GBP/EUR forecast, GBP/USD outlook, weekly data

As usual for a Monday, today we'll have a detailed weekly look at Sterling vs Euro forecast, Sterling vs US Dollar outlook, and the weekly data that may affect exchange rates:

In this week’s Report:

• Pound vs. Euro drops to 18 month low
• EU Interest Rates likely to go up this week
• Greek austerity plan agreed, affecting EUR and USD
• Round up of the week’s data that may affect rates

Sterling vs. Euro;

The GBP/EUR rate plummeted last week to the lowest since March 2010, falling against a basket of currencies as well as the Euro. Britain’s currency slid against the Euro in particular on predictions that a faltering economy will limit the policy makers’ scope to raise interest rates, as the European Central Bank lifts borrowing costs to curb inflation. A report on Thursday showed U.K. consumer confidence fell more than economists forecast in June while the Bank of England’s Credit Conditions Survey said mortgage demand is predicted to drop in the third quarter.











It was a dramatic week with market sentiment swinging from worries that Greece would go bankrupt to relief that it would get through the crisis, against a backdrop of violent protests and general strikes over austerity steps. The Greek parliament approved a detailed austerity plan on Thursday, paving the way for 12 billion euros of international aid.

“The market is bullish on risk and looking to buy euros,” said Paul Mackel, director of currency strategy at HSBC. “The Greek issues still linger, but there is a bit of calm now with the markets' focus on data.” Barclays Capital pushed back its forecast interest-rate hikes for the UK, saying the central bank will now most likely keep its main rate unchanged until May 2012.

The bank, which previously forecast a rate increase in November, said the change reflects weaker than previously expected economic growth and recent comments from central bank officials. This is in start contrast with the euro zone where even with weak manufacturing surveys, little changed regarding strong expectations that the European Central Bank would raise interest rates next week.

Sterling has fallen 9 percent in the past 12 months, making it the second-worst performer among 10 developed-market currencies after the U.S. Dollar, according to Bloomberg Correlation-Weighted Currency Indexes.

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Sterling vs. US Dollar;

It looks like the US market holiday for Independence Day today will mean a continuation of the relatively flat trading range for Cable that we saw over the last week; the pair hit a low on Tuesday of 1.5923 with a high Thursday of 1.6117.











Media & market attention was mainly focussed on the continuing debt problems in Greece and whether or not the austerity measures would be passed by the Greek parliament. Both the US & UK economies are struggling so both currencies are weak on paper, but how the EU handles the spiralling debt issues within its smaller nations will help to determine how the GBP/USD exchange rate moves.

The US Dollar is the world’s safe haven currency (for now) and as the global financial problems persist, risk-averse investors will continue to plough money into the Greenback, keeping the Dollar strong. If we get to a point where the crisis starts to ease then we should see a return of risk appetite whereby investors will start to put money into perceived risky assets (of which the Pound is one), taking them away from the Dollar and that should start to push the rate back up again.

There were still some data releases last week and we have seen confirmation that UK mortgage activity and consumer spending is still well below levels seen before the credit crunch took effect. With credit conditions this subdued, it continues to highlight the struggle the UK economy is facing and further strengthens the Bank of England’s argument for keeping UK interest rates at their current low of 0.5%.

Barclays Research is among a number of investment institutions forecasting that they will remain this low until 2nd quarter 2012. Without an interest rate hike there isn’t much on the horizon that looks like it will give the Pound a much needed boost, but we have to remember that the US is in the same boat, and some ratings agencies are starting to warn about the risk of the world’s largest economy defaulting on its debts. Unless the government can push through a $2.5 trillion increase in the debt ceiling, the Dollar could be in for a very rough time.

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Weekly Economic Data that may affect exchange rates

The week starts very quietly, but Thursday and Friday both have key releases that could upset the currency markets. Below are the main releases for the week ahead. For a free consultation on how these releases could affect the cost of your currency requirement, open an account with us today. This is free to do, doesn’t obligate you in any way, and simply gives you access to our market knowledge and commercial exchange rates.

