Currency Forecasts

Pound/Euro surges to €1.16

SterlingEuroForecast

Pound/Euro surges to €1.16, best in almost 2 years

This morning we have seen Sterling/Euro rise to the highest level in nearly 2 years. The reason the Pound has gone up is news that the Brexit process could be delayed, significantly reducing the chances of the UK leaving with ‘No Deal’ next month. There are also rumours that she will rule out the UK leaving without some sort of deal.

The PM is still trying to get some concessions on the Back Stop in order to get her deal voted through on the 12th of March. If she doesn’t achieve this, then a delay is the likely option. All of these events have made the Pound much more attractive to investors, causing it to rise in value. Conversely the Euro has less appeal as major EU economies like Italy and Germany face stagnant growth.

In other news Labour have said they would back a second referendum, if a customs union is ruled out. I think this option would prolong uncertainty and is unlikely to get a majority in parliament.

Will the Pound rise further?

I think it’s unlikely. The markets are now pricing in a slight delay. If the PM succeeds in getting a deal voted through in a few weeks, then yes the Pound is likely to rise further. A delay, while avoiding ‘No Deal’ really just kicks the can a little further down the road, so in this scenario I’d expect the Pound to stay steady rather than rise.

For those buying property overseas, the last few months have saved you a lot of money. Purchasing a €300,000.00 property in Europe is £14,000.00 cheaper today compared to early January. The current levels are around the best we’ve seen since April 2017. Previously when rates have reached these levels, they have dropped away again.

If you need to buy Euros and want the best rates, get in touch today to discuss how we can help. Our rates are significantly better than your bank or existing broker may offer. We can also provide the option to freeze the current rates for up to 12 months by lodging a small deposit; ideal for budgeting for an overseas property purchase.

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Pound/Euro exchange rates: Will rates rise further?

Pound/Euro exchange rates have once again pushed close to the 1.15 level bur are we set for a further rise?

Interestingly this is now the fifth time the pound has pushed through the 1.15 barrier in the since May 2017 and each occasion thereafter the pound has corrected and fallen sharply, but will this trend continue?

Will Brexit be delayed?

Rumours have circulated that,. although Theresa May could be close to getting her deal agreed by parliament, it is unlikely she will be able to do this by the 29th March deadline. It would appear concessions could be reached, particularly surrounding the Irish backstop, something that has lead to the pound being the best performing currency this week. However it would appear the market does not believe a deal can be reached by the 29th March with the overriding consensus being a delay of Article 50 by a further three months.

For me I think the above scenario is the most likely and I would be amazed if Theresa May’s Brexit bill is passed in time. May has promised to give parliament a chance to decide what to do about Brexit on Feb. 27 unless she can bring back a deal.

However, some analysts say the short term upside for the pound is likely to be limited as a deeply divided parliament might present significant hurdles for any concessions that May can get out of the European Union. This is something I would completely agree with and I would look for the pound to fall back within the 1.13/14 range. On this basis should you need to secure Euros in the short term then I would suggest that the current level 1.15 is a good buy opportunity.

Looking for the best rates? Speak to an expert

We provide exceptional rates of exchange for all major international currencies. We don’t offer cash, but can help those looking to move funds via bank transfer e.g. buying or selling property overseas, importing or exporting goods, or simply topping up a foreign bank account. We don’t charge commission or fees, and our rates are very competitive.

Make a free enquiry and get a quote today

Getting the best exchange rates

Pound surges higher against Euro and US Dollar

The Pound has surged this week, rising to €1.15 vs the Euro and above $1.30 against the US Dollar. There are 2 reasons for the gains we have seen for Sterling. The first is optimism in the markets that Theresa May will be able to make progress with Brexit talks when she meets Junker today in Brussels. There are still hopes that she can gain concessions to get the withdrawal deal through parliament, removing the chances of a ‘No Deal’ and in doing so, remove much of the uncertainty that has been keeping the Pound subdued.

The second reason is decent UK data showing the economy is performing well. Unemployment is at record lows, wage growth is rising at it’s fastest pace in 10 years, and UK retail sales figures show that consumers are still spending. The news of Honda closing its factory in the UK has not had much of an impact as it’s not believed to be due to Brexit. Global car sales are down and they have said they are restricting their manufacturing base to where they sell most of their cars.

In the light of the recent gains, in today’s post I will outline why using a broker like us when making international payments can save you thousands of Pounds.

Getting the best exchange rates for purchasing property overseas

When purchasing property overseas, you will usually pay in a foreign currency, e.g. Euros. This means that you will need to convert your Sterling and in doing so, enter the potential minefield of the currency markets.

The natural inclination is to use your bank however this is usually a very expensive way of doing it. Banks don’t usually offer particularly competitive rates, and a currency broker can achieve rates that are typically 2% to 3% better. Given a property purchase will usually involve a sizable sum to be converted, the savings can be considerable. A 2% difference in the rate when buying €300,000 will save you more than £5,000.00.

How does using a broker work?

Using a broker is straightforward. The first step is to register an account which you can do online. This shouldn’t cost you anything or obligate you in any way, and simply allows you to get a live quote to compare rates of exchange.

When purchasing a property overseas, the first step is paying a deposit. You would do this using a ‘Spot Contract’. You simply fix a rate with your broker, settle the required Sterling amount by debit card or bank transfer, and your currency is then transferred to the solicitor dealing with the sale. We don’t charge you any fees or commission, as we will be making a small profit through our margin (the difference between the rate we buy at, and the rate offered to you).

