Weekly GBP/EUR and GBP/USD forecast

Tuesday 6th September 2011
Good morning. Today we'll take a detailed look at GBP/EUR and GBP/USD rates over the course of the last weeks trading. In this week’s Report:

• Pound slips away on poor data but rallies at end of week
• UK interest rates to remain on hold for some time
• 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;

At the start of the week we saw the GBP/EUR rate reduce for two consecutive trading days to 1.1283. Clients were receiving less Euros for their pounds as the Euro gained ground against Sterling. This movement would have seen a difference of nearly 1000 euros on a £200,000 trade over a two day period.

Sterling was vulnerable almost across the board this week. UK net lending and money supply data was poor on Tuesday and consumer confidence data remains at very low levels. The euro was on the back foot.

Euro zone annual inflation was unchanged in August while the number of people without jobs continued to increase. This was confirmed by figures released on Wednesday, adding to expectations that the next ECB (European Central Bank) interest rate move could be a cut rather than a hike. As a result we saw GBP/ EUR trade around the €1.13 level and a dip in the market was looking increasingly likely towards the latter stages of the week as the euro continues to enjoy hefty investment from Asian sovereign buyers.

EU statistics office Eurostat said inflation in the 17 countries using the euro was 2.5 percent year-on-year in August, the same as in July, as expected by economists.
The European Central Bank has indicated they want to keep inflation below, but close to, 2 percent, and economists had been expecting the bank to raise interest rates a third time this year to 1.75 percent from 1.5 percent to stem price pressures.

There was no surprise month-end moves from the British Pound this time, Wednesdays session was a case of sideways trading among the major currencies, though the euro had weakened significantly by Thursday morning.

With regards to the euro exchange rate we note that PMI (Purchasing Managers Index) numbers are due across Europe with slight declines expected in general and risk appetite should respond accordingly.

Friday morning’s whole-of-Eurozone Producer Price Index data showed an acceleration in the increase in input prices for Eurozone producers. Invariably, manufacturers will pass these price rises on to consumers, so the figure suggests that the single economic area may face higher prices as 2011 draws to a close, meaning further interest rate rises by the ECB are increasingly likely.

If you need to buy or sell Euros, send us an enquiry today.

Sterling vs. US Dollar;

The Sterling/Dollar had a bullish day on Monday, as traders continued to sell the USD against many other currencies. As the stock markets rallied, the Pound gained strength against the Greenback.

On Tuesday Pound/Dollar decreased by nearly 170 pips, in converse with the positive Interbank sentiment at nearly +1%, depreciating from 1.6420 to 1.6253, closing the day at 1.6297.

The pound edged higher against the U.S. dollar on Wednesday, as the dollar was weighed by mounting speculation that the Federal Reserve may soon implement fresh stimulus measures to boost U.S. growth.
On Thursday Pound/Dollar decreased with nearly 125 pips, in line with the negative Interbank sentiment at almost -8%, depreciating from 1.6257 to 1.6130, closing the day at 1.6178.

The pound slipped to a three-week low versus the US dollar on Thursday afternoon to $1.6197 after data released showed that manufacturing activity in the UK shrank in August, further signalling that the economic recovery is stalling.

Friday afternoon’s Non-Farm Payroll figure caused massive price action for the Dollar at the time of its release. The figure immediately caused investors to move out of stocks and into defensive bond plays, which saw the US Dollar gain ground as the week’s session drew to a close.

The Pound edged higher against the Greenback on Friday, extending a bounce from a 3-week low struck on Thursday at 1.6130 ahead of the US jobs data. GBP/USD managed to regain the 1.6200 mark during the European session and touched a daily high of 1.6253 in recent trade.

If you need to buy or sell US Dollars, send us an enquiry today.

Weekly Economic Data that may affect exchange rates

Tuesday – Today in Australia we have the RBA interest rate decision and policy statement. In the Eurozone we have GDP figures month on month and year on year.

Wednesday – Wednesday sees industrial production and manufacturing production figures released in the UK, whilst in Canada we have the BoC interest rate decision.

Thursday – An important day for the UK and Eurozone with interest rate decisions for both economies. On the other side of the pond we have jobless claims data.

Friday – We end the week with a busy day in UK but quieter elsewhere with data Producer Price Index in the UK which measures the change in the price of goods manufactured. The UK also releases figures relating to the Trade Balance and Producer Price index.

