Pound falls over 1% as 2010 draws to a close

31st December 2010
Good morning. Sterling had a very poor day yesterday, falling to near 2 month lows versus the Euro, a near 2 year low versus the Japanese Yen, an all-time low against the Swiss franc and a multi-year low against the New Zealand dollar. We'll look at this in a moment after the usual snapshot of rates for the last time this year:

• GBP/EUR 1.1608
• GBP/USD 1.5474
• GBP/AUD 1.5194
• GBP/NZD 1.9996
• GBP/CAD 1.5451
• GBP/CHF 1.4500
• GBP/ZAR 10.231
• GBP/JPY 125.88
• GBP/HUF 322.89
• EUR/USD 1.3328

Sterling drops over 1% in one day

There was no particular poor data yesterday that caused the big drops for Sterling. Traders cited year end clearer selling while thin liquidity exaggerated price movements."Sterling has seen quite a move but it has all been down to selling by a particular clearer," said Neil Mellor, currency strategist at Bank of New York Mellon.

He said a fragile UK economy was weighing on sterling sentiment, with investors concerned about the negative impact of the government's planned austerity measures.

"The fact that sterling has not derived a huge benefit from the weakness in the euro (due to the euro zone debt crisis) speaks about a limited appetite for sterling. If it can't benefit against the euro now it's unlikely to going forward."

This is a good point. The Euro is as weak as can be at the moment due to all the debt problems, and if Sterling is struggling to make gains against such a weak currency, there is little hope as we go into next year for those needing to buy Euros.

Our exchange rates are up to 6% better than offered by the banks, and coupled with our expert market knowledge, the savings for any large currency transfer can be huge.

Contact us today to discuss your requirements for 2011, find out where rates may move and how much you can save by using us to secure better rates.

Daily market reports will start again on Tuesday the 3rd, so check back then to find out where exchange rates are headed in 2011.

A very happy and prosperous new year to all our regular readers.

If you are looking for the best exchange rates, click the link below to send us an enquiry, and have a free consultation on what's happening in the currency markets.

Forecast for Sterling, Euro and US Dollar

30th December 2010
Good morning. The pound rose slightly against the US Dollar yesterday, but remained between €1.17 and €1.1740 against the Euro in thinned trade. Today we'll look at the state of Sterling, the Euro and the US Dollar. First the usual snapshot of rates as at 08:30am:

• GBP/EUR 1.1706
• GBP/USD 1.5500
• GBP/AUD 1.5227
• GBP/NZD 2.0175
• GBP/CAD 1.5484
• GBP/CHF 1.4559
• GBP/ZAR 10.245
• GBP/JPY 126.27
• GBP/HUF 326.78
• EUR/USD 1.3237

Sterling

The pound has been under pressure since last week as higher than expected unemployment data, falling house prices, a hike in taxes, cuts in government spending and softer growth than forecast cloud the economic picture going into 2011.

Analysts said the continued weakness hampered the outlook for future growth. The Financial Times forecast UK house prices will drop as much as 10 percent in 2011 as government spending cuts kick in and access to mortgages remains restricted. Also, last week Bank of England policymaker Paul Fisher said the economy could suffer another period of contraction next year.

All this is likely to pose a dilemma for the BOE in the coming year. A slow recovery will require loose policy to stimulate growth, while tightening may be needed if upward price pressures continue.

So, it's likely that the pound may weaken further as we go into 2011 and trading begins again in earnest.

Euro

Of late the Euro has weakened due to the sovereign debt problems of Ireland, Greece, Italy, Portugal and Spain. The weakness in the single currency is the reason that rates for GBP/EUR are where they are. Sterling is weak and without these debt problems rates would be much much lower.

Recently though the largest economies in the EU, France and Germany, have voices support for the Euro saying it will not fail. Also China has recently offered support.

These developments have calmed the markets and is the reason rates are no longer increasing. Unless we see further issues with debt in the Eurozone it's likely the Euro may regain some of it's strength in 2011 pushing rates lower.

US Dollar

Sterling edged up from near 3-1/2 month lows against the dollar in thin trade on Wednesday, as year-end position adjustments drove trading although a fragile outlook for the UK economy curbed gains.

The problems in the EU and poor UK data has meant that investors returned to the safe haven status of the US Dollar. This demand has strengthened the greenback making it more expensive to purchase. Now that the Euro seems a good alternative to the US Dollar, rates are now moving the other way.

Inflationary concerns however and the fact further Quantitative Easing may be needed may weaken the US Dollar further next year. The question is will the USD weaken further than Sterling? Time will tell but for the remainder of this year we expect rates to stay range bound between $1.53 and $1.57.

If you are looking for the best exchange rates, click the link below to send us an enquiry, and have a free consultation on what's happening in the currency markets.

Sterling remains weak in thin holiday trading

29th December 2010
Good morning. I hope everybody enjoyed the Christmas break. Little has happened during the Bank Holidays in the markets, and sentiment for Sterling is still weak following last weeks weak economic data. Today we'll look at the data released in the run up to the New Year break. Rates at 08:30am this morning are as follows:

• GBP/EUR 1.1715
• GBP/USD 1.5372
• GBP/AUD 1.5163
• GBP/NZD 2.0184
• GBP/CAD 1.5334
• GBP/CHF 1.4641
• GBP/ZAR 10.266
• GBP/JPY 126.22
• GBP/HUF 326.43
• GBP/HKD 11.960
• EUR/USD 1.3119

Sterling remains weak following poor data

Last week a run of poor data including Housing figures and negative comments from the Bank of England caused the pound to fall against major currencies such as the Euro and US Dollar.

Little has happened to change this during the Christmas break. Trade is very thin and likely to remain so this week, and so we don't expect any huge changes. In the thinned holiday trade however, any economic news that surprises the markets could have a bigger impact than usual.

Despite the thin trade there are still data releases and trades happening, so contact us today to discuss your currency requirement, and find out how much you could save with our commercial rates of exchange.

This Weeks Economic Data

Wednesday

German Consumer Price Index data is released today along with Money Supply data from the Eurozone.

Thursday

From the USA today we see some jobless and employment figures. The USD has been strengthening of late, and further better data may push GBP/USD rates lower.

Friday

UK data today is Consumer Confidence and Housing data. Last week poor housing data weakened the pound, and further poor figures could weaken Sterling further.

If you are looking for the best exchange rates, click the link below to send us an enquiry, and have a free consultation on what's happening in the currency markets.

