Currency Forecasts

Pound rising as rumours swirl of Brexit deal

This afternoon, we have seen the Pound rising as rumours swirl of a Brexit deal. For weeks and weeks many have been saying that the EU leave things until the last possible minute before making concessions necessary to get a deal, and we’re hearing that might be exactly what will happen today.

We are hearing that PM May will head to Strasbourg today, and that Junker will be offering some kind of deal with regards to the Brexit Withdrawal Agreement.

Illustrating how quickly things can change both in politics and the currency markets, since this morning the Pound has strengthened by around 1% against the Euro and US Dollar. Rates are at €1.1630 and $1.31 respectively, recovering losses from last week.

Time will tell what kind of deal will be offered, and if whatever May comes back with will get voted through parliament tomorrow. If it does, expect further gains for the Pound. If it doesn’t, the scale of any defeat will dictate the amount the Pound could fall by.

We will publish more as we find out what’s happening. In the meantime, you can follow live real-time currency charts here. To talk to an expert about your currency needs, click here.

Pound falls ahead of Brexit vote

Good morning. The Pound has fallen this morning ahead of this week’s votes in Parliament on Theresa May’s Brexit deal. There were hopes that progress would be made this weekend in talks between the UK and EU, but it doesn’t look like that has been the case. It’s now looking like the deal will be voted down again, as it was in January.

Due to this, Sterling has given up much of the gains it had made against other currencies in recent weeks. GBP/EUR has dropped from €1.17 to €1.15. GBP/USD has dropped below $1.30.

What is happening with Brexit talks?

As there has, as yet, been no breakthrough in talks, the most likely outcome now is that the deal will be voted down. MP’s will then vote on whether to leave the EU with no deal, which is highly unlikely. That leaves us with a vote on whether to extend and delay Brexit. In doing so, the uncertainty that has been keeping the Pound weak of late would also be extended, which could lead to rates dropping further.

Of course there is still time for the EU to make the concessions on the back stop necessary to get the deal through. However, given that MPs have effectively already ruled out leaving without a deal, there is now little impetus or need for the EU to do anything.

Will Brexit be delayed, and how could this affect the Pound?

We therefore expect Brexit to be delayed by at least 2 or 3 months. How this would affect GBP exchange rates is hard to predict. On the one hand, it would extend uncertainty and do little more than kick the can down the road. A ‘No Deal’ would still be possible, and so this could weaken the Pound. On the other hand, it would greatly reduce chances of a ‘Hard Brexit’ so could limit any losses. Either way, in the absence of a deal being agreed, it’s unlikely the Pound will strengthen.

Worried about Brexit affecting exchange rates?

If you are worries about how Brexit talks are affecting exchange rates, then contact us today for a free consultation with one of our expert currency brokers. We can discuss your requirements, explain how our service works, and provide you a quote to see how much you could save by using our currency services.

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Draghi comments help Euro/US dollar through 0.89

Euros

This afternoon Euro exchange rates have fallen heavily against both the pound and US dollar following comments made by European Central Bank (ECB) Governor Mario Draghi.

At the central banks latest meeting the ECB hinted that interest rates in the eurozone will not rise until next year at the earliest amid evidence of a slowdown in the 19 countries using the single currency.

In his statement he said economic growth in the euro area was now expected to be 1.1% against the previous forecast of 1.7%. Inflation is expected to be 1.2% down from the earlier forecast of 1.6% – reducing pressure for any monetary policy stimulus.

Following these comments GBP/EUR pushed through 1.1670 but the big move was seen for USD/EUR which rallied to its highest level since July 2017 to push through 0.89/1.1230.

Will the USD/EUR rally continue?

The ECB’s concerns regarding a slowdown in growth follows a similar trend to that of the Federal Reserve. Both have taken a less hawkish tones in recent months with regards to interest rate movements but the lack of positive date from within the eurozone is likely to keep the Euro weak in the short term. But what about the longer term view?

The US economy hasn’t been setting the world alight and many now believe the Fed will keep rates on hold for the remainder of 2019. This combined with the on-going trade war with China and I believe the dollar could be set for a correction. We have seen a significant rally for the dollar in the last year. In April 208 rates were at 0.8060/1.24 some 11% lower than the current levels. I for one feel the dollar is overvalued and believe a move back toward 0.87/1.15 will be seen in the next few weeks.

Looking for the best exchange rates?