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 Pound vs Euro & Pound vs US Dollar forecast

Monday 22nd August 2011

Good morning. As regular readers will know, on a Monday we take stock of the last weeks movements in Pound vs Euro and Pound vs US Dollar. In this week’s Report:



• Sterling hovers near 12-week high vs. struggling euro

• Scope for Sterling gains seen as limited due to weak UK economy

• GBP/USD rates close to 2 year 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;



Sterling hovered near a 12-week high against the euro towards the end of last week, as concerns about a worsening euro zone debt crisis dented the single currency. Mounting fears of a global recession and concerns about stresses facing some European banks caused European stocks to fall 2.6 %, extending a steep decline that continued throughout the week.





















Analysts said sterling has benefited to an extent from the troubles besetting the euro, though its scope for gains was expected to be limited due to recent evidence of a sluggish UK economy. The euro was down 0.1 % by Thursday last week, which placed it not too far from the August 5 low, below which would mark its weakest position since late May.



"Given the renewed demand for safe-haven currencies, sterling has fared quite well," said Michael Derks, strategist at FXPro. "Sterling is the least bad of the big currencies, but economically the country is still completely stuck in neutral". These comments highlight the fact the gains may be limited.



Data on Thursday showed British retail sales barely grew in July as cash-strapped consumers cut back on spending, underscoring the risks for the UK's already fragile economic recovery. However, public finance figures on Friday showed that the UK government's harsh austerity measures are helping to bring down UK debt as intended, which is a welcome sign of progress for the UK economy, albeit only a small glimmer of hope in an ocean of neutrality.



Higher unemployment and rising inflation are expected to continue to restrain consumer spending and, together with signs key British export markets are slowing, increase the risk the UK economy may still fail to pick up. In spite of stubborn inflation, markets expect the Bank of England to keep interest rates on hold until the end of 2012, with possible calls for further quantitative easing to stimulate growth. This will mean that although the economy may be quietly strengthening, it may not be reflected on the currency markets for quite some time, with further QE likely to be interpreted by investors as a sign of weakness for Sterling.



So, with exchange rates close to a 3 month high, and fears Sterling could slip back away due to poor economic conditions in the UK, those that need to purchase Euros within the next 6 months should contact us now to discuss how we can help protect against the market dropping.



Do you need best exchange rates to buy or sell Euros? Send us a free enquiry now.



Sterling vs. US Dollar;



Last week the GBP/USD got very close to a two year high which was mainly due to a batch of poor US data showing a plunge in factory activity in the U.S. mid-Atlantic region. Concerns about the UK recovery and the chance of monetary easing are expected to keep the pound in check. The poor data from the US made the dollar cheaper to buy, and this is why rates climbed against the USD despite dropping against the Euro.























Traders said markets were thin and declining risk appetite was pushing investors back to the dollar in the near-term, but the pound was gaining some support from the perception it was the best of a bad bunch of currencies.



Last week markets across the World dropped, with the biggest fall on the FTSE since the financial crisis began. We saw a flight from risk, where investors were jittery and moved their funds to perceived safe havens. Usually this means the US Dollar and Swiss Franc, however with problems in the US and the Swiss keeping their currency weak, Sterling benefited.



"Despite negative data coming out of the UK suggesting there's quite a significant cyclical downturn taking place, global investors see the UK as relatively stable from a political and ratings perspective against Europe and the U.S.," said Ian Stannard, head of European FX strategy at Morgan Stanley.



So Sterling is gaining support from the perception it is the best of a bad bunch of currencies. We have stable credit ratings, political calm and a deficit reduction plan in place. The government's fiscal austerity programme is also expected to hamper demand in the economy, leaving sterling vulnerable to weakness in the medium term.



Many are questioning the Pounds buoyancy at the moment, as the UK economy is far from healthy. Just last week we had poor Retail Sales figures, higher than expected unemployment, and dovish minutes from the Bank of England. Due to this, many analysts think that these gains will be short lived.



So in summery Sterling vs USD rates got very close to the best they have been in two years, however many analysts do not expect these levels to last for long.



Do you need to buy or sell US Dollars? Send us a free enquiry now.



Weekly Economic Data that may affect exchange rates



Monday – There are no scheduled economic releases today.