Pound remains weak; BoE Comments

24th December 2010
Good morning. The pound remained weak yesterday following Wednesdays revision of UK growth. Also yesterday one of the Bank of England policy members said that the economy could suffer another period of contraction last year. Rates this Christmas Eve at 08:30am are as follows:

• GBP/EUR 1.1771
• GBP/USD 1.5467
• GBP/AUD 1.5402
• GBP/NZD 2.0659
• GBP/CAD 1.5585
• GBP/CHF 1.4846
• GBP/ZAR 10.406
• GBP/HKD 12.032
• GBP/JPY 128.22
• GBP/HUF 325.94
• EUR/USD 1.3139

Bank of England comments

MPC member Paul Fisher's comments came a day after data showed downward revisions to economic growth in the past two quarters. He said the economy could suffer another period of contraction next year.

Even as spending is seen rising during Christmas, analysts warned a rise in VAT at the start of 2011 would curb consumer demand and lead to weaker growth in 2011. Also, austerity measures and internal government tensions are keeping investors negative on the pound.

"The concern that the VAT rise, higher public sector spending cuts, higher unemployment, the government in a bind is central in people's minds," said Kit Juckes, currency strategist at Societe Generale. "So the pound has no natural buyers right now."

Christmas Break

This is the last working day until the 29th December, and so this will be the last update until then. There is no economic data today as markets wind up for the holiday break.

I would like to thank all our regular readers of this blog for helping to make it one of the most popular currency blogs in the UK, and also wish you a very Merry Christmas and a prosperous new year. Blog updates will start again as usual next Wednesday.

Sterling falls on revised GDP Sterling/Euro

23rd December 2010
Good morning. Yesterday a downward revision in UK economic growth reminded investors the country's recovery remains fragile. The revised GDP figures weakened Sterling against the Euro, and hit a 3 month low against the US Dollar. Rates at 08:30am this morning are as follows:

• GBP/EUR 1.1739
• GBP/USD 1.5389
• GBP/AUD 1.5338
• GBP/NZD 2.0636
• GBP/CAD 1.5581
• GBP/CHF 1.4636
• GBP/ZAR 10.395
• GBP/JPY 127.64
• GBP/HUF 322.92
• GBP/DKK 8.7436
• EUR/USD 1.3106

Revised GDP weakens the Pound

The UK economy grew less than previously estimated between July and September, revised figures have shown. The yearly estimate was also cut, with the ONS saying that GDP in the third quarter had grown by 2.7% compared with the same point last year, down from the previous estimate of 2.8%.

Market participants said the pounds losses were exacerbated in holiday thinned markets, and analysts expected further losses would be limited after Bank of England minutes showed growing concerns about inflation risks. Rates fell against the Euro to the low €1.17's and to a 3 month low vs the US Dollar.

US growth revised up

In contrast to the UK, US growth was revised up and this strengthened the US Dollar making it more expensive to purchase. GBP/USD is now at a 3 month low due to a weak pound and stronger dollar.

Bank of England minutes

The Bank of England's Monetary Policy Committee (MPC) has split three ways again over interest rates and quantitative easing (QE). Minutes of the MPC's December meeting showed that one of its nine members again wanted QE to be expanded, while another continued his call for interest rates to rise to 0.75% from 0.5%.

However, eight MPC members voted for both rates and QE to stay unchanged. Rising inflation risk could put pressure on the central bank to tighten monetary policy, which would be supportive for the pound as it boost the yield on UK assets. We don't expect an interest rate hike for at least 6 months though, so gains for the pound are limited due to this.

China offers to help Eurozone

China has offered its support to eurozone countries to help them through the debt crisis that has gripped the region. "We are ready to support the eurozone to overcome the financial crisis and realise economic recovery," said foreign ministry spokeswoman Jiang Yu.

She added that the eurozone would become "a major market" for China's foreign exchange investments. This surprised the markets and has given some support to the beleaguered single currency. The news has strengthened the Euro slightly, helping to push GBP/EUR rates down.

Today's Data

Further GDP figures and Unemployment data from the USA are the main releases today. The only UK data of note is the Index of services, which measures movements in the Gross value added for service industries. It’s quite a minor release but given the thin trade in the run up to Christmas, it may have a bigger impact than usual.

If you are looking for the best exchange rates, click the link below to send us an enquiry, and have a free consultation on what's happening in the currency markets.

Sterling falls on public borrowing data

22nd December 2010
Good morning. The pound fell yesterday on record high UK borrowing, and that called into question whether the government can meet its deficit cutting target. After some poor UK data, analysts said investors were concerned that the recovery may falter in the first quarter in 2011. As a result, rates at 08:30am are as follows:

• GBP/EUR 1.1772
• GBP/USD 1.5468
• GBP/AUD 1.5496
• GBP/NZD 2.0797
• GBP/CAD 1.5690
• GBP/CHF 1.4748
• GBP/ZAR 10.498
• GBP/JPY 129.36
• GBP/HUF 324.85
• GBP/NOK 9.2395
• EUR/USD 1.3133

Sterling falls on public borrowing

The amount of new public sector borrowing hit a fresh record high in November. The borrowing figure was pushed higher by increased spending on health, defence and the EU. The latest figures are likely to raise concerns about the government's efforts to reduce the UK's budget deficit.

A Treasury spokesman said: "November's borrowing figures show why the government has had to take decisive action to take Britain out of the financial danger zone." The poor figures weakened the pound, and rates fell against the Euro, hit a 3 month low against the US Dollar, and against the Australian Dollar Sterling is at a 25 year low.

Analysts said sterling's falls against the Euro may be limited as worries the euro zone debt crisis could continue well into 2011 keep the shared currency under selling pressure, but UK-specific concerns will cause it to weaken against other currencies.

"Sterling is more vulnerable against the dollar and non-euro crosses. If there are more pressures on the euro zone next year then the euro and sterling could be held relatively close together," Standard Bank's Barrow said.

Today's Data

We have the Bank of England minutes that will show how the MPC voted 2 weeks ago. Recently there has been a 3 way split highlighting indecision on rate movements and further QE. This is the most important release for the week and could cause Sterling volatility, especially due to the thin holiday trade.

For both the UK an USA we also have Gross Domestic Product (GDP) figures. These show the rate the economy is growing or contracting and often has a big impact on exchange rates. Expect some volatility with today's releases.

If you are looking for the best exchange rates, click the link below to send us an enquiry, and have a free consultation on what's happening in the currency markets.