For a free consultation with a currency expert, contact us today. We can discuss your requirements, explain how our service works, and provide you with a free quotation on the rate we can offer you. Typically our rates are up to 3% better than banks or other brokers may be able to offer you, potentially saving you thousands on a large exchange.

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GBP/AUD forecast – highest in nearly 3 years

GBPAUD Forecast

In this morning’s post we’ll take a look at the GBP/AUD forecast as this currency pair has risen significantly recently. After the UK referendum, as I’m sure all readers are aware, the Pound fell in value significantly. This cause the GBP/AUD rate to fall from $2.00 to the Pound to as low as $1.60. However throughout the course of the last few years, the rate has been recovering most of these losses.

Why has the GBP/AUD rate been rising recently?

The most recent gains are due to Sterling gaining ground as speculation mounts that progress could be made with Brexit negotiations. This has helped the Pound become one of the strongest performing currencies of 2019 so far, although most will agree Sterling had a low starting point!

The link between Australia and China

The other reason for the GBP/AUD rate recovering is the way Australia’s economy is so reliant on China. Australia’s main export is Iron Ore, the majority of which is exported to China to fuel their building boom. Thus, their economies are inexorably linked. The Chinese economy has been slowing of late, recently lowering it’s economic growth targets, which have been impacted by the trade tensions between China and the USA, the worlds largest economy. Their growth is still very impressive – 6% last year – which is much higher than western economies, and double what the IMF expect global growth to be this year. However a drop in consumption is slowing things, and this has reduced demand for Australia’s Iron Ore.

Could the Aussie weaken further?

This means that the Reserve Bank of Australia could well choose to cut interest rates later this year, which has weakened the Aussie Dollar which has become cheaper to purchase. As you can see from the chart below, GBP/AUD has risen by almost 8% in the last 3 months, reaching a high this morning of $1.8700.

GBP/AUD rates since December 2018

Will GBP/AUD go up or down in 2019?

If May can get a Brexit deal agreed, then the Pound is likely to strengthen further. If Australia does cut interest rates, then this could mean a further gain for GBP/AUD rates. However given the rise in recent months, those clients that need to convert funds to AUD and don’t want to miss out on the best rates in nearly 3 years may wish to fix a rate now. If you have time on your side and want to see if rates rise further, then consider a ‘Stop Loss’ order to protect you against rates coming back down in the event of a ‘No Deal’ Brexit.

Those selling Australian Dollars to another currency will have been watching the rate move against them in dismay. AUD sellers therefore may wish to cut their losses and move out of the Aussie Dollar to protect against a further weakening of the currency.

Looking for the best GBP/AUD or AUD/GBP rates?

If you need to buy or sell Australian Dollars and want the best possible rate of exchange, then get in touch with us today for a free consultation. We can run over your options and provide you with a quote so you can see how much you can save.

Sterling falls on signs of slowing economy

It looks like the Pound’s rally has finally run out of steam. A significant rise throughout the year so far has seen GBP/EUR rates reach as high as €1.17+ which is the best we have seen in over 21 months. However this week we have seen Sterling level off, dropping into the mid €1.16’s.

It’s uncertain whether Theresa May will be able to get her deal through parliament later this month, so any further gains for the Pound will likely await the next round of voting in mid-March. Until then, in the absence of any Brexit news, investors will be focusing on economic data and it’s this that will drive the Pound over the course of this week.

What economic data could affect the Pound this week?

Already this week we have seen the UK construction sector show signs of contraction after posting poor figures. Later this morning at 09:30 am we will see the latest Services PMI data. Services form a huge part of the UK economy and so the release could have an impact on GBP exchange rates. The expected result is around 49.9 (anything above 50 indicates growth, anything below indicates contraction). If the number is lower than the expected the Sterling will fall. A higher number should cause gains for the Pound.

Elsewhere we have speeches by Bank of England members this week that could also affect the Pound. On Thursday, we have the latest ECB interest rate decision. The EU economy has been slowing recently and if the ECB hint at further stimulus measures, it could weaken the Euro and keep GBP/EUR rates supported. On Friday, GBP/USD could be affected by the latest US jobs numbers.

Looking for the best exchange rates?

For a free consultation with a currency expert, contact us today. We can discuss your requirements, explain how our service works, and provide you with a free quotation on the rate we can offer you. Typically our rates are up to 3% better than banks or other brokers may be able to offer you, potentially saving you thousands on a large exchange.

Contact us today for a free quote