Tuesday – UK Mortgage Approvals are released today, showing the health of the UK housing market. Rom the Eurozone we have Inflation Data from Germany, and also Economic Sentiment Surveys from Germany and the EU. Also from the EU, we have measures of consumer confidence that may affect the value of the Euro. In the USA, Home Sales figures are released. Trade Balance figures and Inflation data are released from New Zealand.



Wednesday – Today’s UK data is Nationwide Housing Prices. In the EU we have Industrial New Orders, and Business Climate assessment figures from Germany. In the USA, we have Mortgage Approvals. New Zealand releases Retail Sales.



Thursday – The most important release today are German GDP figures. If poor these could weaken the Euro. In the USA we see Jobless Claims and Unemployment Data.



Friday – After yesterday’s German GDP figures, today is the turn of the UK. This will show at what pace the economy is growing, and is likely to have an impact on the value of Sterling. GDP is also released in the USA in the afternoon, followed by a speech from FED chairman Ben Bernanke.



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Pound Sterling Forecast for GBP/EUR & GBP/USD

Monday 15th August 2011.

Good morning. As usual on a Monday, today we'll take a detailed look at the Pound/Sterling forecast for Sterling vs Euro, Sterling vs US Dollar, and this weeks data that may affect getting the best exchange rates.

In this week’s Report:



• Rumours of French downgrade weakens Euro

• Market Volatility creates big exchange rate swings

• BoE paint gloomy picture of UK growth

• 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;

Last week was a rollercoaster ride for all the major markets, with currencies and indeed the GBP/EUR cross being no different. Wild swings in both directions during continued choppy trading resulted in excellent price points for both buyers and sellers on this cross.

The market as a whole seems unable to decide whether Sterling or the Euro is the most stable bet going forward. Rumours that France along with several of its marquee investment banks were in line for credit rating downgrades swung the cross in the Pounds favour, only for gains to be pegged back by poor UK economic figures.



The most notable event which detracted from GBP gains was the Bank of England’s Growth forecast cut, which demonstrated to the market, as if it didn’t already know that times are still hard in the UK and that the economy is by no means out of the woods. Indeed it is still not out of the realms of possibility that a second recession could bite in Britain.



However for all the gloom on this side of the channel, much of the focus going forward will be on whether France with its problems, will be able to continue to support Germany in bankrolling the sovereign debt issues cropping up all over Europe. With severe worries about Spain and Italy requiring bailouts akin to those in Greece, Ireland & Portugal, the purse strings across the channel may not be as freely loosened as they have been thus far.



This week will probably continue to see fairly choppy rate fluctuations, although most traders will expect it to calm down when compared to the week gone by. A full list of the main data to watch out for follows later, but for this cross Tuesdays UK inflation figures and the Bank of England Minutes usually cause some volatility and Tuesdays’ Euro zone GDP figure is worth watching out for too. This said, often the biggest market moves occur on the back of events that appear on no calendar; the rumours and political events that unfold throughout the week.



Do you need to buy or sell Euros? Send us a free enquiry.



Sterling vs. US Dollar;

In what was one of the most turbulent weeks across the global markets since the credit crisis began in 2008, all eyes were on the US as worldwide stability looked shakier than ever. Global stocks saw Billions of dollars wiped from their value on consecutive days in the early part of the week as the markets readied themselves for another potential credit crunch.

In the wake of the US being downgraded to AA rating from AAA by the credit rating agency ‘Standard and Poor’s’, Sterling began the week at a near two-month high against the beleaguered Dollar as the downgrade led more investors to sell the greenback.



Sterling’s momentum against the Dollar was maintained early on Tuesday as the UK’s AAA rating looked safe following Standard and Poor’s Chief stating in an interview that he didn’t expect a ratings drop in the UK within the next 2 years. However, comments about Sterling becoming the next ‘safe haven’ currency were quickly dismissed in light of the unfolding problems with rioting in the capital which dragged on throughout the week.



This was followed just before lunch on Tuesday by a slight slip as UK manufacturing data fell by a surprise 0.4% rather than a 0.2% growth as expected – However, continuing concerns over the US prevented the Pound slipping too much. "In isolation this data is definitely sterling-negative. In ordinary conditions it feeds the idea the Bank of England will not be hiking interest rates any time soon," said Jane Foley, currency strategist at Rabobank.



