Currency Forecasts

Detailed forecasts for: Sterling (GBP), Euro (EUR), US Dollar (USD), Australian Dollar (AUD), Canadian Dollar (CAD).

Good afternoon. Regular readers will be aware that Brexit remains the main story for Sterling exchange rates, with the political uncertainty causing the Pound to fall to 18 month lows against the Euro and US Dollar. In today’s post, I’ll take a more detailed look at how some major currencies have performed recently, including GBP, EUR, USD, AUD and CAD.

If you need to make an international payment and would like to see what exchange rate we can offer you, get in touch today for a free quote.

GBP Pound Sterling Forecast

The Pound was the biggest mover and shaker in currency markets last month as the UK currency experienced some major swings in movement amidst a flurry of Brexit developments. This has continued as we enter December, with Brexit uncertainty helping the Pound fall to 18-month lows.

Some of the key developments included the sign off on a controversial withdrawal deal between the UK and EU and subsequent cabinet resignations, as well as a political declaration outlining a future relationship, and a gloomy Brexit analysis from the Bank of England (BoE). This culminated in Theresa May calling off the meaningful vote, which has created even more uncertainty about the Brexit process.

The risk that the UK could crash out of the EU in a no-deal Brexit scenario is increasing, likely to result in the Pound facing considerable volatility in the coming weeks.

Those that need to convert GBP to another currency may wish to explore options to remove their exposure, such as a ‘Forward Contract’ to freeze the current rate for up to 12 months.

EUR Euro Forecast

The Euro struggled throughout the first half of November, with the single currency coming under considerable pressure due to a dispute over Italy’s 2019 budget. This led the European Commission to rule that Rome’s budget broke EU fiscal regulations and that it would begin disciplinary procedures in response.

Further dampening EUR sentiment was the release of the Eurozone’s latest GDP figures, which revealed growth in its largest economy – Germany – actually contracted in the third quarter.

While the Euro made some headway later in the month on the back of some hawkish comments from European Central Bank (ECB) President Mario Draghi, EUR ultimately remained subdued as Eurozone business growth was shown to have struck a two-year low, exacerbating fears of a slowdown in the bloc in the second half of 2018.

Looking ahead, the ECB’s December policy meeting is likely to be the main focus for investors in the coming weeks, with the bank’s tapering of its stimulus programme likely to be a key focus point for EUR investors. However markets may remain wary of this month’s PMI figures, with another slump in private sector activity likely confirming analysts’ slowdown fears.

USD US Dollar Forecast 

Outside of a small setback following the US midterm elections, the US Dollar remained in demand throughout the first half of November as growing global uncertainty led investors to flock to the safe-haven currency.

These gains were trimmed in the latter half of the month however following some dovish remarks from Federal Reserve Chair Jerome Powell, as he suggested US interest rates are nearing ‘neutral levels’.

An expected rate hike from the Fed in December is unlikely to have much of an impact on USD exchange rates having already been largely priced in by investors.

Instead the focus is expected to be on the central bank’s forward guidance for the coming year, with any confirmation of a slowdown in the pace of rate hikes likely to dampen market sentiment. However this could be offset if US economic indicators remain strong, and point to a robust start to 2019 for the US economy.

AUD Australian Dollar Forecast 

The Australian Dollar was subject to some volatility last month as shifts in market risk appetite proved to be the main catalyst for movement. This resulted in the ‘Aussie’ softening through mid-November as investor confidence was rocked by a rout in equity markets as well as flaring trade tensions between the US and China.

However AUD moved sharply higher at the turn of the month as President Trump and his Chinese counterpart President Xi agreed to a tariff truce at the G20 summit in Argentina, resulting in an easing of trade tensions.

It’s unclear whether the Australian Dollar will be able to carry this momentum forward into 2019 however, with a weaker-than-expected third quarter GDP reading leading to speculation the Reserve Bank of Australia’s next rate move could be a cut rather than a hike.

CAD Canadian Dollar Forecast

The Canadian Dollar has proved highly sensitive to movement in oil prices over the last month, leading the currency to lose out to most of its peers after the commodity was hit by a major sell-off. The blow was softened somewhat by the release of some strong domestic inflation figures, on hopes this could accelerate the Bank of Canada’s pace of monetary tightening.

