is farily good for you if you are looking to sell Euros in the near future as there is no doubt anyone with this kind of transaction to carry out must be very wary as personally I feel the Euro is a bit of a ticking time bomb as it stands.

The banks in Spain will be a talking point this year and from the reports I have read I think a few are in much more trouble than they are letting on so this will blow up and be front page news again later in the year which should have an adverse effect on the strength of the Euro.

On the flip side, the Bank of England never seem to like to allow the Pound to gather too much strength and the mention of further Quantitative Easing and even the potential of an  interest rate cut a possibility in the near future we may see Sterling start to lose strength again soon, as an interest rate cut it generally seen as negative for the currency concerned due to making it less attractive to investors.

If you have an upcoming transfer to make involving Sterling or Euros then it is key to have a proactive currency broker on your side that will not only get you the best rate when you decide to carry out the transfer but will also keep you fully up to date with what is going on in the markets. If you would like to speak to me directly then feel free to email me on djw@currencies.co.uk quoting GBP EURO FORECAST as your subject title and I will be more than happy to assist you.

Eurozone continues to fall into crises – how does that affect GBPEUR?

Over the last 48 hours the Eurozone has taken a few steps back towards a solution to the crisis. The largest of which was the confirmation of another member state going with hand out to the European Central bank for a bailout, this was of cause Cyprus which was in the press yesterday.  The rumors where in the market that this was a possibility as early as last Wednesday however the volume they expect to need far surpassed what was expected. Current rumors are that they will need upwards of €10 billion or the equitant of €10,000 per Cypriot. So how did this change the market? The main reaction was a run on the Eurozone as people flocked out even though some of this was pricing in the expectation that the crises meeting later this week with resolve nothing, again. The meeting, which will be the 20th since 2010, is expected to be concluded with another flat statement about promises that it will be resolved but with little detail or change actually confirmed.

Overall the Cyprus bailout is nothing in the whole schemes of things for Europe but now means that 25% of member states need a bailout, and raises alarms of the risk of contagion across the rest of Europe that everyone should be aware of.  The UK is not in the Euro and we are not going to join. But when 40% of our trade is with the Eurozone, its future affects our future. It’s in our national interest for the Eurozone to resolve its difficulties. Currently the little support it has been getting is from Germany, the strongest state, however the figures show there may not be much left for them to give. The Single state has €17 trillion of deposits and a total asset base of €34 trillion, which hugely dwarfs the €1.2 trillion German tax base that they are growing reliably dependent on.

Food for thought perhaps for us all and everyone with a currency need, how are they going to fundamentally get out of this mess and how much worse could it get?

For a more up to date forecast on the euro situation or any currency feel free to contact us today. We are well placed to help clients time transfers at peaks rather than lows which could happily save thousands. Over the last two trading sessions the difference on GBPEUR has been over 1.5 cents!!

If you have a currency exchange to make and are needing to jump into the currency market, make sure you review your situation with a specific currency broker. Our expert service can save several percent compared to the banks along with proactively helping your time your transfer. To compare your current provider Call on (+44) 1494 787 478 or email me directly at hse@currencies.co.uk

Bank of England minute open the floodgates on GBPEUR

Date released this morning indicated it is more likely than not that the UK will be restarting their QE program. The nine members of the Monetary Policy Committee (MPC) vote on both this and a change to interest rates with a majority win changing policy. The data this morning showed that at their meeting 2 weeks ago it was a 5/4 split to add more QE of £50 billion. This is over the £325 billion already pumped in over the last few years.  The reaction on the market to this is negative for sterling, as the probability of more QE is priced into the markets. When they print money the money in the system is worth less, hence sterling losses. Another topic of interest was the debate about lowering interest rates to a record low of 0.25%. None voted for the change and this may have simply been a discussion about planning on a Euro breakdown, but it seems they are open to the policy change if needed.

News from Europe is that Greece is close to forming a government, probably euro strength when confirmed. Plus the Italians have proposed a bailout plan for Europe at the G20 meeting in Brazil. This will probably be the main discussion at the next meeting being held in Italy at the end of the week.

My predictions, if it helps is GBPEUR rates to fall this week so if you need to buy currency in the near future you may wish to review your situation sooner rather than later. Nothing hurts in checking rates with currency specialists/brokers, if we could not save you money on your transfer we simply would not be in business. We hear have been trading for over 12 years so I am 100% confident we can help if you do need to exchange currency. In each case our pro-active service can include creating a strategy to help time your transfers over the up and coming economical events.  Contact us today on  01494 787 478 or email me directly at hse@currencies.co.uk

A warning for some – I would not be surprised to see UK banks downgraded in the next week by the credit rating agencies. This will be again negative for sterling.

