Pound vs Euro rates surge up August 2011

Tuesday 2nd August 2011
Good morning. Sterling fell yesterday after poor manufacturing data, however as we'll see in a moment the US debt problems have resulted in GBP/EUR rates surging, nearly at €1.15 this morning. We'll look at the reasons for this after the usual rate snapshot as at 08:30am:

• GBP/EUR 1.1488
• GBP/USD 1.6276
• GBP/AUD 1.4968
• GBP/NZD 1.8640
• GBP/CAD 1.5577
• GBP/ZAR 10.958
• GBP/JPY 125.71
• GBP/DKK 8.5558
• GBP/NOK 8.7917
• EUR/USD 1.4169

US debt agreement and the effect on currency exchange rates

The agreement to congress raising the US debt ceiling has had some interesting effects on the currency markets. As there have been problems in the US, the Dollar had weakened significantly. As it was perceived as a risky investment, other currencies such as the Euro and Sterling benefited.

Now that there is an agreement, investors have been buying dollars again, mostly with Euros. The net effect of this Euro sell off is a severe weakening of the single currency, making it much cheaper to purchase.

Pound vs Euro rates surge up August 2011

The weakening of the Euro has helped push GBP/EUR rates up to nearly €1.15 this morning, creating the best exchange rates for Euros for some time. It's very important to note however that this is purely due to movements with the debt crisis in the US. Fundamental UK data is still very poor, and Sterling is down.

Sterling still weak due to poor data

Further poor data from the UK yesterday highlighted the fragile recovery. Manufacturing activity shrank for the first time in 2 years, and the fact interest rates in the UK will remain low for many months is weighing on the Pound.

As a result Sterling has actually dropped against most currencies, however this has been masked by the upwards movement in GBP/EUR following the developments in the USA.

Summary; what you should do if you need Euros.

If you need to buy Euros, you should seriously consider fixing the rate with a Forward contract, where you can lock in today's rates for up to 2 years, and only pay 10% now, the remainder when you need the currency.

With poor UK data continuing to weigh on Sterling, most analysts think exchange rates are going to fall back away. Buying €200,000 today compared to a few weeks ago is an astonishing £7500.00 cheaper, clearly illustrating the huge spike we have seen.

Do you need to buy Euros? Send as an enquiry now to find out more about our rates.

Today's Data - After the holiday in Australia yesterday, today we have House prices, building permits, commodity Index and an interest rate decision, all of which could strengthen the Aussie. Closer to home, we have Inflation data for both the UK and Eurozone. Also from the UK there are shop price index figures from the BRC.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

Interest Rates and effect on exchange rates

Thursday 7th July 2011
Good morning. Today is the busiest and probably most important day of the week. Starting in the UK, we have various measures of manufacturing and industrial production, and also a GDP estimate. We will also see the BoE interest rate decision, but we expect no change in rates. Moving to the EU, we have an interest rate decision and we expect a rise from 1.25% to 1.50%. This could well strengthen the Euro and push GBP/EUR rates lower. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1169
• GBP/USD 1.5971
• GBP/AUD 1.4878
• GBP/NZD 1.9303
• GBP/CAD 1.5425
• GBP/ZAR 10.718
• GBP/JPY 129.21
• GBP/DKK 8.3274
• GBP/NOK 8.6467
• EUR/USD 1.4297

Interest Rates and effect on exchange rates

Today we have interest rate decisions in both the UK and EU. Starting in the UK, while we expect no change in rates, there has been recent speculation that the Bank of England may opt to restart its asset purchase programme (Quantitative Easing), which continued to keep the UK currency under selling pressure and weak. The decision in the UK comes at 12:00pm today.

In the EU at 12:45pm we have their interest rate decision. They are widely expected to raise interest rates today by 0.25% and signal more tightening ahead. It's hard to know how much of this is already priced into the market, but usually an interest rate hike strengthens a currency and makes it more expensive, so there is a good chance we could see GBP/EUR rates fall today.

What should you do if you need to buy or sell Euros?

You have various options:

Forward Contract; You can fix the rate now with a Forward contract, which locks in today's rates for up to 2 years, and you only have to lodge 10% of the total initially, with the remainder due when you need the currency. This option removes uncertainty and allows you to budget effectively, although if rates do go up you're stuck with the rate you've fixed.