However despite this the BoC voted to keep interest rates on hold in December, with the bank’s cautious tone being taken as a sign the BoC may hold off on a rate at the start of 2019 as well, an outcome that could see the ‘Loonie’ slip in the months to come.

If you are looking for the best exchange rates, get in touch today for a free telephone consultations with one of our expert brokers

 

Pound falls as Brexit vote could be called off

Sterling is suffering further losses this morning, as rumours swirl that Theresa May has called off tomorrow’s vote on the Brexit deal. It was widely expected that she would lose the vote, and it seems she has now decided that it won’t go ahead, for now. Britain is now facing a constitutional crisis that is weakening the Pound due to the uncertainty it is causing.

At the time of writing GBP/EUR rates have dipped into the €1.10’s and GBP/USD rates have fallen into the $1.26’s. The reason for the drop in the Pound is simply the uncertainty that this news generates.

The Sunday Times reported that the vote might not go ahead, but Number 10 were adamant that it would be. That looks to have changed this morning. May is expected to make a statement to the Commons at 3.30pm so we will have a clearer picture of the situation then.

What will happen to Sterling next?

While uncertainty remains, so will pressure on the Pound. We will report on this blog what is expected to happen next when this becomes clearer. I think that it’s likely another date for the vote will be set, which will give time to try and negotiate concessions from the EU with regards to the backstop.

There are so many variables and possible outcomes, it’s impossible to predict what will happen to the Pound in the short to medium term. Theresa May could face a leadership challenge, there could be a general election. Another referendum is unlikely but is not ruled out. I think that in order to avoid a Hard Brexit the EU will need to make some concessions with regards to the Irish Backstop, in order to drive this forwards. While any progress is lacking, I think that the Pound is likely to remain under pressure.

Protect yourself against adverse exchange rate movements

For those that need to convert currency and make an international transfer, there are steps you can take to avoid the uncertainty in the currency markets. We offer various tools to help protect against adverse rate movements such as Forward Contracts, Stop Loss Orders, Limit Orders and Rate alerts. We also offer exceptional rates of exchange that are up to 5% better than your bank or existing broker might offer.

To find out more about how we can help, or to just get a quick quote to compare with your existing provider, get in touch today.

Riskier currencies fall ahead of key Brexit vote

This week has been a poor week for a number of currencies, notably those offering a higher yield. We classify these as the “riskier” currencies as they can be susceptible to significant market movement due to currencies flows from investors. Currencies that would fall into this category would be the Autrsalian Dollar, New Zealand Dollar and the South African Rand.

If you look at the trends this week each one of these respective currencies have fallen quite sharply. GBP/AUD has gone from a high/low of 1.72117 to 1.7722 (2.8%) GBP/NZD from 1.8287 to 1.8641 (2%) and GBP/ZAR from 1.34 to 18.13 (4.5%). This suggests their has been a sell off from each of these currencies and a drive into “safe haven” currencies such as the US dollar and Swizz Franc.

Will this trend continue?

Much of the movement can be attributed to market uncertainty surrounding the key Brexit vote on the 11th December. The overriding consensus is that Prime Minister Teresa May will not get her Brexit bill passed and hence the market is in limbo as to what the alternative might be.

It is this uncertainty that is weighing on a number of currencies and I would expect further volatility today and the early part of next week. Of course, depending on the outcome of Tuesdays vote, I expect these currencies to struggle, particularly if a suitable alteranative to Theresa May’s propasal cant be found.

Making the most of your currency transfer

Those that need to buy or sell a foreign currency should take action to reduce their exposure. We can help clients that want to avoid exchange rates moving against them.

We source exceptional rates of exchange for our clients, and we can very easily beat rates on offer from other currency brokers. If you need to convert a large sum and want to save money, contact us today for a free quote.

Sterling remains resilient to Brexit uncertainty

The Pound, perhaps surprisingly, is holding up fairly well against other currencies such as the Euro, despite current affairs suggesting this should not be the case. Currently the GBP/EUR rate is at 1.1235 and Sterling remains robust in the face of some significant political uncertainty. Today’s post will look at what has happened this week, how it has affected the Pound, and ways to avoid adverse exchange rate movements.