The fortunes of Sterling were almost instantly reversed on Wednesday as the Pound fell by 1 percent against the Dollar following the news that BoE lowered its expectation for annual GDP growth to around 2.0 percent in the last quarter of 2011. In May, it had forecast 2.47 percent growth by the end of the year. Investors, appearing very fickle following comments earlier in the week took the news and headed straight back to the relative ‘safely’ of the US Dollar and out of Sterling.



Following the release of the inflation report, BoE Governor Mervyn King suggested that monetary policy would remain ultra loose with interest rates being kept at a record low of 0.5 percent for some time as the global economy is slowing. It is widely expected that interest rates will be kept on hold now until the end of next year.



Mervin King went on to say that adding to the BoE's asset-buying programme would be a possibility if the economic outlook deteriorated, but suggested that more quantitative easing may not be imminent. Despite the markets ending the week more stable than they started and with the stock market recovering somewhat, the global market’s future is far from predictable. Gold remains at near record levels and this is for good reason - no one is quite sure what will happen next.



Will we will drop from this seeming precipice into another full scale recession or will we be able claw our way slowly back to growth? All this uncertainty leaves the Cable notoriously difficult to predict. UK retail sales and US inflation data are just two of the releases this week which have the potential to see Cable move significantly - Speak to your FCG account manager for up to the minute market data and ensure that you capitalise on your gains whilst protecting yourself against negative market movement.



Do you need to buy or sell US Dollars? Send us an enquiry now



Weekly Economic Data that may affect exchange rates



Monday – There is no data of note from the UK or EU. There is some trade flow data from the US, which is looked at as an indicator of the trade deficit.



Tuesday – We start in the EU, where we have GDP figures from Germany, Europe’s largest economy. There are also GDP figures for the EU as a whole, in addition to EU Trade Balance. From the UK we have inflation data (Consumer Price Index). From the USA we will see the latest measures of Industrial Production and Housing Starts.



Wednesday – Various unemployment measures are released for the UK today, and we also have the minutes to the latest Bank of England (BoE) decision to hold interest rates. Any mention of Quantitative Easing could weaken Sterling. From the Eurozone, there are Consumer Price Index figures, which if high could strengthen the Euro. From the US there are also inflation numbers released in the afternoon, along with mortgage approvals.



Thursday – Today’s UK data is Retail Sales, which are a barometer of consumer confidence. From the USA we have unemployment figures, Jobless Claims and Home Sales. There are no major releases from the EU today.



Friday – We end the week with Public Sector borrowing from the UK, and further inflation figures from Germany.

If you need to get the best exchange rates 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 Outlook Forecast

Monday 8th August 2011

Good morning, As always on a Monday morning, today we'll take stock of the last weeks movements that has created best exchange rates to buy Euros and US Dollar is some time, following the turmoil in the financial markets last week.

In this weeks Report:

• EU debt crisis significantly weakens Euro
• World markets rocked by sovereign debt worries
• US Debt agreed, Job figures better than expected
• 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;

This week European markets have again fallen sharply amid a crisis of confidence in the ability of Eurozone leaders to deal with debt problems. Due to this the pound has risen sharply against the euro reaching a two month high last Thursday.

Investor confidence was severely hit after European Commission President Jose Manuel Barroso warned that financial markets are not convinced that Eurozone governments are prepared to take necessary action to defend the stability of the Eurozone.

Barroso says that the Eurozone crisis is no longer “just in the Euro-area periphery”, a reference to the uncertainty spreading from Ireland, Portugal and Greece to Spain and Italy which are now at the eye of the storm. The fear that these countries would need assistance has significantly weakened the Euro giving some great opportunities to buy at the moment.

The European Central Bank has said it will offer a fresh round of loans to banks in light of continuing fears about the Eurozone debt crisis. "Given the renewed tensions in some financial markets, the ECB has decided to conduct a supplementary refinancing operation," said the bank's president, Jean-Claude Trichet. He added that economic uncertainty was "particularly high"'.

Last week bonds issued by the Irish and Portuguese were bought up by the ECB but there was concern that they did not appear to have intervened to help Spain and Italy, whose borrowing costs have risen significantly recently.