Monday – Very little data today due to US Markets being closed for Independence Day. In fact the only real data of note is an investor confidence release from the EU.

Tuesday – Again, a very quiet day for fundamental data. We have an interest rate decision for Australia, and factory order data from the USA. From the EU we have Retail Sales and Services PMI.

Wednesday – Today we have EU Gross Domestic Product (GDP) figures. This could show growth in the EU, and so expect volatility for GBP/EUR rates.

Thursday – 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. We also have various measures of unemployment from the US, indicating how their economy is performing.
Friday – Again pretty busy today, with UK inflation data (PPI) and German trade balance figures. Germany now has the lowest unemployment since reunification and so further good data from Europe’s largest economy could strengthen the single currency. From the US we have Non Farm payrolls. This shows how many people are employed outside the agricultural sector (as it’s seasonal) and the numbers are very hard to predict. As such, the actual result can differ to forecasts and often causes big swings for GBP/USD and GBP/EUR.

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Pound/Euro lower following Greek vote/ECB comments

Thursday 30th June 2011
Good morning. Following the passing of the Greek vote on austerity measures, the Euro has stabilised and this has pushed GBP/EUR rates down. Also comments from the ECB president this morning signal interest rates are going up in the EU next week, this is likely to push exchange rates to buy Euros even lower. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1095
• GBP/USD 1.6091
• GBP/AUD 1.4984
• GBP/NZD 1.9400
• GBP/CAD 1.5556
• GBP/CHF 1.3409
• GBP/ZAR 10.865
• GBP/JPY 129.29
• GBP/DKK 8.2737
• GBP/NOK 8.6317
• EUR/USD 1.4500

Greek vote on Austerity measures strengthens Euro

Yesterday the vote was narrowly won to push through austerity measures in return for financial aid. The package of tax rises and budget cuts worth about 28bn euros over five years, had been championed by Greek Prime Minister George Papandreou.

If it had been rejected, Greece could have run out of money within weeks. The EU and the International Monetary Fund have demanded that the measures are implemented before they extend further loans to Greece.

The markets have taken the news positively, with markets across Europe soaring yesterday, and the Euro also strengthening, making it more expensive to purchase and pushing GBP/EUR down.

ECB comments - rate rise expected next Thursday

Jean Claude Trichet, the president of the European Central Bank this morning has said 'strong vigilance' is needed on inflation. This is his code word for saying interest rates will rise, and so we now expect this to happen next Thursday. An interest rate rise strengthens a currency due to the higher return, and the comments have pushed GBP/EUR even lower this morning.

Should you buy Euros now or should you wait?

It's always impossible to predict what will happen to exchange rates, however with poor UK data showing the economy is struggling it's not likely the pound will strengthen in the coming weeks and months. Also with interest rates on the rise in the EU, and optimism following the Greek vote it could easily strengthen the Euro further.

To protect against possible drops in rates, you could consider fixing the rate for your Euros now with a Forward contract, even if you don't need the currency for some time. Contact us today to find out more about how these contracts work.

Today's Data

Unemployment data from Germany today is the main release from the Eurozone. The UK has little data out today, however there is a credit conditions report from the BoE. This studies the risk attitude towards UK banks, and can indicate economic growth (or lack thereof!). We also have jobless figures from the USA and Gross Domestic Product from Canada.

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.

Weekly GBP/EUR & GBP/USD forecast

In this week’s Report:

• Pound vs. US Dollar hits 17 month high
• Investors cool to dismal UK consumer confidence data
• Sterling remains near 1 year low vs. Euro
• Round up of the week’s data that may affect rates

(For currencies other then GBP, EUR and USD, contact us for a consultation)

Sterling vs. Euro; Positive GDP figures brighten outlook for shaky UK economic recovery

The eagerly awaited UK GDP first quarterly figures for 2011 were released on Wednesday and showed the economy expanding in line with general expectation at 0.5%. Given the previous quarter’s negative 0.5% contraction this week’s positive figures depict an economy returning to growth, quelling any fears of a double dip recession.