Do Nothing; This high risk strategy means relying solely upon a spot contract and one won’t know the rate of exchange achievable until the actual point of buying the currency. The volatility and unpredictability of the currency markets makes this strategy high risk and speculative. The markets do move both ways, so it could result in a win (or lose) situation, however it does make budgeting for the future virtually impossible.

Use Currency Options; The two key tools are a Stop Loss order, which will protect you against adverse exchange rate movements and secure your currency if it falls below a pre-agreed level. The other is a Limit order, which is placed at the top end of the market to secure currency at a specific price that may not be currently available. This type of contract is particularly useful when the markets are moving in a positive direction for you.

Whatever you need to do, contact us today to discuss the different options so you can make an informed decision on when to buy. Don't simply leave it to chance and hope things will move your way, hope is not a reliable economic tool.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

Will Pound fall lower vs Euro? Forecast July 2011

Tuesday 5th July 2011
Good morning. The markets remained flat yesterday with markets closed in the USA for Independence day. Sterling remained near it's 15 month low vs the Euro still due to interest rate differentials. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1056
• GBP/USD 1.6010
• GBP/AUD 1.4965
• GBP/NZD 1.9311
• GBP/CAD 1.5395
• GBP/ZAR 10.758
• GBP/JPY 129.81
• GBP/DKK 8.2465
• GBP/NOK 8.5717
• EUR/USD 1.4476

Sterling remains low vs Euro on interest rate differentials

The pound hovered near the 15 month low hit against the euro last week as investors awaited Thursday's central bank meetings in the UK and the euro zone. A further monetary tightening by the European Central Bank is expected while UK interest rates are seen chained near record lows. Higher interest rates in the EU will mean a higher return for investors, and therefore the single currency will strengthen due to the demand, pushing GBP/EUR lower.

Sterling has suffered against a widely recovering euro after the passage of Greek austerity measures last week helped the debt-laden country to avoid a default for now, resulting in a hefty bounce in the single currency. At the same time, t he euro's recovery versus the dollar has dragged the pound higher versus the U.S. currency.

What do the analysts say?

"When you have the interest rate differentials between the euro and sterling becoming quite wide, and widening even further, that's going to put pressure on sterling to go lower," said Peter Kinsella, currency strategist at Commerzbank. So it seems likely Sterling could drop further against the Euro.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

Poor Retail Sales hurts Sterling, but Greek debt supports GBP/EUR

17th June 2011
Good morning. Sterling fell slightly during trading yesterday, after Retail Sales figures were very disappointing indeed, and this weakened the Pound. It's very clear that the Bank of England will not be raising interest rates for some time, and this news pushes back the chances of a hike even further.

Interest Rates

Most analysts now expect the Bank of England to push up interest rates in June 2012. This is nearly a year away, and is likely to keep Sterling very weak indeed. As I've stated several times in the last few weeks, the EU are likely to raise their interest rates several times this year, and that's going to strengthen the Euro and make it more expensive to purchase.

So why hasn't the GBP/EUR rate fallen that much?

It's to do with the debt problems. On economic figures alone, it's clear that the UK economy is going to get worse before it gets better. However the debt problems with Greece have weakened the Euro slightly, so this is limiting the drop in the exchange rate. Be warned however that these debt issues won't hang around forever, and once resolved focus will revert to basic economic data, and that clearly shows that the UK is not recovering as fast as had been hoped.

The Euros problems continued yesterday when an ECB member said that the EU bailout should be doubled. This is helping to stop a significant drop in GBP/EUR rates.

Summary

With all the uncertainty surrounding the UK economy, its important to remember without the Greek debt problems, exchange rates would be significantly lower. With interest rates on the up in the EU soon with the UK unlikely to follow suit for at least a year, it's more likely that the exchange rate will resume it's downward trend before long.

Forward Contracts

If you need to buy Euros in the next 12 months, you can protect yourself against a downturn in the rate. With a Forward contract you can fix today's exchange rates for up to 2 years into the future. You only need to pay a 10% deposit now, with the remaining 90% not due until you need the currency.

In this way you can budget effectively for any purchase you need to make, safe in the knowledge of exactly what exchange rate you have regardless of which way rates move. It should be noted that once a rate is fixed, you can't then take advantage of any gains in the rate, but you will be protected against a downturn in rates.

Find out more about Forward contracts by clicking here.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exchange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.