Rates remain steady in thin Christmas trade

21st December 2010
Good morning. Sterling rose against a struggling Euro in thin Monday trade, as the single currency was hampered by debt worries. However gains for the pound were slight, with UK exposure to the euro zone hampering the rally. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1831
• GBP/USD 1.5549
• GBP/AUD 1.5617
• GBP/NZD 2.0833
• GBP/CAD 1.5817
• GBP/CHF 1.4972
• GBP/ZAR 10.574
• GBP/JPY 130.11
• GBP/NOK 9.2890
• GBP/HUF 326.06
• GBP/AED 5.7053
• EUR/USD 1.3137

Thin trade keeping price movements minimal

The year end light trading conditions are keeping rate fluctuations minimal, as many investors are waiting until the New Year. The Euro is expected to stay weak however, as investors await more aggressive solutions from European leaders to address debt concerns in the region.

The debt problems are weakening the Euro, however as the UK is exposed to the Eurozone it's also affecting Sterling, keeping any gains limited.

The Bank of England's semi-annual Financial Stability Report released last week showed Britain's banks remained vulnerable to increased European sovereign debt turmoil, and it's this that is keeping rates fairly steady against the Euro.

Snow affecting retail sales

There has been some speculation that the weather will hamper retail sales. In reality I don't subscribe to this, as anybody putting it off will still need to buy their products, so this will be offset when the weather improves. So while it may be affecting things at the moment, overall this will be taken in to account in Sterling's value and will have little effect.

We won't go on about the snow here though; it's enough that the news channels are giving it rolling 24 hour coverage, with correspondents posted live in 17 cities at once reporting on the conditions minute by minute. It's hilarious and providing much amusement here at Foremost.

Rest assured we will be here every day this week to trade currencies for our clients, whatever the weather.

Today's Data

UK public finance data is due for release on Tuesday, followed on Wednesday by the minutes from the BOE Monetary Policy Committee's latest decision on interest rates, which analysts expect will show another split in the voting.

"Another three-way split is expected but this should not cause more than a ripple in FX markets," said analysts at Credit Agricole.

If you are looking for the best exchange rates, click the link below to send us an enquiry, and have a free consultation on what's happening in the currency markets.

Pound to Euro in run up to Christmas

What next for GBP/EUR rates as Christmas draws in - Sterling Forecast

Lsat week we have seen a relatively powerful Sterling exchange rate, by recent standards at least, fall from a height of just below 1.20 to 1.17 on the nose.

Thursday and Friday saw Euro-Zone Heads of State meet in Brussels, to discuss the Euro, the Euro-Zone support fund and financial-market stresses, and early week support for the single currency from Angela Merkel and Nicolas Sarkozy, may have been joint reasons for the boost in Euro strength against the Pound.

As ever, Quantitative Easing is a topic of choice for both the BoE and the FED, which will weaken their respective currencies, a prospect which could see Trichet smile, investor’s pull funds and all potential overseas property buyer’s panic, as taking advantage of a falling rate, whilst undesirable, is far more beneficial than holding fire and buying when it is lower.

This was emphasised in trading last week, as exchanging £100,000 to €’s Monday would have seen you almost €3000 richer than those exchanging the same amount just two days later. Relatively speaking, holding for 48 hours may have cost you a swimming pool.

Weekly Economic Data that may affect exchange rates

Below the main data releases that we think will have an impact on exchange rates are listed. As this is the last working week in the run up to Christmas, world trade on the currency markets is likely to be very thin indeed.

With thin trade comes more volatility; a data release different than forecast that would usually sometimes have a limited impact on the market can be exaggerated due to the reduced volumes being traded. It’s also important to note that many international investors will be winding up positions this week in advance of the Christmas market closure. So, even though things are slowing down, the markets are likely to be volatile and the cost for an overseas transfer could change significantly.

To find out the forecasted figures and the effect the below releases may have on the currency you need to buy or sell, open an account with us today. It’s free to register, doesn’t obligate you and simply provides access to our market knowledge and commercial exchange rates.

Monday
We start the week with UK Money Supply data and Mortgage approvals. Money supply basically measures the amount of money in circulation and is an inflation indicator. Inflation is high at the moment; however interest rates are not likely to go up so high figures could actually weaken the pound.

Tuesday
A very quiet day with no data of note from the UK, EU or US. We have the minutes to the recent Australian interest rate decision so there could be some GBP/AUD volatility. There are Canadian Retail Sales and Inflation figures at mid-day so GBP/CAD could also be choppy.

Wednesday
Now we get going for UK data. WE have the Bank of England minutes that will show how the MPC voted 2 weeks ago. Recently there has been a 3 way split highlighting indecision on rate movements and further QE. This is the most important release for the week and could cause Sterling volatility.
For both the UK an USA we also have Gross Domestic Product (GDP) figures. These show the rate the economy is growing or contracting and often has a big impact on exchange rates.

Thursday
Further GDP figures and Unemployment data from the USA are the main releases today. The only UK data of note is the Index of services, which measures movements in the Gross value added for service industries. It’s quite a minor release but given the thin trade in the run up to Christmas, it may have a bigger impact than usual.

Friday
Christmas Eve and no data released at all.

We wish all our regular readers a very merry Christmas and a Happy New Year.


If you are looking for the best exchange rates, click the link below to send us an enquiry, and have a free consultation on what's happening in the currency markets.

Sterling gains slightly on Retail Sales, but not much.

17th December 2010
Good morning. Sterling edged higher against the the dollar and the euro on Thursday on robust retail sales data, ending 4 straight days of decline. Gains were limited however due to a mixed outlook for the economy. Rates at 08:30am this morning are as follows:

• GBP/EUR 1.1747
• GBP/USD 1.5626
• GBP/AUD 1.5801
• GBP/NZD 2.1141
• GBP/CAD 1.5720
• GBP/CHF 1.5001
• GBP/ZAR 10.610
• GBP/HKD 12.150
• GBP/JPY 131.13
• GBP/HUF 320.01
• EUR/USD 133.01

Sterling gains on Retail Sales

UK retail sales rose 0.3% in November, broadly in line with expectations. But the previous month's sales were stronger than initially thought, with the Office for National Statistics (ONS) revising up October's figure from a rise of 0.5% to 0.7%.

The ONS said November's growth was driven by sales of toys, sporting goods, watches and jewellery. Retails sales are taking as an overall indicator of consumer confidence, and so the better than expected results helped push Sterling slightly higher against both the Euro and US Dollar.

EU agrees on permanent Eurozone rescue fund

EU leaders have agreed to set up a permanent mechanism to bail out any member state whose debt problems threaten the EU. The leaders agreed that in 2013 the permanent mechanism would succeed the eurozone's 750bn-euro bail-out fund, the European Financial Stability Facility (EFSF).

"We stand ready to do whatever is required to ensure the financial stability of the eurozone as a whole," Mr Van Rompuy said. The agreement says "member states whose currency is the euro may establish a stability mechanism, to be activated if indispensable to safeguard the stability of the euro as a whole".

