Currency Forecasts
Pound exchange rates: Why is GBP falling?
Pound exchange rates have fallen this morning to halt the recent resurgence. We have seen a rally of nearly 6% since mid July but has the run ended?
This morning we have seen the pound slide across the board following comments made by Michael Saunders, a member of the Bank of England Monetary Policy Committee (MPC). The nine members of the MPC are responsible for setting interest rates. Saunders was talking to local businesses in Barnsley and mentioned that due to Brexit uncertainty and slower world growth, the next move for the Bank of England could be a cut.
This came as somewhat of a surprise to the market and has caused a sell off for the pound. It has fallen to a three week low against the US dollar nad nearly 1 cent against the Euro.
Protecting yourself against adverse rate movements
There are so many possibilities in the next few months, rates could move either way, by large margins. If you need to convert currency then this volatility could cost you thousands if rates move against you.
We offer various ways to protect against adverse rate movements. A ‘Forward Contract’ allows you to freeze the current rate for up to 12 months, removing your exposure to the market. A ‘Stop Loss’ order secures your currency if the rate drops below a certain level, giving you a worst case scenario. A ‘Limit Order’ secures your currency at a higher rate should you be targeting a particular level. We also offer free rate alerts, and exceptional rates of exchange for both private and corporate clients.
Make a free enquiry today or email me if you would like to discuss how we can help with your currency requirements michael@currencyforecasts.co.uk
Pound falls as parliament returns
Pound falls as parliament returns – Following gains for the Pound yesterday, today the mood towards Sterling has soured, with the British currency sliding throughout the day. We have lost 1 cent to the Euro, which has dropped from €1.1350 to €1.1260. Against the US Dollar, the Pound is also down a cent, currently trading at $1.2365. View live currency graphs here.
Why has the Pound fallen today?
Ultimately the drop is down to recent political events. Parliament resumed today, however nothing has really changed. There have been calls for the PM to quit, along with the Attorney General Geoffrey Cox. Cox gave a robust performance in answering questions from MPs today, and it will be the PM’s turn later today.
Recent political manoeuvrings have removed the chances of No Deal happening next month. Yesterday’s court ruling initially gave the Pound some support, but exchange rates are now dropping back away. This is because it’s now less likely that a Brexit deal will be agreed. There had seemed to be some momentum behind the negotiations, but that now seems to have waned. It’s quite clear that recent events have tied Boris Johnsons hands, and the EU know it.
Leaving with a Deal now less likely
Even though ‘No Deal’ is now less likely, MP’s actions have, in my view, contributed to making any deal less likely. Recent defeats for Johnson mean the EU know that the UK won’t leave without a deal. They also know that the PM is now severely restricted and will have to ask for an extension. Given the inability of parliament to agree on anything, they also know that even if a deal is struck, there is no consensus among MPs that would need to vote the deal through.
Recent events therefore are mostly political, and in terms of Brexit, have probably reduced the chances of a deal being struck next month. This is why Sterling has fallen in value today. Many MPs may state that their intention was to avoid ‘No Deal’, however it could be argued that their actions have reduced the chances of a possible breakthrough in the negotiations.
Pound likely to remain under pressure
If a deal was agreed, it would almost certainly have sent Sterling higher. An extension would simply extend the uncertainty, limiting any gains for the Pound. While uncertainty remains, so will pressure on the Pound.
If you need to make a transfer and are worried about rates moving against you, get in touch to discuss how our currency services can help you.
Supreme Court ruling – Pound rises
Supreme Court ruling – Pound rises
Good afternoon. Following this morning’s Supreme Court ruling that suspending parliament was unlawful, the Pound has strengthened. This morning the GBP/EUR rate was at €1.13, but has since risen by around 0.5% to €1.1350:
Will the Pound keep rising?
I don’t think so. It’s hard to know whether today’s events will have much more of an impact on the Pound. It’s certainly going to generate headlines, but the reality is that it hasn’t changed much. There will be calls for the PM to resign, and it provides ammunition to the opposition. An election is now certain. Boris has tried twice to call for one, however this has been blocked by opposition MPs.
Current polling shows the Conservatives would win a large majority. For this reason, Labour and other parties want an election after the 31st of October. This is so they can say the PM has failed in his pledge to deliver Brexit, in the hope that voters will desert the party and give them a bigger chance of winning. All of this was true yesterday, so not much has really changed. No Deal is now very unlikely which is why the Pound is a little higher. However, the continued uncertainty is, in my view, likely to limit any further gains for the Pound.
When to convert Pounds to Euros
If you need to convert Pounds to Euros, then it’s worth noting the current rate is 6.5% higher than a month ago. The chart below shows how the GBP/EUR rate has moved over the last 3 months.