A closer look at the figures highlights the positive impact of the manufacturing and service sectors.

Currency analysts suggest that UK GDP data was possibly too weak to prompt a Bank of England (BoE) rate rise as soon as next month, although it has still left open the possibility of a rate hike in the summer.

Indeed, should UK figures show consistent improvement throughout the month of May, then a summer BoE rate rise is still a possibility. As it stands however, the positive figures are too often coupled with negatives ones, leaving the UK recovery in a fragile state. Concerns over the underlying strength of the economy and its ability to withstand the fiscal squeeze remain firmly intact.

In summary, Sterling-Euro rates remain low and may well do so for some time. Therefore if you have a requirement to buy Euros click the link below to open an account with us today - free of charge and without any obligation.

Sterling vs. US Dollar; Pound hits 17-month high of 1.6747

Sterling was firm near a 17-month high against a struggling U.S. dollar on Thursday last week as investors placed more bearish bets on the greenback after the Federal Reserve signalled it was in no hurry to reverse policy:










Sterling's rise came even after dismal data showed British consumer morale unexpectedly deteriorated in April to a two-year low as people braced to take a hit from public spending cuts. Analysts said this showed how entrenched dollar bearishness was in the market, with many expecting sterling to rise past its 17-month high of 1.6747 struck earlier on Thursday and test its November 2009 peak of 1.6879 in the next few days.

"British consumer confidence data fell again," said Kit Juckes, currency strategist at Societe Generale. "However, sterling/dollar held support and is heading higher again. Dollar bearishness is consensual, but remorseless."

The dollar sank to a three-year low against a basket of currencies with many predicting more losses after Ben Bernanke of the Federal Reserve said it was in no hurry to tighten monetary policy soon and appeared relaxed on inflationary pressures.

Commerzbank said in a note that should sterling rise past its November 2009 peak of 1.6879, it could advance to test the 1.7025/50 area. This is where the 200-week moving average, 2009 high and 2005 low could all come together.

If you are looking to buy USD over the next month, it is currently in the most favourable position it has been for a long time, contact us by clicking the banner below to send us an enquiry.

Weekly Economic Data that may affect exchange rates

Below we list the main data released for the week ahead. For a free consultation on how they could affect the cost of your currency requirement, open an account with us today. This is free to do, doesn’t obligate you in any way, and simply gives you access to our market knowledge and commercial exchange rates.

Monday
Bank Holiday in UK and EU. Some Manufacturing and Construction data is released from the USA however.

Tuesday
The working week starts for the UK with Inflation data and Shop prices. If PMI is above 57.1 then Sterling may strengthen as it would increase the case for a rate hike. The EU also releases some inflation data today, and Australia has home sales figures.

Wednesday
UK data today comprises of mortgage approvals, Inflation data and lending info. From the Eurozone we see Retail Sales which are a barometer of consumer confidence. The US has inflation figures also in addition to employment figures. New Zealand has unemployment info in the evening and Australian Retail sales are released towards the end of the day.

Thursday
The EU and UK both release interest rate decisions today. It’s expected both will leave rates on hold, but there’s an outside chance of another EU hike which would push GBP/EUR down. Elsewhere the USA has some employment figures and the Reserve Bank of Australia gives a statement at 09:30pm.

Friday
We end the week with PPI for the UK which can often cause volatility for Sterling. US and Canadian unemployment figures are released today also. The only EU data of note is French Trade balance figures and German industrial production.