The summit comes amid continuing concern about stability in the eurozone, as national debts and deficits have soared above the EU's targets. Portugal and Spain have been under financial market scrutiny since the Irish Republic was forced to be bailed out.

The news seems to have calmed the markets and given the Euro some strength. It's the weakness in the Eurozone of late that pushed GBP/EUR rates near to €1.20, so the better climate in the Eurozone could cause rates to fall.

Today's Data

Nothing of note for the UK today. From Europe we see German Business climate and business assessment measures. Also from the EU we have Trade Balance figures. This is a balance between exports and imports and usually generates some volatility for GBP/EUR rates.

Have a great weekend.

If you are looking for the best exchange rates, click the link below to send us an enquiry, and have a free consultation on what's happening in the currency markets.

Pound falls to 3 week low vs Euro; high unemployment

16th December 2010
Good morning. For the 4th day in a row, Sterling fell further against most major currencies. The culprit this time was high unemployment figures for the UK. This is despite figures showing retail sales rose at their fastest pace in 8 years. Rates at 08:30am this morning are as follows:

• GBP/EUR 1.1776
• GBP/USD 1.5599
• GBP/AUD 1.5778
• GBP/NZD 2.1151
• GBP/CAD 1.5666
• GBP/CHF 1.5132
• GBP/ZAR 10.656
• GBP/JPY 131.11
• GBP/HUF 322.90
• EUR/USD 1.3242

Poor employment figures push Sterling lower

Unemployment in the UK increased by 35,000 in the three months to October to 2.5 million, the Office for National Statistics (ONS) has said. It is the first time that the jobless measure has risen for six months.

The surprise increase was driven by public sector job losses, and pushed the unemployment rate up to 7.9%. The worse than expected figures pushed the pound lower, and we are now at 3 week lows versus the Euro.

Dilemma for Bank of England

The data could also heighten the policy dilemma for the Bank of England, coming only a day after figures showed consumer price inflation had risen to 3.3%, well above the Bank's 2% target.

In recent meetings, the Bank's monetary policy committee has been split three ways, with one member voting in favour of gradual interest rate rises to head off inflation, while another has voted to increase the Bank's purchases of government bonds in order to boost the recovery.

Usually, high inflation means a hike in interest rates which would support the pound. In the current climate though, the BoE have already said they expect inflation to remain above target through most of 2011. For this reason we don't expect a hike any time soon.

The split in consensus among the rate setters though is interpreted as uncertainty by the markets. With some members voting for rate rises and some not, the lack of a clear plan reflects the problems surrounding the economic climate at the moment.

Today's Data

From the UK the main data is Retail Sales figures at 09:30am. The report is widely followed as an indicator of consumer spending, and therefore is seen as a reflection of the economy as a whole. From the EU we have inflation measures in the form of the Consumer Price Index. The US releases jobless data at lunchtime.

If you are looking for the best exchange rates, click the link below to send us an enquiry, and have a free consultation on what's happening in the currency markets.

Sterling falls vs Euro and US Dollar despite high inflation

15th December 2010
Good morning. The pound fell again yesterday against both the Euro and US Dollar. UK Inflation came in higher than expected, and investors took profits on a strong pound, and the sell off caused weakness for Sterling. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1806
• GBP/USD 1.5736
• GBP/AUD 1.5848
• GBP/NZD 2.1009
• GBP/CAD 1.5847
• GBP/CHF 1.5118
• GBP/ZAR 10.748
• GBP/JPY 132.10
• GBP/HUF 324.18
• EUR/USD 1.3330

UK Inflation rises; interest rates to rise?

Inflation rose to a 6 month high in November, figures showed yesterday. This is the latest surprisingly good economic figures for the UK, and initially it strengthened the pound as it dented lingering hopes of further monetary easing by the Bank of England.

Andrew Sentance, the most hawkish member of the Bank's Monetary Policy Committee, said the data strengthened his view that interest rates should rise now. "I think we would reinforce our credibility by gradually moving interest rates upwards," Sentance said. Usually higher interest rates lead to a stronger currency.

Bank Deputy Governor Charles Bean that policymakers were watching price pressures "like hawks" and admitted inflation had been above target for an uncomfortably long time.

However the Bank has already acknowledged that inflation will stay above 3 percent all next year, and analysts said the latest data will not change the policy of keeping rates low.

"The Monetary Policy Committee is unlikely to respond to this surprise," said Barclays Capital economist Fabio Fois. "The committee has nailed its colours to the mast: it views the current high rate of inflation as temporary."

So, despite the higher inflation it looks unlikely that the BoE will push rates up. Due to this the pound then retreated back, as investors pondered the likelihood of further Quantitative Easing.

Summary

So it's a weak Euro that has been pushing exchange rates higher, and despite a run of good UK data the pound has actually fallen back away, highlighting the uncertainty surrounding the economic recovery in Britain. Markets will soon slow as we approach the Christmas break, and often when trade is thin economic data can have an even stronger effect on exchange rates than usual.

Today's Data

UK data is all out at 09:30am; Unemployment figures and Jobless claims. The figures measure unemployment and are an indicator how the economy is performing. We also have employment figures from the EU today. From the US we have inflation data and Industrial production figures.

We expect the claimant count for the UK to be 4.5% and total unemployment at around 7.7%. Watch the 09:30 figures, and if the numbers are bigger than this, expect the pound to drop quite quickly. Of course better figures could provide some support for Sterling.

If you are looking for the best exchange rates, click the link below to send us an enquiry, and have a free consultation on what's happening in the currency markets. Remember our rates can be up to 6% better than the banks offer, and so the savings for any currency transfer can be substantial.

Pound falls against Euro; poor house prices to blame

14th December 2010
Good morning. Sterling fell quite sharply vs the Euro yesterday, as weak housing data and comments from the Bank of England suggest more Quantitative Easing could be on the way. Against the US Dollar rates actually rose, due to a weakening USD as a result of fears the country's credit rating is at risk. We'll look at all of this in detail after the usual snapshot of rates as at 08:30am:

• GBP/EUR 1.1795
• GBP/USD 1.5885
• GBP/AUD 1.5912
• GBP/NZD 2.1062
• GBP/CAD 1.5973
• GBP/CHF 1.5325
• GBP/ZAR 10.801
• GBP/HKD 12.350
• GBP/JPY 132.31
• GBP/ZAR 10.799
• EUR/USD 1.3460

Pound falls on Housing Data

Property website Rightmove said house prices fell 3 % in the past month, citing economic uncertainty and low mortgage approvals and forecasting bigger falls in 2011. The poor figures pushed the pound down fairly sharply. Today we have the RICS survey, and if this replicates the results then we expect the pound to fall further.