Protecting against volatility using a Forward Contract

Most purchases will have a lag time between paying the deposit and paying the completion balance, of up to 3 months. The exchange rate could change significantly in that time, so simply relying on another ‘Spot Contract’ at the time of completion could prove costly should the rate fall. Most overseas purchasers therefore opt for a ‘Forward contract’. This allows you to eliminate the risk of fluctuating exchange rates by freezing an exchange rate today for a transaction that will take place in the future.

Forwards are very popular when buying overseas, as it allows you to fix a rate on the balance due at the same time as securing your deposit, thus protecting you from unfavourable movements in the market. A 10% deposit is required to secure the contract, with the remaining 90% due when you want your currency to be transferred. You then know the cost of your property in Pounds, regardless what happens with exchange rates.

Taking a gamble

For those less risk averse that are happy to gamble on the rate moving up in their given timeframe, 2 other contracts are available: A Stop Loss order will protect you against adverse exchange rate movements and secure your currency if it falls below a pre-agreed level, giving you a worst-case scenario while still allowing you to take advantage of any gains in the rate should the market move in your favour.

A Limit order is the opposite; it is placed to secure currency at a specific price that may not be currently available. This type of contract is particularly useful when the markets are moving in a positive direction for you. If you have a target rate you are aiming for, you can place a Limit order to buy should it get there, while having a Stop Loss order in place to protect against adverse movements.

Get in touch today to find out more

Everybody’s specific requirements are of course very different, as are attitudes to risk. If you are looking to buy property overseas, or need to convert currency and want to make exchange rates work for you, you should have a free consultation with one of our foreign exchange brokers so that you can discuss all the options available, and make an informed choice about which type of contract is right for you.

Make a free enquiry today to get a quote

Political Uncertainty keeping the pound in check

Pound exchange have remained relatively stable today despite the on-going Brexit debacle. To highlight how much of shambles this whole process has been seven MP’s have resigned from the Labour Party in protest at Jeremy Corbyn’s approach to Brexit and anti-semitism.

The MP’s who all back a further referendum have reportedly said they will not be launching a new political party but instead will sit in Parliament as an independent group.

As my my colleague Alastair alluded to in his post last week there are a number of potential outcomes as we head towards the key date of the 29th March. He is of the opinion that a deal will be reached, even if it is at the 11th hour, however I am not so sure. For me I believe there isn’t enough time to get a deal in place and I would expect an extension of Article 50 to be seen. If this is the case then I expect the pound to continue to trade in a relatively tight range against the Euro.

What data could impact exchange rates this week?

Of course the on-going Brexit debacle will keep the pound in check and will continue to dominate as we head towards the 29th March. Below I have given an outline of key data this week that could have a more immediate impact on exchange rates.

Tuesday 19th – 09:30 UK unemployment figures. Expected to remain on hold at 2.8%

Tuesday 19th – 10:00 EU construction output. Strong figures forecast up from 0.9% to 2.1% which could see some Euro strength.

Tuesday 19th – 15:00 EU speeches from European Central Bank member Peter Praet

Wednesday 20th – 09:00 EU Markit services PMI

Wednesday 20th – 13:30 US Initial jobless claims

Wednesday 20th – 14:45 US Markit Services PMI

Thursday 21st – 09:00 EU Markit services PMI

Friday 22nd – 10:00 EU Consumer Price Index

Friday 22nd – 15:30 EU ECB President Draghi speech

Friday 22nd – US Fed monetary policy report

Looking for the best rates? Speak to an expert

We provide exceptional rates of exchange for all major international currencies. We don’t offer cash, but can help those looking to move funds via bank transfer e.g. buying or selling property overseas, importing or exporting goods, or simply topping up a foreign bank account. We don’t charge commission or fees, and our rates are very competitive.

Make a free enquiry and get a quote today

Pound Rises on Retail Sales data

Retail Sales

Retail Sales better than expected

The Pound has recovered most of yesterday’s losses after stronger than expected Retail Sales number were released this morning. The markets had only been expecting a small rise of 0.2%, but the actual number came in at a much more impressive 1.0%. This indicates that consumers are still spending. Retail Sales is a good barometer of the overall health of the economy, so the better result helped the Pound rise. You can see live graphs here.

May suffers defeat; currency markets ignore it

In other news, May lost a series of votes last night as was expected. It didn’t affect the Pound much because it doesn’t really mean anything. The lack of support however means there is no impetus for the EU to make concessions to help get the deal through.

Will a deal be done?

I’m still of the view that they will make the necessary concessions. From the EU’s point of view however, there is little point in doing so now. If they did there is the risk of the UK going back and asking for more. It’s more likely they will leave things until the last minute as the EU has been shown to do in the past. If they do make concessions, parliament have already indicated that they will vote the deal through. This would help the Pound as it would put to bed once and for all any chance of a ‘No Deal’, and both sides could get on with negotiating a trade deal.

Getting the best exchange rates

If you need to change currency and want to get the best exchange rates, then get in touch today to see how we can help. We offer exceptional rates of exchange that are up to 5% better than banks or other brokers may offer. You can also speak to one of our expert brokers about the market to help with the timing of your trade.

Make a free enquiry today