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Pound near 1 year low vs Euro

13th April 2011
Good morning. A surprise fall in inflation yesterday means there is little chance of a UK interest rate hike any time soon. The figures pushed Sterling to a 6 month low vs the Euro, and very close to the lowest in a year. At 08:30am this morning rates are as follows:

• GBP/EUR 1.1218
• GBP/USD 1.6274
• GBP/AUD 1.5500
• GBP/NZD 2.0594
• GBP/CAD 1.5633
• GBP/CHF 1.4601
• GBP/ZAR 10.923
• GBP/JPY 136.75
• GBP/HUF 298.64
• GBP/NOK 8.8457
• EUR/USD 1.4505

Inflation figures push Sterling to near 1 year low vs Euro

The Consumer Price Index (CPI) figures released yesterday showed a fall in inflation for the first time in 8 months. The fall in food and soft drink prices was the main cause. Lower inflation means that initial expectations of a rate hike in the UK have now been pushed back to November.

The news weakened Sterling and after the figures were released at 09:30am the Pound immediately fell and now sits at close to a 1 year low vs the Euro.

A survey also showed the biggest drop in retail sales in nearly 6 years, highlighting the problems facing the UK as the government's tough austerity measures hit consumer spending, and jobs data on Wednesday will also be closely watched.

"The economic data that we've had out of the UK this morning gave a lot of ammunition to sterling bears," said Audrey Childe-Freeman, EMEA head of currency strategy at JP Morgan Private Bank.

"Lower-than-expected inflation, weaker growth, that's taking off pressure from the BoE to raise interest rates and sterling is a loser in that environment.

Sterling fell 1.5 cents against the US Dollar and fell 1 cent vs the Euro. You can read a good report on the inflation figures and what this means for interest rates here on the BBC website.

Today's Data

UK data today comprises of Unemployment data. This will be closely watched and could affect rates further. We expect the Claimant count to be 4.5% and the unemployment rate to be 8%. If the figures are worse than this, expect Sterling to fall further. If the numbers aren't that high however, Sterling should recover.

Eurozone data is in the shape of Industrial Production. The rest of the days releases are US based; Retail Sales, mortgage approvals and Retail Sales

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.

Weekly Pound vs Euro/US Dollar & Economic data

In this week’s Report:

• Pound hits 5 month low vs. Euro
• EU and UK Interest Rate decisions this week
• GBP/USD falls from 14 month high
• Round up of the week’s data that may affect rates

(For currencies other then GBP, EUR and USD, contact us for a consultation)

Sterling vs. Euro; 5 month low

Sterling fell to a 5 month low vs. the Euro last week, on expectations that interest rates in Europe will rise faster than in the UK and talk of month-end demand from central banks. Sterling’s falls were exacerbated by sterling selling against the Australian dollar, related to insurance payments for flood damage in Queensland.

"There is a sense that the UK economy is going through a ropey phase and selling in sterling has been very steady since last week," said Michael Derks, currency strategist at FXPro. "Further gains look likely while the market embraces the more positive aspects of the euro area periphery story, ECB tightening and softening UK data," he said.

Following Thursday’s movement, the euro was broadly firmer as above-forecast euro zone inflation cemented the case for higher interest rates from the European Central Bank (ECB). Markets see the tightening cycle starting in April.

Manufacturing growth slowed more than expected in March but companies still ramped up prices at a record rate to cover rising costs, a survey showed on Friday. The Markit/CIPS manufacturing PMI headline index fell to a five-month low of 57.1 in March from a downwardly revised 60.9 in February. Analysts had expected only a slight dip to 60.6.

On a brighter note for sterling, Housing prices increased and the manufacturing survey also showed that companies' raw materials costs had continued to rise in March, albeit at a slightly slower rate than in February. And companies continued to take on new staff, though not at February's record pace.

Rising job creation, a surprise rise in house prices and further growth in the manufacturing sector are encouraging signs. However, the economic outlook is still uncertain and the slowdown in the pace of expansion in the sector will not ease the dilemma facing Bank of England policymakers over how to tackle persistently above-target inflation, without harming economic recovery.