More Quantitative Easing?

Bank of England Deputy Governor Charles Bean said the bank may restart its programme to pump money into the economy if growth slows or the euro zone debt crisis has a big impact on Britain's economy. The comments pushed the pound lower following the poor housing data earlier in the day. More Quantitative Easing in the US severely weakened the US Dollar, and a similar move in the UK would push Sterling exchange rates lower too.

Summary

We have recently seen 2 month highs for GBP/EUR rates. This has been due to all the problems in the EU. Now however these problems may mean the UK is affected, and more QE will certainly push the pound much lower.

Last week we said that the spike was likely to be short lived and this does now seem to be the case. With huge uncertainty in both the UK and EU, we could see either currency weaken further. If you need to buy or sell Euros, contact us today to discuss the options we have to ensure you don't lose out if rates move against you.

Today's Economic Data

Following yesterdays house price data, we have a host of inflation figures for the UK today. Consumer Price Index and Retail Price Index are released at 09:30am. They are taken as an indicator of inflation and UK economic growth, and so often affects the pound.

From the Eurozone we have industrial production figures. From the USA we have retail sales and the FED interest rate decision.

If you are looking for the best exchange rates, click the link below to send us an enquiry, and have a free consultation on what's happening in the currency markets.

Pound vs Euro forecast December 2010

What next for GBP/EUR rates in December?

Last week proved to be a relatively quiet week for the GBP/EUR exchange rate with limited movements in an uncertain market. That being said Sterling still managed to reach a 10 week high against the single currency, but found high resistance at 1.20 with the Pound not yet strong enough to break through.

The limited data releases brought little change as manufacturing information was better than expected and The Bank of England held rates at the record low of 0.50% for the 21st month in a row. They also left the quantitative easing (QE) stimulus package at £200bn leaving investors wondering what to expect next from the UK in the coming months.

Investors seem to be confused as to which currency to back; the Euro or Sterling. The two economies are showing increased negativity with well documented problems from Eurozone members Greece, Ireland, Portugal and Spain, and for the UK we see an economy struggling to control inflation and refusing to distance themselves from the aforementioned QE package, leaving both in a very precarious position. Many analysts can’t help but feel that at some point in the near future one of the Powerhouse currencies could be set to drop heavily in the blink of an eye causing turmoil in the markets.

With such uncertainty it may be wise to secure a Euro requirement, either buying or selling, this week, as any information due could change things dramatically and make a transfer more expensive. Even if your currency need is not required for some time a Forward contract allows you lock a rate today with a 10% deposit and settlement is not due until a maximum of 2 years into the future taking the risk away from the markets and allowing clients to know how much a transfer will cost.

For those buying Euros, one thing to note this week will be the EU summit in Brussels on Thursday and Friday where the single currency could find some strength depending on the outcome. Ahead of the meeting both French President Nicolas Sarkozy and German Chancellor Angela Merkel have put on a united front stating that the two nations are firmly behind the Euro. Merkel said that the Euro would not be allowed to fail, because it had "a meaning that goes beyond a mere currency". Sarkozy added "We will defend the Euro, because the Euro is Europe."

As said this united front from the two largest economies in the Eurozone could force the single currency back this week so close contact with us here at FCG is imperative to maximize your transfer. If you have yet to open a trading facility with us you can do so, by clicking here and an experienced trader will be in touch to discuss your requirement and offer expert market knowledge.

Pound vs. US Dollar forecast, December 2010

The past week has been a pretty lacklustre one for the currency pairing with movements of only 1.25% between the High and low. Tit for tat seemed to be the game of choice so far as economic data releases were concerned and was mirrored in the exchange rate fluctuations throughout the week.

Ultimately the US dollar got the upper hand by end of play Friday boosted by the US trade balance which reduced more than expected as a weaker dollar and growing economies overseas propelled US exports to a two-year high. Sterling was not the only casualty of this economically and politically positive data release; the Euro was pushed down to fresh lows below 1.32 vs. USD.
The upcoming week again at face value seems to be pretty barren for major economic data releases from the US, however, a concise round up of all the potential market moving economic events can be found in our regular “Market Data” section below.

Despite the lack of economic direction next week the US Dollar could find itself being guided by external events occurring closer to us here in the UK in the shape of the Eurozone debt crisis. Being the global reserve currency the USD has benefited from the Europeans troubles as investors seek a safe haven to park their currency, the concerns in Europe have yet to be resolved and this could mean continued strength for the USD.

Other movements could stem from the FED, who have recently renewed talk of a further round of quantitative easing in the form of QE3, as we have seen last week QE2’s impact on the USD exchange rate has benefited US exports and a further round could be seen in the not too distant future. The short term implications may well be negative for the green back whilst longer term this could help the US towards growth.

Weekly Economic Data that may affect exchange rates

Below we list the main economic data releases for each day this coming week, focusing on the major economies; the UK, EU & USA.

Data releases can often affect exchange rates. Markets will have already seen the forecasted figures and exchange rates will have these priced in already. What can affect rates is if the actual data is significantly different from forecast. For example last week UK Manufacturing output was above analysts’ forecasts, and as a result the pound immediately strengthened and exchange rates rose.

To find out the forecasted figures and the effect the below releases may have on the currency you need to buy or sell, open an account with us today. It’s free to register, doesn’t obligate you and simply provides access to our market knowledge and commercial exchange rates.

Monday
Fairly quiet start to the week, with only Producer Prices from the UK being released. This is an inflationary measure and as such can have an impact on Sterling exchange rates if different than forecast.

Tuesday
Following yesterday evenings house price data, we have a host of inflation figures for the UK today. Consumer Price Index and Retail Price Index are released at 09:30am. They are taken as an indicator of inflation and UK economic growth, and so often affects the pound.
From the Eurozone we have industrial production figures. From the USA we have retail sales and the FED interest rate decision.

Wednesday
UK data is all out at 09:30am; Unemployment figures and Jobless claims. The figures measure unemployment and are an indicator how the economy is performing. We also have employment figures from the EU today. From the US we have inflation data and Industrial production figures.

Thursday
From the UK the main data is Retail Sales figures at 09:30am. The report is widely followed as an indicator of consumer spending, and therefore is seen as a reflection of the economy as a whole. From the EU we have inflation measures in the form of the Consumer Price Index. The US releases jobless data at lunchtime.