Time will tell whether the EU manage to come to an agreement to avert the crisis escalating, but in the meantime you should look at the positive; you can buy Euros at a much better price than has recently been available. It's very important to note however that this is purely due to movements with the debt crisis in the US and fundamental UK data is still very poor.

If you need to buy Euros in the next 6 months, consider discussing the options available with a currency broker such as Forward contracts, Stop Loss orders and Limit orders, to ensure you secure the best possible exchange rate.

Do you need to buy or sell Euros? Send us a free enquiry now

Sterling vs. US Dollar;

The US Dollar suffered last week as fears escalated that the US economy was heading towards another recession. Stock markets tumbled to their lowest point since 1978 and Sterling climbed close to 1.65 as continued political and economic woes weighted on the dollar.












Carrying over from the week previous, a last minute deal to raise the U.S. borrowing limit cleared its biggest hurdle in Congress on Monday, warding off the risk of a debt default after weeks of feuding which damaged America's image abroad but failed to dispel fears of a credit downgrade.

Moody's Investors Service and Fitch Ratings maintained U.S. ratings for now, but said additional deficit-reduction measures were needed for the government to put its finances in order, Underscoring that threat, Moody's assigned a negative outlook to the AAA rating, which means a downgrade is possible in the next 12 to 18 months.

Fitch promised to conclude a more thorough review of the United States by the end of the month and did not rule out slapping a negative outlook on the rating. Now investors await Standard & Poor's. The agency has been tougher than its rivals, threatening to downgrade U.S. ratings by mid-October if lawmakers did not come up with a plan to meaningfully cut the budget deficit.

The dollar fell further on Friday despite stronger-than-expected U.S. jobs growth, the much anticipated Non-farm payrolls accelerated more than expected and the unemployment rate dipped to 9.1 percent from 9.2 percent Markets however remain sceptical on the inability to stem the spread of the euro zone's debt crisis, but Friday's employment report offered a glimmer of hope.

Do you need to buy or sell US Dollars? Send us an enquiry now.

Weekly Economic Data that may affect exchange rates

Monday – House Prices and Retail Sales from the UK today will give some idea how confidence in the economy is faring. Eurozone confidence figures are also due, which in the current climate are unlikely to be positive.

Tuesday – Lots of UK data today; Manufacturing Production, Trade balance, Industrial Production and a GDP estimate. We could therefore see significant volatility for Sterling today. There is also an interest rate announcement and press conference by the US Federal Reserve.

Wednesday – German inflation figures will be closely watched today, for any hint of a further EU interest rate hike. In the UK we see a confidence report, and there is a Bank of England inflation report, along with a speech by BoE governor Mervyn King.

Thursday – A bit quieter today, with a report from the European Central bank the only thing likely to affect GBP/EUR. In the USA there are various jobless measures.

Friday – We end the week with Industrial production figures from the EU, and Retail Sales from the United States.

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.

GBP/EUR & GBP/USD Forecast Outlook August 2011

Monday 1st August 2011

As always on a Monday, we'll take stock of the movements in exchange rates for GBP/EUR & GBP/USD over the last week. In this week’s Report:

• Euro debt again weakens Euro
• US debt issue weaken US Dollar
• Sterling benefits despite continued weak data
• 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;

Markets continue to expect the Bank of England to hold interest rates at record lows well into 2012, with some speculation that more asset purchases may be needed to revive flagging growth in the UK economy.

After figures showed the economy barely grew in the second quarter, BOE policymaker David Miles said last Wednesday that the recovery appeared to have slowed and there is a risk the economy could tip back into recession. On the upside, analysts said sterling was likely to benefit from any downgrade to U.S. debt by rating agencies as the UK, with a sound fiscal plan in place, is likely to retain its AAA rating.

But austerity measures to curb Britain's budget deficit are also crimping growth and consumer spending, meaning sterling is unlikely to strengthen significantly in coming months. UK data has been lacklustre of late, with the CBI figures reminding investors that consumers are struggling and that growth in the current quarter is unlikely to be encouraging.