The pound fell off the back of the figures, but analysts noted that the manufacturing sector was still on course to make a strong positive contribution to first-quarter GDP growth, which may work to ease concerns of the UK slipping back into recession.

Money markets have pushed back expectations for the first rise in interest rates from a record low 0.5 percent to August from May, largely as a result of weak news on consumer activity. "The Monetary Policy Committee's balancing act between growth and inflation has perhaps become even more precarious," said Markit economist Rob Dobson. Markit said the slowdown in demand was most pronounced in the consumer goods sector, which was virtually stagnant, and indicated a fall in domestic orders for such goods.

Rising inflation, muted wage growth and the prospect of government spending cuts have hit consumer morale and dented retail sales, spelling bad news for an economy which has historically been heavily reliant on household spending.

On a final note, to ensure we don’t get too carried away with ambitions of recovery, we have to bear in mind that the manufacturing sector has recorded strong growth over the last year but in reality, it accounts for just 13 percent of total economic output…

Sterling vs. US Dollar;

Last week saw a relatively quiet week for the GBP/USD currency pairing, as investors seemingly took a step back to take stock following recent high volatility between the two powerhouse currencies. That said the early part of the week saw the pairing hit an 8 week low for a short period of time but this was short lived as Sterling then found support below the 1.60 level pushing marginally higher as the week progressed.

With little happening last week most eyes will be firmly on the key data releases of this week which promise to cause turbulence in the markets. The UK faces a potentially tough week as we await decisions on interest rates and GDP estimates, both of which are key indicators of economic health.

We expect Thursday’s interest rate decision to show no change for the UK with the bank of England likely to hold at 0.5% for the 25th consecutive month. This will no doubt push investors away from Sterling as it seems we are still no closer to raising rates which is likely to make the Pound a less attractive option. It is known that the USD is seen as the world’s safe haven currency and uncertainty for the UK and GBP respectively will no doubt drive funds into the Dollar.

The interest rate decision however could end up bearing little or no relevance on the markets this week if Wednesdays GDP estimate shows a negative reading. The basics of the decision are as follows, a negative figure means that the UK would be set to officially re-enter a recession when the official release is made on 27th April. This would almost certainly be catastrophic for the Pound and make any purchase of foreign currencies across the board that much more expensive in the weeks and months to come.

Close contact with your account manager this week is as important as we have seen in recent times. If you have yet to open a trading facility with us you can do so by clicking the link below, and a dedicated currency trader will be in touch to explain the many tools at our disposal to maximise your trade. We offer expert market knowledge to help make the best decision for your individual needs.


Weekly Economic Data that may affect exchange rates

Below we list the main data released for the week ahead. For a free consultation on how they could affect the cost of your currency requirement, open an account with us today. This is free to do, doesn’t obligate you in any way, and simply gives you access to our market knowledge and commercial exchange rates.

Monday
For the UK today we see construction PMI. In the Eurozone we have various releases including Investor confidence and Inflation data. If high this could reinforce the case for a rate hike later in the week from the EU, so GBP/EUR rates may push lower.

Tuesday
Today’s UK data comes in the form of the Purchasing Managers Index (PMI). This is an inflationary measure and so can impact on interest rate movements. From the EU we have Retail Sales which is seen as a barometer of consumer confidence. Later in the day the US releases the minutes from its interest rate decision.

Wednesday
We have a UK GDP estimate this morning so we expect some GBP volatility. There are also GDP figures released from the Eurozone this morning, so expect GBP/EUR to change should the figures be different to forecast.

Thursday
Today is arguably the most important of the week for GBP/EUR. We have an interest rate decision from both the UK and the EU. Markets expect the UK to leave rates on hold at the record low of 0.5%. In the EU however we could see a rate hike, as hinted by the ECB president last month. If rates do go up, expect the Euro to strengthen and GBP/EUR rates to fall. From the US we have various measures of unemployment and jobless claims.