Friday
Nothing of note for the UK today. From Europe we see German Business climate and business assessment measures. Also from the EU we have Trade Balance figures. This is a balance between exports and imports and usually generates some volatility for GBP/EUR rates.


If you are looking for the best exchange rates, click the link below to send us an enquiry, and have a free consultation on what's happening in the currency markets.

Pound vs Euro forecast outlook

10th December 2010
Good morning. The pound rose again very slightly against the Euro and US Dollar yesterday, following the decision from the Bank of England to hold off on any further Quantitative Easing and left rates on hold. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1938
• GBP/USD 1.5800
• GBP/AUD 1.6021
• GBP/NZD 2.1034
• GBP/CAD 1.5941
• GBP/CHF1.5498
• GBP/ZAR 10.878
• GBP/HKD 12.283
• GBP/NOK 9.5109
• GBP/HUF 331.00
• GBP/JPY 132.17
• EUR/USD 1.3233

Bank of England leave rates on hold

The Bank of England's Monetary Policy Committee (MPC) has kept UK interest rates on hold at 0.5%, and unveiled no new quantitative easing (QE) measures. Both decisions were expected, but it will not be clear whether they were unanimous until the minutes of the meeting are released.

At the MPC's November and October meetings, there was a three-way split among its nine members. In those meetings, one member voted for a rate rise, another for more QE. So in reality we will have to wait 2 weeks for the important part of the decision - who voted for what. This will show if there is consensus and direction within the MPC.

It was the 21st month in a row rates were left unchanged at 0.5%.

US Trade Deficit widens

The UK's trade deficit in goods and services widened in October, the latest official figures from the Office for National Statistics (ONS) have shown. The deficit - the difference between what the UK exports and imports - grew to £3.9bn from £3.8bn in September.

Alan Clarke, an analyst at BNP Paribas, said the figures did not immediately make good reading. The news didn't really affect Sterling as focus on the Eurozone is the biggest driver in GBP/EUR rates.

Pound vs Euro Summary

Rates to buy Euros have recovered back to the 2 month high we saw last week. It doesn't seem to be able to push higher however, as markets are still cautious on whether the UK economic recover will continue.

It's also important to remember that without the problems in the EU, GBP/EUR rates would be around 6% lower at 1.12/1.13. Now the Irish have been bailed out, if there are no further bailouts required for the other EU countries with debts, then the Euro could regain strength and cause rates to fall again. While the problems remain however, so do the best buying opportunities in over 2 months.

Sterling will be strongest major currency in 2011?

Sterling will be the best performing major currency next year, Barclays has forecast in an article in the telegraph today, which you can read here.

The prediction will be welcome for many clients waiting for better rates, but it may take well into the year for this to materialise. Most analysts expect the pound to rise when interest rates start to go up. They've been at 0.5% for nearly 2 years, and once it looks like inflation is rising and the economy is growing strongly, the BoE will start to raise rates again.

This will probably be in Q2 / Q3 next year, so if you can wait that long, great. If not, then you should consider the possibility that things may get worse before they get better, especially if the BoE decide to opt for further QE in the meantime.

To find out what may happen in the markets, and see how our commercial rates compare with your bank, click below to send us an enquiry today, and take advantage of a free consultation on your requirements.

Enjoy your weekend.

Pound gains vs Euro, BoE and Trade balance today

9h December 2010
Good morning. After a very flat start to the week, yesterday the pound gained against the Euro and US Dollar, following a surge in industrial orders which was a further indication that UK economic recovery is gaining momentum. Rates at 08:30am are as follows:

• GBP/EUR 1.1900
• GBP/USD 1.5814
• GBP/AUD 1.6010
• GBP/NZD 2.1107
• GBP/CAD 1.5947
• GBP/CHF 1.5535
• GBP/ZAR 10.892
• GBP/DKK 8.8690
• GBP/JPY 132.48
• GBP/HUF 328.79
• EUR/USD 1.3287

Industrial orders boost Sterling

Industrial orders rose to their highest since June 2008 yesterday surprising the markets. The news follows Tuesdays better than expected Manufacturing data, and this has increased the value of Sterling.

"The decent numbers out of the UK, plus the peripheral concerns in Europe, have tended to push sterling up," said Adrian Schmidt, currency strategist at Lloyds. Yesterday rates vs the Euro broke through €1.19 again, touching a 10 week high.

While the problems in the Eurozone remain, the Euro is also weak which is also the reason GBP/EUR rates have risen again. Rates didn't last long above €1.19 though and have already dropped back this morning following a fall in house prices according to data from the Halifax. Markets are also waiting ahead of the Bank of England interest rate decision later today.

Bank of England decision today

At 12:00 today we will have the latest Bank of England decision on Interest rates. We expect rates to remain on hold at 0.5%. What is interesting is that the members of the Bank of England's Monetary Policy Committee (MPC) seem have a lack of consensus on how to move forwards. Most vote for no change, but in recent months some have voted for an increase and others pushing for another round of Quantitative Easing.

This indecision is unhelpful for the pound and is causing some volatility. We will have to wait 2 weeks for the minutes of today's meeting to see who voted for what. There is a very small outside chance more QE will be announced today. The markets don't expect it though, so if it were to happen expect the pound to fall sharply.

Other important data today

The European Central Bank publishes a monthly report that contains a detailed analysis of the prevailing economic situation and the risks to price stability. It also provides articles on a wide range of topics related to the tasks of the ECB. The Euro is volatile at the moment so markets will look for any comments designed to calm sentiment towards the single currency. If so then the Euro could strengthen and GBP/EUR rates could drop.

From the UK, we have Trade balance figures.This is a balance between exports and imports of goods. A positive value shows trade surplus, while a negative value shows trade deficit. It is an event that generates some volatility for the Sterling. If a steady demand in exchange for UK exports is seen, that would turn into a positive growth in the trade balance, and that should be positive for the GBP. If demand is low then the pound may fall.

Take the next step towards the best exchange rates

If you're reading this then it's probably the case you need to buy or sell foreign currency, and are keen to know what moves exchange rates. Take the next step and register an account with us today. It's free to open and doesn't obligate you in any way. It means you can then discuss the different options available to ensure you make the right decision on when to fix your rate.