Sterling did however rise against a broadly weaker euro last Thursday as the single currency slipped on lingering concerns about euro zone debt. British retail sales fell at their fastest pace in a year in July and stores expect a further deterioration in August, as hard-hit consumers clamp down on spending, a survey by the Confederation of British Industry showed. Movements in sterling over the past week were largely driven by a broad sell-off in the euro after an Italian bond auction. Also, the pound has benefited as investors have shunned the dollar and the euro due to fiscal issues plaguing those areas, while the UK has been making progress on reining in government spending, although some analysts say this has come at a cost to economic growth.

Commerzbank currency strategist Peter Kinsella said this view would keep the pound supported, but still added the belief that UK interest rates will stay low due to a sluggish economy that would cap any significant upside in Sterling. Many times in July we have seen that data releases haven’t necessarily dictated the movement of the markets, the euro has fallen roughly 3 percent versus sterling so far this month, showing a confused and volatile time for the GBP/EUR cross.

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Sterling vs. US Dollar;

Sterling slipped against the Dollar last Friday, tracking a slide in the Euro versus the U.S. currency after a threat by ratings agency Moody's to cut Spain's credit rating prompted some investors to sell riskier currencies for the Dollar. But losses versus the Dollar were limited given that investors remain negative on the U.S. currency as Washington remains far from reaching an agreement on government borrowing before a deadline next week. The Pound ended July around 1.5 percent higher versus the Dollar.

Debt negotiations in the US were hit by further complications at the end of last month as Republican leaders abandoned a vote on plans to increase the debt ceiling after failing to secure enough votes to get the plan approved. This failure gave US politicians 4 days to complete any deal. If they struggle to arrange a deal and the US misses a coupon payment, a technical default would have occurred, but what does that mean for the world economy and the US Dollar?

Any default would lead to a huge adjustment in the value of the Dollar, which would be reinforced by the almost certainty of the Fed starting QE3 to offset the compulsory reductions in governmental spending. We are in uncharted territory in terms of the potential effects on the world economy, particularly with the inter-bank rate which could, according some economists, be affected more by a US technical default than the aftermath of the Lehman Brothers failure.

Some analysts have said Sterling is likely to benefit from any downgrade to U.S. debt by rating agencies, as the UK (with a sound fiscal plan in place) is likely to retain its AAA rating. But austerity measures to curb Britain's budget deficit are also restricting growth and consumer spending, meaning Sterling is unlikely to soar above the $1.70 level in the coming months.

The US problems would have worrying implications for the European debt markets, since if the safe haven of the US cannot meet its obligations, who can? The recent problems in Spain and Italy would be amplified and may lead eventually to those countries requiring some sort of bail-out. However, since money would have to flow somewhere, the Euro could actually benefit from the US problems. The recent shift away from the Greenback has been profound in all currencies, in the shorter term and over the past weeks, as investors have been protecting themselves from potential Dollar fallout.

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Weekly Economic Data that may affect exchange rates

Monday – Inflation data and unemployment figures are released from the EU today. In the UK we have House Prices and Inflation data. In the US there are manufacturing prices.

Tuesday – 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.

Wednesday – Australian Retail Sales and Trade Balance figures are released today. From the Eurozone there are also Retail Sales figures. The EU and UK both release Purchasing Managers Index which is a measure of inflation. Stateside, watch for Mortgage Approvals and Factory orders.

Thursday – As with every first Thursday in the month, the UK and EU announce their latest interest rate decision. Both are expected to leave rates on hold, but watch for any mention of Quantitative Easing from the BoE. The USA has various measure of unemployment.

Friday – A busy end to the week, with PPI (Inflation) data from the UK, in addition to Industrial Production figures from Germany. A busy day in the states also, with Unemployment and Non Farm Payrolls at lunchtime.

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 Outlook

In this week’s Report:

• EU bailout agreed, strengthening Euro
• US deficit and credit rating threat weaken USD
• Global Markets surge on the agreement
• 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;

The main news of last week was of course the details surrounding the European Sovereign debt crisis. Details of how Greece will restructure its massive debts emerged last week as euro zone leaders agreed a package they hope will help resolve the debt crisis. The share prices of banks seen as most exposed to distressed euro zone government debts rose by more than 5%, led by Lloyds, which ended the week almost 20% higher than on Monday.







The news also strengthened both the Euro and to some extent the pound (against other major currencies), as investors calmed about investing in riskier currencies. Against the Dollar, the Euro stayed near a 2 week high as news of the agreement broke. The latest Greek bail-out by the 17 euro zone governments and the International Monetary Fund is part of a comprehensive package to shore up the single currency unveiled on Thursday.