Friday
We end the week with German Trade balance figures, and as the largest economy in the EU this could affect the value of the Euro. There are also further inflation measures for the UK and unemployment figures from Canada released today.


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 for the week ahead

In this week’s Report:

• Sterling vs. Euro; why rates have fallen
• The dilemma facing the BoE regarding Interest Rates
• The week’s data that may affect exchange rates

(For currencies other then EUR and USD, contact us for a consultation)

Sterling vs. Euro; rates fall as UK figures disappoint

Last week started off looking like it should be another good one for the Pound, with a slight rise in UK house prices on Monday morning, and then a higher than expected jump in inflation to 3.7% (nearly twice the Bank of England’s target) early on Tuesday, which helped fuel a rise in the GBP/EUR rate to nearly €1.20 again as speculation grew that the MPC would be forced raise UK interest rates.

However any initial optimism for Euro buyers was short lived. Even the better than expected jobs figures couldn’t help the slide in the exchange rate as we moved towards the end of the week. With investors refocusing on perceived weaknesses in the UK economy they started buying back into the Euro as expectations grew that Eurozone policy makers would arrive at a more durable solution to the current debt crisis.

This was topped off on Friday morning as UK retail sales figures were released for December 2010; showing a drop of 0.8% from the expected -0.2% reading. We knew the blanketing of snow the British Isles received in December would have hurt UK retailers, but we also hoped that the VAT increase in the New Year could have perhaps encouraged people to buy before the hike and offset any drop in sales due to the weather; unfortunately, this was not the case and Sterling exchange rates fell as a result.

We have various EU data releases next week (see “This Week’s Data” section below for more info) but we should all be more interested in what’s going on in UK where midweek news could set the scene for GBP-EUR movements for weeks to come. Tuesday brings the first reading of 2010 quarter 4th GDP (economic growth) figures which are expected to show that growth slowed again. The drop is expected to come down from 0.7% to 0.5% and while it doesn’t mean we are back in recession, it could be a sign that the government cuts are starting to take effect on the economy.

This kind of slowdown in growth could lead to potential stagflation (stagnating growth and rising inflation) and would put the Bank of England in a very difficult position whereby a hike in interest rates would help to cool inflation, but could seriously hurt growth and with more austerity measures to come the economy needs all the help it can get.

The BoE minutes from this month’s meeting released Wednesday morning could give us more of an insight into their thoughts so we’ll have to wait and see, but on the flipside, better than expected UK growth figures and more bad news about debt problems in Spain and Portugal could easily help force the rate back up towards 1.20 again.

All-in-all it looks like the recent volatility is here to stay so whether you are buying or selling Euros, make sure you keep abreast of market movements by making an enquiry today.

Heed the inimitable words of Martin Luther King Jnr “Faith is taking the first step, even when you don't see the whole staircase.”

Weekly Economic Data that may affect exchange rates

Below we list the main data released for the week ahead. The implication of these will differ depending on the currency you need to buy or sell. For a free consultation on how the below released could affect your currency requirement, open an account with us today. This is free to do, doesn’t obligate you in any way, and simply means you can have a free consultation from a currency expert.

Monday
Today’s Data is mainly EU based. We have the Purchasing managers Index, which is a measure of inflation. If inflation is higher than expected, then it supports an EU interest rate hike that could push GBP/EUR rates lower. We also have Industrial Orders which measures the health of the EU manufacturing sector.

Tuesday
The most important UK figure today is the Gross Domestic Product. This is a broad measure of economic activity and shows if the UK economy is growing in line with forecasts. It often creates some volatility for Sterling. Later in the day we have some Consumer Confidence figures from the USA.

Wednesday
Today we have the BoE minutes from the Bank of England. This will show how the members voted in their recent interest rate decision. We expect volatility for Sterling. We also have a US interest rate decision from the FED. It’s likely rates will be left on hold at their record low of 0.25%. However any comments from the FED about the US economy will be closely watched by the markets and may affect GBP/USD rates.