In real terms, a €250,000.00 property purchase is £15,000.00 cheaper than last month, purely due to exchange rate movements. This really illustrates how important it is to ensure you get the best rate of exchange, and take steps to protect yourself against the rate moving against you. For those with an imminent currency transfer to make, it’s worth considering taking advantage of this recent spike in the value of Sterling.
We offer exceptional rates of exchange, coupled with tools to help clients avoid the market moving against them. For example, we can freeze the current rate for up to 2 years with a 10% deposit. We also offer free online trading, rate alerts, and free consultation with an expert currency broker to help you decide when to fix a rate.
Pound to Australian Dollar: Is it a good time to buy AUD?
Pound to Australian Dollar exchange rates have seen somewhat of a resurgence in the last few weeks. Just two months back GBP/AUD was trading at 1.76 and yesterday peaked at just shy of 1.84, a 4.5% move. Is it a good time to buy?
Why has the Australian Dollar weakened?
There are a number of factors as to why the AUD has devalued sharply against the Pound. Of course we have the Brexit effect. With the threat of a ‘no-deal’ becoming increasingly unlikely, sterling has rallied against a number of currencies. We have also seen signs of a break through in the US/China trade war. Representatives are due to meet on the 15th October to see if they can re-negotiate a deal. Some analysts believe this could be a possibility and it has caused a risk-on move on the currency market.
Another factor to take into account is what the Reserve Bank of Australia is planning. We have recently seen the central bank cut interest rates to help boost the Australian economy. There are suggestions that they will cut again. Another reason as to why the AUD could fall further in the coming weeks and months.
In short all factors appear to be positive for those looking to buy the Australian Dollar. Would I buy now? Personally I would hold. I think we could see the Pound vs Australian Dollar test 1.90 soon.
Looking for the best exchange rates?
If you need to convert a large sum, to purchase overseas for example, then get in touch to see how we can help. We offer a free consultation over the phone to discuss your requirements and explain the various options you can consider. We can also provide you with a free quote for you to compare with your bank or existing broker. Our rates are up to 5% better than available elsewhere, so you could save thousands.
Click here to send a free enquiry today or email me at michael@currencyforecasts.co.uk
This week’s economic data releases
Good morning. As regular readers will know, on a Monday morning we post the weekly economic data that could move exchange rates. This week’s economic data releases are listed below, along with how we think it could affect exchange rates. We also offer a free consultation to clients that want to know how a particular currency pair could fare. Contact us today to discuss your requirements.
In addition to the below data, Brexit will also have an impact on the Pound. The Supreme Court will rule today or tomorrow on the legality of suspending parliament, which is probably going to be the main Brexit news of the week.
This week’s economic data releases
Monday 23rd September
Apart from possible Brexit news from the Supreme court, there’s nothing due from the UK. GBPEUR rates will therefore be influenced by data from the Eurozone. This included some negative EU inflation numbers earlier. Of more importance will be speeches by the outgoing European Central Bank (ECB) president Mario Draghi. Hints of further EU stimulus could weaken the Euro, helping the Pound/Euro rate.
Elsewhere, we have Inflation and central bank speeches from the USA. I think this will be overshadowed by geopolitical events with rising tensions in the Gulf. These tensions could decrease risk appetite, strengthening the USD due to its safe haven status.
Tuesday 24th September
UK Public Sector net borrowing figures are releases today. It’s unlikely to affect Sterling a great deal. In the absence of data from Europe, Brexit will be the main driver for GBP/EUR rates. GBP/NZD rates could be affected by the latest trade balance data from New Zealand. house price and Consumer confidence from the USA comes at lunchtime, which might impact GBP/USD rates.
Wednesday 25th September
The most important data of the day is the interest rate decision from New Zealand. We expect rates to be left low at 1%. Globally, many countries are starting to lower rates so there’s an outside chance of a cut. If so, expect the Kiwi Dollar to weaken, pushing up GBP/NZD rates. Minor UK mortgage data is unlikely to affect Sterling. The USA releases Home Sales, but again this is a relatively minor release so I don’t expect much movement in cable.
Thursday 26h September
Another quiet day for UK data with nothing on the calendar. An EU economic bulletin is the only Eurozone data. Focus today will be from the raft of data from the United States. GDP numbers are expected at 2%. Anything higher will move GBP/USD down, a lower number will push GBP/USD up. We also see Jobless numbers, home sales, and Trade Balance numbers, all of which will indicate how the US economy is doing.
Friday 26th September
We end the week with UK House prices and a speech by one of the members of the Bank of England (BoE) rate setters. Eurozone data is a mix of sentiment and confidence measures. This will be a good barometer of how business and consumers see the Eurozone economy. The USA has measures of Spending and durable goods orders, which could move GBP/USD.
Getting the best exchange rates
Contact us today to discuss how we can help you make the most of your currency. We offer exceptional rates of exchange, coupled with a range of currency tools to protect you against adverse exchange rate movements.
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