Further QE in the UK Likely but Euro Still Struggling Before Greek Elections

Friday has witnessed another volatile day in the markets for GBP/EUR, following yesterdays announcement by BoE (Bank of England) governor Mervyn King that there was likely to be two further stimulus packages introduced in the UK before the end of the year. This is in response to the ‘deteriorating economic state’ in the UK and will dampen any hopes that 1.30 was soon going to be available as a trading level.

The markets reacted to this annoucnement and we initially witnessed euro strength. In fact at the low today GBP levels were touchingh 1.2261, before fighting back during afternoon trading and at time of writing were pushing 1.24.

To me this is further evidence that market confidence in the euro is still at a near all time low and with the Greek election results due on Sunday, uncertainty and fear is still gripping the markets.

If you have an upcoming currency requirement or would like to be kept up to date with all the latest market movements then please contact me directly at mtv@currencies.co.uk or on 01494 787 478.

Spanish bailout on the Euro and the week ahead for GBPEUR

As predicted by GBPEUR forecast Spain confirmed over the weekend the they would need a bailout for their financial sector. This was accepted by the Europeans and a credit line was given up to €100 billion, we will not know for another week how much of this will be needed to “resolve” the Spanish banking system. Following this news the euro strengthened in early trading but once the markets understood the volumes involved where not final uncertainty returned and the euro weakened. I am still of the opinion that the way they have gone about this over the last few weeks  has been awful however it seems the markets are happy with the news, maybe they see any step forward as a good thing. 

The next date for everyone with a currency transfer is the Greek election taking place over this coming weekend. Even though it is no financial benefit for Greece leaving the Eurozone this could easily be the case in a matter of days. It would be an unprecedented event that the markets have not seen before so there is no clear prediction on how the markets will react. It could be that the markets see it as Europe cutting off the illness and the euro strengthens, or could easily been seen as a massive financial loss with all the money that has gone to them being written off, and as a result the euro falls. I personally am unsure what would happen if Greece left the euro. Either way it looks like GBPEUR is shaping up for a turbulent week and there is no 1 solution out there. As a result anyone with a currency transfer should review their personal situation before hand this week. Each of you will have different scales, volumes and appetite for risk and we normally look at each situation separately to create a personal  strategy to try and maximise your exchange.

If this is of interest feel free to use the enquiry form to get in contact with one of us writers, or call (+44) 1494 787 478. Alternatively if you wish to contact me directly my email address is hse@currencies.co.uk

Other than policies events there are a number of economic events taking place this week. Please review the below events before your trade:

Tuesday

UK Industrial & manufacturing Productivity – 2nd degree – Expected to strengthen GBP

Wednesday

German Consumer price index – 2nd degree – Expected to weaken the Euro

European Productivity – 2nd degree – Expected to weaken the euro

Thursday

European Central Bank Monthly Report – unknown and could easily be significant for the future of the worlds second currency

European Consumer Price Index – 1st degree – Expected to weaken the euro

Markets Wait for Outcome of Greek Election

GBP/EUR rates are currently fluctuating around the 1.24 level as the markets wait for the next move in Europe, with the focus primarily on Greece and the upcoming government elections. Confidence in the single currency is at an all-time low and if it weren’t for the on-going recession in the UK and our poor growth forecasts, I think 1.30 on GBP/EUR would have been reached
comfortably by now.

As it stands, both the UK and Europe are still suffering from economic depression and it is difficult to see how the respective currencies will move beyond their current levels whilst these problems persist.

In my mind I can see more positive signs of recovery in the UK than in Europe but with Europe being our largest trading partner, their long-term welfare is essential to our future growth prospects.

If you have any upcoming currency requirements or would like to be kept up to date with the latest market movements then please contact me directly at mtv@currencies.co.uk or on 01494 787 478.

Eurozone crises chapter ??? – Where will GBPEUR news go

GBPEUR rates took another tumble today as the possibility of a Spanish bailout got greater. This is after another meeting between international finance ministers. The market assumption is that over the next 2 weeks there will be a press conference stating that the Spanish will receive somewhere between €80-€100 billion from the European stability fund. As the likelihood of the bailout gathers pace, going forward I feel the euro will strengthen and we could see rates several cents lower than where they stand now.  Even though it is another temporary solution it should smooth the markets until it returns. 

Someone said to me today that it was like being on a night out, and to avoid the hangover you just keep drinking, which I agree with. The fundamental problem is that European countries have too much debt and these debts are growing both in number and in their costs to pay back. In the long term the problems will continue and the solutions that are currently on the table are only short term solutions, we are talking months not years. In my opinion the creation of a European bond is the only long term option.

In other news outside of the Eurozone woes, China surprised markets by cutting their interest rate decision. This increased the risk appetite of traders in the market resulted in several currencies including the AUD, NZD and ZAR to climb in value (making it more expensive to buy).