Thursday
Today we see a raft of data from the EU so expect some movement in GBP/EUR rates. Consumer confidence, Economic Confidence and Industrial confidence are all released at 10am. From the USA we have various measures of unemployment. Jobless figures are very hard to predict and so expect some movement in GBP/USD rates today.

Friday
To end the week we have Money Supply data from the Eurozone and Gross Domestic Product figures from the USA.

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 above €1.20 but gains limited

11th January 2011
Good morning. The pound rose to a 4 month high against the Euro yesterday, due to the ongoing concerns regards some EU countries. Gains were short lived though as housing data weakened Sterling. Rates at 08:30am this morning are as follows:

• GBP/EUR 1.2024
• GBP/USD 1.5552
• GBP/AUD 1.5795
• GBP/NZD 2.0470
• GBP/NOK 9.2849
• GBP/CAD 1.5434
• GBP/DKK 8.9559
• GBP/JPY 129.16
• GBP/ZAR 10.626

Pound vs Euro

The single currency was stung by increasing concerns about sovereign debt problems in the euro zone. The euro was on the back foot after a senior euro zone source said at the weekend that euro zone countries are cranking up pressure on Portugal to seek financial help from the European Union and the International Monetary Fund.

They are pushing for this to stem contagion risks from its debt problems already faced by Greece and Ireland. Analysts said the euro would remain under selling pressure on concerns that debt problems will extend beyond Portugal and Spain (another country that investors believe may have to seek aid) while their borrowing costs escalate.

So it's this Euro weakness causing the jump in rates this year.

What about Sterling?

There is nothing particular strong regarding the pound at the moment.. So far this year we have seen a run of uninspiring UK economic data including weak services sector data, poor retail sales and worse than expected housing data.

Given the uncertainty surrounding the UK economic recovery and the effect the austerity measures will have on growth, the market is focusing on the EU debt problems and it is this that is driving rates up at the moment.

If problems persist in the Eurozone then the Euro will remain weak. Mixed economic data from the UK however shows that the recovery is far from certain, and so it’s not a given that rates will continue to rise. Indeed many analysts think that Sterling will not recover until interest rates start to go up, something that’s not likely to happen until much later this year.

So will Sterling go higher against the Euro? In the longer term this is likely, but things may get worse before they get better.

Today's Data

Today we have the British Retail Consortium (BRC) Shop Price Index. This measures price changes in Retail Outlets and is a good barometer of overall consumer confidence. Retail has suffered recently due to the snow, with only John Lewis bucking the trend. It’s also an indicator of inflationary pressures and so can affect Sterling. We also have House Prices today for the UK.

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.

Weekly Currency Report, and fundamental data

Good morning. As usual for a Monday, today we'll review where rates moved last week vs the Euro, US Dollar & Canadian Dollar, and the outlook for Economic Data that may affect rates for the coming week.

Pound vs Euro

This past week has seen an abundance of data releases that affected exchange rates including; the positive manufacturing PMI results, which was higher than expected, but more crucially, the BoE and ECB interest rate decisions.

The fear was Mervyn King may sheepishly follow in Ben Bernanke’s footsteps with regards to QE and introduce the dreaded austerity measure into the UK, leaving Jean-Claude Trichet and the ECB smiling with their strengthened euro. However, whilst the BoE, indeed, decided to hold interest rates at its current level, as did Monsieur Trichet, they have put on hold QE… for now at least.

These more promising results and decisions, acted as the icing on the cake for our better than expected GDP Q3 figures, pushing the pound 4 points higher than its level just weeks before, creating the best currency rates for a week. So if selling euro, it may be worth taking advantage of the current level, as we could see the pound continue to gain strength.

After ten days of promising support for the pound, the week ahead has fewer prospects, other than manufacturing production, which forecasts suggest should remain at 0.3%. It must be noted, however, movement either way can tip the scales, and rates could fluctuate like a bungee.

