GBP/EUR & GBP/USD Forecast

Pound vs Euro
The past week has been very flat for the Sterling-Euro currency pairing with only a 1.7% shift between the highs and the lows of the week on Monday and Thursday respectively. The general feeling has been that Sterling, broadly speaking, has gained during the week as growing speculation around various Euro states being on the ‘chopping board’ continues.

This includes but is not limited to Portugal, Italy and Spain, all having been given negative mention by Ratings agencies in recent times. However, with few data releases for both the UK and the Eurozone last week, volatility has been at a low for the two currencies. This low volatility in the currency pairing highlights the benefits of placing a ‘Stop Loss’ or ‘Limit Order’ on a contract with FCG.

Talking to your account executive and knowing where to place a minimum and/or maximum on your exchange rate would help to optimise your purchase. This would safeguard against any potential loss should the market drop and ensure that you are able to take advantage of any upward spikes without having to stay glued to Bloomberg.

In contrast to this past week, the one ahead holds much uncertainty for the Euro. On Tuesday, those countries participating in the European Monetary Union will make a decision on whether to bailout Greece, whom are currently in the midst of a large debt crisis.

If Germany and France decide to show solidarity with Greece, it would indicate a positive outcome for the Eurozone economies as a whole and those clients looking to sell Euros.
Together with the important release on Wednesday of the Bank of England minutes, should we see any more rumour or mention of Quantitative Easing, we are likely to see at least a 1% drop in GBP/EUR as seen on all previous occurrences.

Those with impending purchases in the Eurozone might look to consider booking a Forward contract with the Foremost Currency Group. By placing a 10% deposit, clients can eliminate the risk of a falling GBP/EUR rate by locking in a price today for a transaction that will take place in the future, up to maximum of two years.

Pound vs US Dollar
Sterling began the week with a small rise, reaching 1.52 before dipping down to 1.4870, a movement of 2% on worse than expected data from industrial and manufacturing production. A slow recovery followed, and it closed at 1.52 where it began the week.

Despite this volatility USD continued to receive support from safe haven buying as sovereign debt concerns remained a significant issue amongst investors. US economic data played a part in influencing the greenbacks strength, US Trade balance shrank and the retail sales figures came out better than expected but the weaker economic data in the UK dictated the dollar’s direction.

The coming week is relatively thin in economic data however the releases that are due to be made are real market movers and promise as much if not more volatility than we have seen this past week, it is for this reason, crucial to keep in close contact with your FCG account manager and discuss your foreign exchange requirements as soon as possible to help manage your exposure in the markets.

This Weeks Data
For the UK, Wednesday is the main day for releases, with Jobless data and the minutes from the recent BoE interest rate decision. Watch for any comments on further Quantitative Easing, and general comments in the economic recovery.

For the EU, there are various measures of inflation, data on the Trade balance, and we also expect news on Tuesday of the EU plans to tackle Greece’s debt problem. This is likely to be the main driver for the GBP/EUR cross this week, and with Sterling remaining weak this is likely to have a big impact.

Across the pond, we have various US data including an interest rate decision from the FED. Of late, the US seems to be recovering better than most from the recession, so further good news may strengthen the dollar further.

Elsewhere, we have the RBA minutes from Australia’s recent decision to raise interest rates. The Aussie Dollar is very strong at the moment, so any further positive comments from the RBA may cause GBPAUD rates to fall further.

Everybody’s requirement is different, and of course data releases will have a different impact depending which currency you are buying or selling. Contact us today and we can give you a free consultation on how market data could affect rates for the currency you need.

Monday
UK – House Prices
EU – Employment Change
US – Manufacturing

Tuesday
Aus – RBA Minutes
EU – Consumer Price Index
Ger – ZEW Survey
US – Housing Starts
US – Fed Interest Rate Decision
US – FOMC Minutes

Wednesday
UK – Average Earnings
UK – BoE Minutes
UK – Claimant Count
UK – Jobless Claims
EU – Construction Output
US – Producer Prices

Thursday
Swi – Trade Balance
UK – Public Sector Borrowing
UK – Mortgage Approvals
EU – Trade Balance
Can – Consumer Price Index
US – Consumer Price Index
US – Jobless Claims

Friday
Ger – Producer Price Index
Can – Retail Sales


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