The most important reason to register with us is our commercial exchange rates. We buy live from the market and so can achieve rates that are up to 5% better than you can achieve at the bank. When converting a large sum, for a property purchase for example, the savings can often run into thousands of pounds. Better in your pocket than the banks. Register below and ensure you mention 'Blog' when you get in touch :

Pound vs Euro gains due to better Manufacturing Data

8th December 2010
Good morning. The pound rose yesterday against the USD and EUR following better than expected Manufacturing data. We also had a good GDP estimate that has reduced the chance of further Quantitative Easing in the UK, and this has helped the pound gain. Rates at 08:30am this morning are as follows:

• GBP/EUR 1.1888
• GBP/USD 1.5714
• GBP/AUD 1.6021
• GBP/NZD 2.0893
• GBP/CAD 1.5889
• GBP/CHF 1.5519
• GBP/DKK 8.8640
• GBP/HUF 331.86
• GBP/ZAR 10.954
• GBP/JPY 131.80

Sterling boosted by Manufacturing data

The UK's manufacturing output grew by 0.6% in October, the fastest pace since March, official figures have shown. The growth was twice as fast as analysts had expected, and the figure comes a day after an industry body said the sector was "powering ahead".

The wider measure of industrial output - which includes mining and oil production - fell 0.2% in October. However, analysts said much of this fall was down to seasonal factors, and the overall picture was encouraging.

The result was a much stronger pound, with exchange rates rising. Those that placed Stop Loss orders yesterday as suggested have now been able to take advantage of the rising market and raise their Stop limits. Get in touch today to discuss how these types of contract work.

Irish Budget Passes vote

The toughest budget in the Republic of Ireland's history has narrowly passed its first parliamentary vote.The 6bn euros (£5bn; $8bn) of cuts in the 2011 budget are part of a four-year 15bn-euro austerity plan designed to bring the country's deficit under control.

If the rest of the budget is cleared by parliament, it will trigger the first tranche of bail-out funds from the EU and IMF. It will also avert the likelihood of a snap election, and the news has calmed the markets.

Sterling vs Euro summary

Now there seems to be a way forward for Ireland, investors are calmer about the Euro. Given that the US may well conduct further Quantitative Easing and face higher inflation, investors are looking for other places to put there funds. Right now Sterling and the Euro are more attractive options.

So both the Euro and Pound have risen in value, but the Euros gains have been limited due to fears other EU countries such as Portugal Spain & Italy may also face debt problems. This meant that the pound rose more than the Euro, and that's why were now close to 10 week highs for Sterling to Euro exchange rates.

As we said in yesterdays post, it's impossible to predict if the rate will keep rising. In these situations we have different contract types to allow you to take advantage of continued gains in the rate while protecting against adverse exchange rate movements.

How to get the best exchange rates

To discuss the contract types we offer and find out more about the commercial exchange rates we offer, contact us today. It's free to register an account with us, doesn't obligate you in any way; it simply enables us to provide you with quotes and means you can call us for information on markets and exchange rates.

Pound vs Euro forecast December 2010

7th December 2010
Good morning. Sterling edged slightly higher against the Euro yesterday, as investors focused on euro zone debt problems ahead of a meeting of European finance ministers. Today we'll look at where Sterling vs Euro rates will move in December and the forecast outlook. First the usual snapshot of rates as at 08:30am:

• GBP/EUR 1.1805
• GBP/USD 1.5776
• GBP/AUD 1.5888
• GBP/NZD 2.0643
• GBP/CAD 1.5832
• GBP/CHF 1.5418
• GBP/ZAR 10.837
• GBP/JPY 130.30
• GBP/HUF 328.86
• EUR/USD 1.3357

Pound vs Euro

The euro zone ministers met yesterday and will face pressure to increase the size of a €750 bn safety net for troubled members in order to halt a debt crisis in the single currency bloc.

That is followed by a meeting today of ministers from the European Union, who are expected formally to approve an 85 billion euro aid package for Ireland and discuss the reform of EU budget rules.

An IMF report obtained by Reuters said the euro zone should have a bigger rescue fund for member states in trouble. Germany rejected such a move and dismissed calls for joint euro zone bonds.

The ongoing problems in the Eurozone is the reason GBP/EUR rates are significantly higher than recently. While concerns are ongoing in the EU, the Euro will remain weak. Sterling is also weak however, but focus remains firmly on the Eurozones problems and while it does the Euro will remain weak.

At some point there will be an agreement and consensus on how to proceed with the PIIGS (Portugal, Ireland, Italy, Greece & Spain). When this happens the market will be calmer about the Euro and we expect sooner or later the single currency will regain it's strength. When it does expect GBP/EUR rates to fall sharply.

Of course, in the meantime there is every chance the Euro will weaken further, however predicting if/when this will happen is nigh on impossible. There are however tools you can use to take advantage of market movements in your favour, without simply hoping rates will move your way.

A Stop Loss order is useful if you need to buy Euros in the coming months. This allows you to set a level where your currency is bought should rates fall; €1.15 for example. In this way you can continue to take advantage of any gains in the exchange rate, but at the same time have a safety net should rates drop back.

Stop Loss orders are available for any client wishing to purchase £10k+ of foreign currency. To discuss your requirement and see how much you could save with our commercial exchange rates, contact us today.

It gives you much more control over your currency purchase, and coupled with our commercial rates that are up to 6% better than the banks, and the savings when purchasing a large volume of currency can often run into thousands of pounds. It's better than simply hoping you will get a better rate. Hope is not a reliable economic tool. Take advantage of the knowledge and rates we offer, make an enquiry with us today.

Today's Data

Things get busier in terms of data releases as we see a GDP estimate for the UK. The figure estimates UK growth, and as such can often have a big impact on Sterling exchange rates. Also for the UK we see Retail Sales, Industrial Production and Manufacturing Production.

So, lots that will give clues on the UK economy; expect Sterling volatility.We also have some interest rate decisions for Australia and Canada; we expect no change.

If you are looking for the best exchange rates, click the link below to send us an enquiry, and have a free consultation on what's happening in the currency markets.

Pound vs Euro & Pound vs US Dollar

6th December 2010

Where to for Sterling / Euro pair?

Last week started relatively unspectacularly as the focus remained on the debt crisis in the Euro-Zone with particular attention on Ireland and Portugal and the stance that the ECB would take.

We saw Sterling exchange rates gain momentum against the Euro in trading on Tuesday and Wednesday seeing highs on both days and flirting with 1.1985 on Weds, a price not seen since the late Sept and the then Euro sell-off and subsequent decline. Sterling gained support from defensive inflows as investors saw Sterling as a safer option on the back of positive news from independent analysis of the UK budget deficit and good PMI figure in construction on Wednesday albeit UK economic calendar being notably light.

Sterling strength evaporated on Thursday in a choppy trading session as the focus shifted to the imminent ECB decision, the fact that the Euro had not been oversold and doubts remained over the UK recovery on the back of Nationwide showing a slowdown and subdued housing market which weigh on prices. Furthermore, consumer confidence is relatively week and private sector debt high. This accompanied with tax rises from 2011 and concerns over debt in the banking sector is adding to market uncertainty.