If you have a currency exchange to make, make sure you review your situation with a specific currency broker. Our expert service can save several percent compared to the banks along with proactively helping you to time your transfer. To compare your current provider Call on (+44) 1494 787 478 or email me directly at hse@currencies.co.uk

GBPEUR rates – all eyes on the central banks

As regular readers will know this last few months the euro has been put under more and more pressure which has benefitted many of you who have been looking to buy Euros. However, I personally think there is a real chance of the pressure easing, a view that appears to be becoming more commonplace among market experts. Today, this was backed up by the European Central bank, after they  announced the latest interest rate decision ( which they kept unchanged), they put pressure on Eurozone Governments to quickly get their respective houses in order by taking a close look at the make-up of their banking system.

Over the weekend there were a number of meetings between the Spanish and German financial ministers which was probably around this exact topic.  The Spanish need to borrow money, this needs to be given to their Government and passed to their banks, the question is how do they raise this money? Germany could loan it to Spain themselves but the difficult thing for them to answer would be why not Belgium? Italy? Greece? and the others. It is this political time bomb that is getting closer to blow! When it does, the markets will move very quickly so people with a currency transfer to do should be limiting their losses while playing for profit – Contact an expert to find out more.

In other news this week we have a host of data that will drive the market:

Thursday          

  • UK Interest rate decision  – There is potential for them to discuss another round of QE (this would probably weaken sterling significantly)
  • USA FED meeting – Potential conversation about more stimulus packages

Friday               

  • A number of UK PMI figures – expected to be negative which could be a blow for the Pound.

Protect yourself by speaking to a currency specialist this week and ask for information about stop loss or limit orders during this period of expected volatility. Call on (+44) 1494 787 478 or email me directly at hse@currencies.co.uk

Euro Defies Expectation Amid Friday Fight Back

The euro continued its recent surge against the pound and at time of writing was hovering around the 1.24 mark, making inroads of over a cent on last week’s trading. This is another example of how quickly the tide can change and proves to all those who were waiting for the ‘inevitability’ of 1.30, that there is no such thing as certainty in the currency markets.

The reason for this sharp spike could well of been a reaction to the release of this morning’s UK manufacturing data, which made for uninspiring reading.  The sector produced its worst results for 3 years and will have investors seriously questioning how stable
the UK economy and therefore GBP really is. With PMI levels now sitting below 50, which indicate contraction in a countries economy, serious questions must now be asked about the UK’s growth prospects over the coming months.

Personally I now feel levels will hold below 1.25 in the build-up to the Greek elections and anyone looking to sell euro’s may want to take advantage of this positive, somewhat unexpected market movement.

If you have an upcoming currency requirement or would like to be kept up to date with current market trends, then please feel free to contact me directly at mtv@currencies.co.uk or on 01494 787 478.

GBPEUR currency rates today

GBPEUR rates have swung wildly over the last 36 hours after a surprising amount of end of month traffic. At the end of the month equity traders need to take margin and re-balance their investments for the next month so there is an inflated amount of money being exchanged which in turn can have a large effect on the strength of currencies.  In May there was an abnormally large difference from the gains and losses on stock markets between Europe and the US. This resulted in a large amount of dollars being bought for this month’s investments and it was this additional demand that pushed the dollar to its strongest point in in nearly 2 years against the pound.  The Euro also gained on this news as investors believe the volatility in Europe may provide some quick bucks.

This abnormal movement recently is a kind reminder that the markets will continue to surprise and it is often the people that wait that miss out. We provide a pro-active service that many have benefited from today taking good gains.  If you are in the position of needing to complete a money transfer, or would like to review your current provider contact us today to see if we can help. In each case our pro-active service can include creating a strategy to help time your transfers over the up and coming economical events.  Contact us today on  01494 787 478 or email me directly at hse@currencies.co.uk

Sterling exchange rates take a significant hit against the Euro this morning.

Sterling exchange rates have significantly weakened over the last couple of days from 1.2550 down to a low of 1.2373.

This morning UK manufacturing data showed that activity shrunk at its fastest pace in three years. With the UK economy already under massive stress showing that we are officially in a recession this latest data release has caused the pound to fall against every major currency.

What this does for the rates going forward is quite difficult to predict. I would however imagine that the continued bad data to come out of the UK will  mean that the Bank of England may look to try and stimulate the economy through further monetary easing. When this happens the pound normally tends to weaken. It will be interesting to see if further QE outstrips the issues in the Euro zone which will determine if sterling rises or falls.

I can see the pound being range bound between 1.22-1.25 over the coming weeks in the lead up to the Greek election. However things are changing on a daily basis in the Eurozone so it would be wise to keep in contact with me here. We offer some of the best exchange rates on the market and will undercut the rate of exchange that your high street bank offers you. If you would like to email me with your currency requirement at bma@currencies.co.uk we can discuss all the options that are available to you from forward buying to placing limit orders in the market.

Ben Amrany