Important figures to pay attention to if buying the euro are the GDP Q3 figures for Germany and the Eurozone, which previous quarters showed better than expected percentages. If the trend is anything to follow, we could see the euro regain it’s recently lost potency over the pound and the rates could correct themselves.

Pound vs US Dollar

With last week’s announcement by Fed chief Ben Bernanke that the US central bank would indeed pursue a second programme of quantitative easing, Sterling made gains against the Dollar. This was aided by the fact that the BoE declined to embark upon fiscal stimulus of its own until at least the New Year.

The US currency is faring rather better now that the so called ‘currency war’ has abated allowing the Dollar to strengthen slightly on the back of a more competitive global trade market. With China’s currency strengthening, the US is once again becoming a popular place to trade with and analysts believe that this can only a positive thing for the Greenback.

With little in the way of market moving data coming in the next week, it will be last week’s QE and interest rate decisions that are still the major players in the markets.

The fact that both central banks remained cautious and left rates as they were caused little fluctuation in the pairing but the $600bn which the US plans to slowly leak into its economy will make waves. Many investors are worried about this negative news and there is a fear that if the amount is misjudged the US could experience hyperinflation.

With little information coming from across the pond and Veteran’s Day keeping the markets closed, there should be limited volatility.

The quietness of the markets is emphasised by the fact that the most important set of data released in the UK will be September’s trade balance figures. The pound could strengthen slightly if the figures are better than forecast but they care still predicted to be well into the negative.

Pound vs Canadian Dollar

The Canadian Unit is closely aligned with Canadian commodity trade and as such is affected by the buying and selling power of its major exports such as its oil stores. Recently, Canada’s dollar traded equal with its U.S. counterpart for the first time in three weeks after reports showing that each of the nations’ economies added jobs last month bolstered global growth optimism.

The loonie, as the currency is often called because of the aquatic bird on the one-dollar coin, rose for a seventh day and gained versus the euro and yen. The Canadian dollar is headed for a 1.8 percent gain this week for the fifth-best performance among the 16 most-traded currencies. Fellow commodity exporters Australia and New Zealand are the two top gainers, after crude oil rose to the highest in more than two years.

This week’s data

Below we list the main economic releases for the coming week that will likely impact on any foreign money exchange you may need to do. Tuesday is the most important day for Sterling as we have a raft of economic data released. Recent weeks have shown that any data good or bad can very quickly push exchange rates up or down. If you need to secure currency with Sterling, ensure you have contacted us before Tuesday to discuss how the releases may affect the cost of your currency purchase.

Last week we correctly predicted the currency movements on the back of the Bank of England decision to hold Quantitative Easing, and getting the timing right can save you thousands of pounds on a currency transfer. Take advantage of the expert knowledge we offer by contacting us today, and help us help you make the most of your currency by achieving the best currency rates.

Monday
A fairly quiet day for data releases, with the main release being the German Trade Balance Data. This is the total balance between imports and exports, and as Germany is the largest economy in the EU, it can affect GBP/EUR rates. Also from Germany we have Industrial Production figures showing how this sector is performing.

Tuesday
In contrast to Monday we have a busy day today. For the UK, we have GDP estimate, House Price Data, Industrial & Manufacturing Production and Trade Balance data. With so much being released, we expect a volatile day for the pound. If the above releases come in above forecast, expect the pound to gain. If figures are worse than expected however, expect big falls for the pound.

Wednesday
Today is US Focused, with releases outlining Import Prices and Jobless Claims. The USD is very weak at the moment creating the best buying levels for 9 months. If the above data is good, then expect a reverse of this trend and rates to fall back below $1.60.

Thursday
US Markets are closed for Veterans Day (Remembrance Day). The only release of note being a Monthly report from the EU.

Friday
German and EU Gross Domestic Product are the most important releases. This will show how the EU economy is growing, and may affect the value of the Euro. Also from the EU we have industrial production, so we expect some volatility for GBP/EUR rates today.

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