Friday’s session started with the Euro looking bullish due in a range-bound early session propped up by the news that the ECB kept their main refinancing rate at 1% and that any exit rates should be put on hold for the short-term. Euro buying was put down to ECB demand which gave strength to the opinion that due to the overarching political pressure the ECB would offer unlimited liquidity to respective central banks.

Exchange Rate Forecast: We think that further defensive buying of Sterling may occur as fears abound that European Central banks may become addicted to the generous ECB offered liquidity. It is believed that the ECB stance has already been factored in to prices in which case it may be the time to bring those Euros home.

Sterling to US Dollar rates fall from 10 month high. Dollar exchange rate forecast:-

This time last month, we saw Ben Bernanke introduce the second round of QE for the US, which as expected saw the dollar lose strength and relight fear that the world currency may be losing its ‘safe haven’ status, with investors pulling funds to speculate in riskier currencies, leading to drops in dollar exchange rates.

‘Cable’ reached heights of just below 1.63, a level untouched since the beginning of 2010, and November remained a bleak outlook for the ‘Greenback’. What more could the FED have asked for to happen to Europe than an Irish bailout, with fear that Portugal and then an economy larger than Greece, Ireland and Portugal put together, i.e. Spain, raise questions about the possibility of following suit. How about rumours that Germany might pull from the euro altogether and return to the Deutsche Mark? A fear that may not be as ridiculous as first thought.

Historically, a weakened euro has lead to a strengthened dollar, and it would seem history has indeed repeated itself, evident by a drop in GBP/USD to as low as 1.54. This, along with better than expected midweek data releases, in the form of Non-Farm Employment Change, for the US, may have been the reason why each individual pound bought you less dollars. However, as the week progressed, poorer US data figures, such as Unemployment Claims, meant £100,000 bought you almost $1000 dollars more than the day before.

Due to less important data releases occurring at the beginning of this week, we could see the end of the week affecting the markets in a more volatile fashion. Data of note, will be Thursday’s BoE decision on UK interest rates, which if forecasts are correct, 0.5% may be ‘hitting the nail on the head’, so to speak, not to mention nearly two years without change.

So in summary, rates have fallen from a 10 month high due to the US Dollar gaining strength in the wake of the EU’s problems. We’re still trading well above $1.50 however, so if you wish to take advantage of the rate and protect yourself against further market losses, contact us today to discuss the options available.

Weekly Economic Data that may affect exchange rates

This week we have interest rate decisions for Canada, Australia, New Zealand and the UK. While rates for all zones will probably remain on hold, the accompanying comments can often cause significant changes in rates. In addition, there are various inflation measures for the EU and UK which can also affect the chances of future rate movements, and so we expect some volatility for GBP/EUR rates.

We list the main data below, but of course the effect this will have on your requirement depends on the currency you need to buy or sell, the volume you need to convert, and the timescales you’re working to.

Discuss these aspects with an expert FX trader at FCG and find out about the various options you have available. In this way you are armed with the knowledge to enable you to make an informed decision on when to fix your rate.

Monday
From the UK Halifax House Prices is the only data of note. If the monthly gain in prices is less than 0.3% then the pound could weaken. From the Eurozone we have some confidence measures which will be interesting to see after the markets were calmed regards the EU bailout for Ireland.

Tuesday
Things get busier in terms of data releases as we see a GDP estimate for the UK. The figure estimates UK growth, and as such can often have a big impact on Sterling exchange rates. Also for the UK we see Retail Sales, Industrial Production and Manufacturing Production. So, lots that will give clues on the UK economy; expect Sterling volatility.
We also have some interest rate decisions for Australia and Canada; we expect no change.

Wednesday
Following Tuesday’s interest rate decisions today is the turn of New Zealand. From the UK Shop Prices and a measure of Consumer Confidence from the Nationwide are the releases to watch for. For the Euro, we could see movement as Germany, the largest economy in the EU, releases Industrial Production and Trade Balance figures.

Thursday
There is an Interest Rate decision for the UK today in addition to Trade Balance figures. Nobody expects the rate to change from 0.5%, but there is an outside chance further Quantitative Easing (QE) could be announced. It’s not likely, but if it does happen expect Sterling to fall sharply.
From the EU we have a monthly report that contains an analysis of the current climate.
From the US various measures of employment could affect GBP/USD rates.

Friday
We end the week with various inflation measures from the UK. If inflation is higher than expected, it usually pushes Sterling higher. This is because higher inflation normally indicates a potential hike in the interest rate. The increased return for investors spurs demand and strengthens the currency. Of course, lower than expect figures could have the opposite effect.

If you are looking for the best exchange rates, click the link below to send us an enquiry, and have a free consultation on what's happening in the currency markets.

Pound falls against Euro, outlook for further declines

3rd December 2010
Good morning. Sterling fell versus the Euro yesterday, as traders cited the ECB buying Portuguese and Irish debt, helping to calm jitters over the euro zone periphery and lend support the ailing single currency. This has reversed the recent trend and rates are now falling. At 08:30am rates stand as follows:

• GBP/EUR 1.1818
• GBP/USD 1.5640
• GBP/AUD 1.5951
• GBP/NZD 2.0636
• GBP/CAD 1.5662
• GBP/CHF 1.5496
• GBP/NOK 9.4801
• GBP/JPY 130.69
• GBP/ZAR 10.830
• EUR/USD 1.3226

Euro gains strength pushing GBP/EUR rates down

"The ECB have reportedly been buying Portuguese debt and the spreads have come in, which is why the euro has rallied against sterling and other currencies," said Adrian Schmidt, currency strategist at Lloyds Banking Group.

There was talk in the markets that the ECB might be buying up troubled countries' bonds on the quiet, despite no confirmation of this action from Mr Trichet. Accordingly, both Irish and Portuguese 10-year bonds rose.

Philip Shaw, an economist at Investec, attributed the euro's recovery partly to the talk of the Portuguese bond purchases, and also to good news on the US housing market.

So, after weeks of GBP/EUR rates climbing due to the problems in the EU, the markets are now calmer and focus could shift to UK economic figures.

Today's Data

We end the week with some Housing data for the UK. From Europe today we have German Retail Sales and some more inflation figures from the EU. From the US we have Non-farm payrolls that measures how many people are employed outside the agricultural sector (as this is seasonal). These are notoriously difficult to forecast, and so the numbers are often very different than expected and so can cause GBP/USD rates to change dramatically.

If you are looking for the best exchange rates, click the link below to send us an enquiry, and find out how much you could save with our commercial rates.