On the GBP/EUR cross rates were knocked down accordingly. Sterling has also strengthened on the news due to the UK's exposure to Greek debt, but despite the Pound gaining the Euro has become much stronger, and the net result is lower exchange rates to buy Euros.

With the uncertainty over the Euro zone seemingly over, markets will likely focus on fundamental data, and given the UK economy is in a poor state at the moment, we expect further falls for Sterling. It has only been the debt crisis keeping GBP/EUR rates high, and now this is resolved we could see further drops for the currency pair. If however this unified agreement shows any signs of cracking, perhaps if more peripheral EU nations require funding then the potential for a weakening of the Euro is a distinct possibility.

With such uncertainty in the markets it is essential to keep close tabs on your positions. To make the most of our commercial exchange rates, make an enquiry with us now for free.

Sterling vs. US Dollar;

Last week started with Sterling encountering losses of almost 1 cent against the Dollar following concerns about UK banks' exposure to the euro zone debt crisis. However, sterling rallied on Tuesday, helped by a rebound in equities market when banking stocks were hit by concerns Europe's bank stress tests were unrealistic.








Sterling is seen as especially vulnerable to renewed euro zone debt worries, particularly against the dollar due to concerns about UK banking sector health and given the UK's close trade links with Europe. "Sterling's outlook is still very closely linked to sentiment towards Europe. Ultimately the UK is so closely entwined with Europe that a crisis would certainly hit the UK". Lee Hardman, currency strategist at BTMU said.

This is likely to dominate the cross in the coming weeks despite the growing concerns in the US over the problems the growing deficit in the Federal budget as discussed in last week’s report. The most anticipated data release over the course week was the minutes of the Bank of England committee meeting which was held at the beginning of the month. With a 7-2 split in favour of keeping rates on hold at 0.5% there were no great surprises contained within the minutes and as a result virtually nothing happen with regards to the cross.

The problems with the US deficit in the Federal budget continue to rumble on following the threat from ‘Moody’s’ and ‘Standard and Poors to downgrade America from their AAA rating. This is unless a compromise between Obama’s camp and Congress can be made within the next 2 years to find a way to move forward and repair the damage.

Speculation continues however, that many in the Republican camp would prefer that a compromise in not reached and that the country is downgraded - in a political more to try and topple Obama’s government. Sterling finished the week up against the Dollar hanging on the shirt tails of the Euros performance following the conclusion of a draft report created at a Eurozone summit outlining a method to it would go about solving the region’s debt problems.

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Weekly Economic Data that may affect exchange rates

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 – Today is quiet for data releases. Mortgage Approval data from the UK at 09:30am, Inflation figures from Australia and Trade balance figures from New Zealand are the only releases of note.

Tuesday – Much more to watch out for today, including UK House Prices and UK GDP which if poor could push the Pound lower. Germany releases measures of Consumer Confidence and Retail Sales. From the USA we have Home Sales and Consumer Confidence.

Wednesday – Onto Wednesday, and today we see Consumer Confidence figures from the UK. In the Eurozone we have inflation figures from Germany. In the USA we see Mortgage approvals, Durable Goods Orders and the Feds beige book which reports on the economic situation in the USA. We also have inflation figures from Australia today.

Thursday – A busy day for the EU today, with German Unemployment, EU Economic, Consumer and Industrial confidence measures. From the USA we have Jobless figures.

Friday – UK figures today are Consumer Credit, Mortgage Approvals and Money Supply. From the EU we see inflation data, and Canada and the USA both release GDP figures.

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Weekly GBP/EUR & GBP/USD Forecast July 2011

Weekly Currency Report 11th July 2011

In this week’s Report:

• Sterling vs. US Dollar remains largely range-bound
• Sterling Euro bounces up due to US Dollar sell-off
• Forecast for GBP/EUR & GBP/USD
• 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;

We finally saw some respite for the Pound on Friday afternoon as rates moved back above 1.1250 for the first time this month.

The week started with some better than expected UK house price, service sector and manufacturing data but the positive readings did little to help Sterling as the ECB interest rate decision was looming on the horizon. It had widely been expected (and most likely already priced in to the market) that the ECB would raise interest rates by a quarter point to 1.5%, especially after Jean-Claude Trichet, the head of the European Central Bank, had used his codeword of “strong vigilance” with regards to inflation after last month’s announcement.

