GBP/USD and GBP/EUR Forecast

Pound vs Euro
The past week has seen slightly more volatile movement for the Sterling/Euro currency pairing, with a 2.3% shift between the highs and lows of the week. To put this into monetary terms it would mean a difference of £4,600 on a £200,000 trade.

We have however seen some positive growth with Sterling, rising to its strongest position in three weeks against a weaker Euro on Thursday, as it extended gains due to the report published on Wednesday with the welcome news that unemployment figures in the UK were lower than expected.

This news paired with continued speculation as to the economic instability of several Eurozone countries provided Sterling with a chance to strengthen. Sterling dropped again slightly at the end of the week due to a number of factors, not least the speech made by ECB President Trichet with regards to his crisis management plan, volatility is often experienced during his speeches as traders attempt to decipher interest rate clues.

Also responsible for Sterling slipping slightly were the remarks by a Bank of England policymaker that there was some risk of a double-dip recession, although only a subjective opinion, his words have carried with them a weight that has injected a slightly apprehensive feeling amongst UK investors.

This coming week could prove to be a volatile time for the pound as a conclusion to the Greece bail-out saga should come to a head on Thursday. Sterling could strengthen if the plan is insufficient and lacks backing from Eurozone powerhouses France and Germany, but could also do the opposite should the bail out plan prove successful, in which case the euro will strengthen, weakening the value of GBP against it.

Until the plan is released, an air of uncertainty encapsulates the market, meaning it would be the ideal time to lock in a rate with the Foremost Currency Group through means of a forward contract or placing a stop loss or limit order, allowing your currency to be traded at a specified rate to protect against any unfavourable movement. Please contact us for further information on how these tools can be implemented.

Security in your currency exchange is paramount in such unpredictable times and this is provided by a forward contract, where you can lock in a rate for up to two years. 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 an unstable 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.

With all of these factors in mind, it is of utmost importance to speak with your specialist account managers to ensure you know all of the options available to you , ensuring you can
make the right decisions when it comes to exchanging your currency, please feel free to contact us for a free consultation.

Pound vs US Dollar
The difference between the high and low point for the Pound Vs the Dollar was around 1.75% which in recent market conditions is some way short of the volatility we have been seeing. That said it still represents a difference of around $5300 based on a £200,000 transfer which is still a substantial amount.

With regular contact with your account manager here at The Foremost Currency Group we can help to maximize your currency requirement with information to try and conduct your transfer at the best possible time for you. To get yourself in the best position to trade why not open an account today.

The main news of the week came in the shape of the Federal reserves decision to hold rates once again at 0.25%. This is now the 15th consecutive month the rate has been held and they stated it would keep the rate at a record low for an extended period to help “nurture the economic recovery.”

News from the UK saw better than expected unemployment figures where the levels actually fell giving Sterling some short term strength on Wednesday. This was coupled with the Bank of England minutes also released on Wednesday, and it showed a much expected 9-0 vote from the committee for keeping rates on hold at 0.5% and continuing to pause its Quantitative Easing program for the time being.

With the QE program only on hold at the moment it still leaves Sterling in a very fragile position as each month that passes, the likelihood for a further £25bn increase becomes that much higher a possibility.

The week ahead sees a host of data releases with the most important for the UK being consumer price index figures released on Tuesday morning at 9:30am and this years budget report being released throughout Wednesday. These releases will be detailed further in the week ahead section of this report.

This Weeks Data
This week for the UK we have various measures of confidence and inflation. Consumer Confidence measures such as retail sales give an idea how consumers view the economic recovery. Good figures can boost the value of the pound. Inflation figures are significant as they are an indicator of interest rate movements. By far the most important UK data however is the budget on Wednesday.

Ignoring the main headline grabbers such as fuel and alcohol duty, the markets will be looking for details on spending cuts to reduce the huge deficit. If measures are not perceived to be robust enough, then Sterling will likely weaken as a result. Recent figures last week showing a slight reduction in public sector borrowing gives the chancellor a little breathing space, but most forecasts suggest planned cuts won’t go nearly far enough.

We also have Gross Domestic Product (GDP) for New Zealand and the USA. What is GDP? It’s a basic measure of a country’s overall economic output. It is the market value of all final goods and services made within the borders of a country in a year. It’s taken as a sign of overall economic performance and whether an economy is expanding or retracting. If the figures are different than forecast, it can cause the currency to strengthen or weaken accordingly.

Monday
Aus – New Vehicle Sales

Tuesday
UK – Mortgage Approvals
UK – Consumer Price Index
UK – Retail Price Index
US – Home Sales

Wednesday
UK – Budget
Ger – Purchasing Managers Index
Ger – Business Climate
EU – Purchasing Managers Index
US – New Home Sales
NZ – Gross Domestic Product

Thursday
Ger – Consumer Confidence
UK – Retail Sales
US – Jobless Claims
NZ – Trade Balance

Friday
UK – Business Investment
US – Gross Domestic Product


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