Theresa May faces multiple commons defeats

Yesterday May had a very bad day in the office. Later this morning the full legal advice on Brexit will be released, and the rumours are that it contains some strong wording about the backstop. If this wording deviates significantly from what has already been released, then it won’t bode well for her.

Why hasn’t the Pound fallen?

Perhaps more importantly, there was an amendment yesterday by a Conservative MP that means that if the deal is voted down next week, which seems almost certain, then Parliament may well be able to wrestle control of the Brexit process from the government. If the vote is lost, they would be able to amend any back up plan and bring it back to parliament 3 weeks later.

There were also developments from the EU, with the ECJ saying that the UK could revoke article 50, and this coupled with the amendment mentioned above, means that a ‘no deal’ brexit is much much less likely.

The is why the Pound remains supported, when you would probably have expected it to drop sharply. Things are very uncertain of course, and by this time next week who knows where the Pound could be. Despite the fact there’s now less chance of ‘no deal’, it remains the only legal course of action other than agreeing to May’s deal. Despite the media noise, I can’t see another referendum. What would the question be? Would it split the leave vote? What if it was close again, a 3rd referendum.

All this uncertainty means Sterling is unlikely to rise any time soon. 2.5 years after the referendum, and the politicians are still arguing about what type of Brexit should be pursued. What says it all is the fact that May and Corbyn couldn’t even agree on what TV channel to debate the issue on!

Worried about exchange rates?

Nobody knows what the next couple of weeks will mean for the Pound, but what we do know is that we’re likely to see some significant volatility in the currency markets. If you need to make a currency transfer, then you should get in touch with us today to discuss how we can help you get the best exhcange rates.

In addition to being able to provide you the best exchange rates, we offer ways to protect against rates moving against you such as: Forward contracts and Stop Loss/Limit Orders.

We also offer access to our online trading platform that allows you to see our actual trading levels so you can compare what we can offer you 24/7.

Click here to make an enquiry today.

Sterling falls ahead of UK parliament vote

Sterling exchange rates fell below 1.12 against the single currency this morning, its lowest level since September. Losses were also seen against the US dollar, with cable falling to 1.27 an eighteen month low.

What has caused sterling to fall?

The pound has come under pressure ahead of a parliamentary vote being held today where MP’s will vote on whether the UK government broke Parliament’s rules by failing to publish the legal advice it has received on its Brexit plan. Opposition parties have said Prime Minister Theresa May’s government have ignored a binding commons vote and have demanded release of the full advice. In response No 10 have insisted that the confidential advise is not in the national interest.

Once again the tit for tat Brexit shambles is creating a significant sell off for the pound. Sterling has no fallen over 3% against the Euro, nearly 4% against the US dollar, and 5% against currencies such as the Australian Dollar. These are some substantial falls with the real prospect of more to come.

What could impact the pound in the coming week?

Of course Brexit will continue to dominate the pounds movements in the coming weeks with the 11th December the main date of note for anyone that has a short term interest in the pound. This being when Mrs May’s Brexit bill will go through parliament. Rumours are already suggesting there is little to no chance of the vote passing and this will then leave the real chance of a no deal Brexit, a scenario that is set to devalue sterling significantly. As mentioned in my post last week I for one believe, that should the vote not pass, then an alternative to a no deal will be found.

Brexit aside other data to focus on this week is details below:

Tuesday – Bank of England Governor Mark Carney is due to speak this morning followed by UK PMI construction at 09:30

Wednesday – Australian GDP data overnight followed by a speech from European Central Bank governor Maria Draghi. Also look out for European data in the form of Markit PMI and retail sales.

Thursday – no UK data of note but plenty of US data with ADP employment change and initial jobless claims followed by a number of speeches from key Federal Reserve members.

Friday – today is a busy day across the board. We have some UK house price data and Euro Zone GDP data. The afternoon will be doiminated by the key US jobs data in the form of non-farm payrolls.

Making the most of your currency transfer

Those that need to buy or sell a foreign currency should take action to reduce their exposure. We can help clients that want to avoid exchange rates moving against them.

We source exceptional rates of exchange for our clients, and we can very easily beat rates on offer from other currency brokers. If you need to convert a large sum and want to save money, contact us today for a free quote.