This time however, he stated that “there were still upside risks to inflation” which was similar to what he said after the last hike in April and suggests that the central bank were expecting to have to raise rates again later this year, and perhaps as early as August. However, there are still concerns within the markets about debt problems spreading to the peripheral economies, and also fears about how these economies would deal with further interest rate increases.

On the other hand the state of the UK economy isn’t exactly doing much to help the Pound. The NIESR estimate for GDP growth slowed sharply in the three months to June, dropping from 0.5% to 0.1% which only reinforced the view that the UK economy will remain weak for some time. If UK inflation data released Tuesday either slows or remains the same then it could add fuel to the Bank of England’s argument that inflation it will cool on its own and there is therefore no need to raise interest rates until growth is back on track.

This kind of reading could have longer term implications for Sterling, as we saw last week when banks started to suggest that it could be May 2012 before UK rates go up. This then led to Barclays Capital reducing their 3 month forecast for GBP-EUR to 1.05 on Wednesday of this week, while some investment institutions maintain that rates will settle back up around 1.15 later this year.

While a fall well below 1.10 is possible, the continuing problems the Eurozone is facing will continue to limit confidence in the Euro so the slightest change in one of the countries concerned could have quite an effect on the exchange rate. For a more detailed look into this week’s data releases from the UK and EU have a look below at our market data section.

Sterling vs. US Dollar;

US economic activity in the first six months of the year was hampered by rising commodity prices and supply chain disruptions following Japan’s devastating earthquake in March. Although more positives can be taken from the early part of the second half of the year, the US economy remains unquestionable volatile. Most notably, efforts to improve unemployment have been encouraging, as US companies increased hiring measures throughout the month of June however; job growth is not expected to be strong enough to make any large dents into the mounting levels of unemployment. The private sector will account for all the jobs created, as has been the trend over the last seven months, with layoffs at state and local governments continuing.

The debt ceiling crisis remains the biggest grey cloud over the United States. President Obama insisted that he would not sign a short-term extension on the U.S. debt ceiling but instead would work through the weekend on a more permanent deal to avoid a debt default. Trying to break a budget deadlock to enable a debt ceiling increase remains a stiff challenge for Obama and his Democrat colleagues ahead of the August 2 deadline - the US treasury has warned it will run out of money to pay all of the country’s bills if the debt ceiling is not increased by the cut off date. Although it is likely that a deal will be firmed up before the deadline, the constant negative press is likely to see the greenback struggle to continue to rally as a consequence.

Cable has weakened from $1.68 to $1.59 over the last quarter, and is widely expected to remain trading around these levels for at least the medium term, according to the median average of 60 banks and analysts polled by Reuters, who predict Sterling will be trading at around $1.61 during the next 6 months.

Weekly Economic Data that may affect exchange rates

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 – Today’s UK data comprises RICS House Price balance, and BRC Retail Sales. Both of these give an overall barometer of the UK economy and so can affect Sterling exchange rate. Other than that it’s a quiet day with no data of note from the US or EU.

Tuesday – There are lots of UK releases today: Consumer Confidence, Retail Price Index, Goods Trade Balance, Overall Trade Balance, Consumer Prices and House Prices. So, clearly much here that will affect the Pound, depending if the numbers are above or below forecast. From the Eurozone we have German inflation figures and a meeting of EU finance ministers, in which the EU debt crisis will no doubt be discussed. Stateside we have FOMC minutes and Trade balance numbers.

Wednesday – Today we have EU Bank stress tests, which will determine how able they are to weather a financial storm. There are also EU Industrial production figures released today. From the UK we have various measures of unemployment. It’s also quite a busy day for US data, with Mortgage Approvals, Import prices and a budget statement all likely to affect cable.

Thursday – No UK data of note. EU inflation figures combined with a report from the ECB though could still affect GBP/EUR rates. There is also a speech from the ECB president, so we will be watching this closely for any coded comments that signal future fiscal policy. From the USA we have retail sales, inflation data and jobless claims.

Friday – Onto Friday, and most data is US based – inflation data and industrial production are the main releases of note. There are also trade balance figures from the EU.

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