BoE upgrade UK growth forecasts / Currency Forecast

Thursday 16th May 2013 
Good afternoon. Sterling Exchange rates remain fairly stable, with GBP/EUR sat just above €1.18 and GBP/USD around $1.5250 at the time of writing. The Pound is being supported by robust UK data, including the upgraded economic growth forecasts for the UK. This is what I’ll be looking at in today’s report, along with an outline of the types of contract I can offer to help you get the best exchange rates. 

If you are looking for the best exchange rates, or are trying to work out whether the Pound will go up or down against the Euro or any other currency, then read on below. You can also have a free consultation on your particular requirements by clicking here.

Bank of England upgrades growth forecasts 

The Bank of England yesterday upgraded its economic growth forecast, with the Governor Mervyn King saying that “a recovery is in sight”. He also said that the projections are for growth to be a little stronger and inflation a little weaker than they expected three months ago. “That’s the first time I’ve been able to say that since before the financial crisis.” 

This was good news for the Pound, and as a result exchange rates remain at relatively decent levels compared to earlier in the year. Economic growth this year is now expected to be greater than 1%, up from the Bank’s previous estimate of 0.9%. As you can see from today’s chart, optimism has pushed the Pound up nicely against the Euro.

The underlining picture remained subdued however. Sir Mervyn said: “This hasn’t been a typical recession and it won’t be a typical recovery. Nevertheless, a recovery is in sight.” So, while the outlook was slightly more rosy than it was three months ago, we are not quite out of the woods yet, with the BoE saying that the recovery will remain weak by historical standards”. 

Looking for the best Exchange rates? Click here for a free quote.

Problems in Eurozone could hurt the Pound. 

While the UK is doing better than it had been, the same can’t be said for the Eurozone. Figures released yesterday showed that France fell back into recession, and the Eurozone economy as a whole contracted for the sixth quarter in a row. 

Many of my clients thought that the problems in Europe would weaken the Euro and push rates higher. Of course this may be the case, but it’s important to remember that the poor Eurozone data means that UK exporters will face obstacles in the coming months. 

The UK is trying to bounce back on an export led recovery, and a weak Eurozone means there will be less demand for UK products. Touching on this yesterday, the BoE said that the “main risks to the recovery continue to emanate from abroad”. So with the Eurozone economy remaining weak, this could hurt the pound. 

As I mentioned in my previous report, this means that we may see the Bank of England try to devalue the Pound to make our exports more attractive. This is what we saw earlier in the year when the GBP/EUR rate fell from 1.2350 to 1.13 in just a few months. 

You can read an interesting article here from Reuters, where they are forecasting the new Governor will opt for aggressive easing, which would really weaken the Pound and potentially send exchange rates tumbling.

If you need to buy or sell currency at the best rates, send me an enquiry. 

Types of Contract I offer 

As a Senior FX broker for one of the UK’s leading foreign exchange brokerages, I can help you get exchange rates significantly better than the banks, by as much as 4%. 

In addition to better rates, there are various contract types I offer that can help protect you against rates moving the wrong way. Let’s take a look at the main types: 


The Spot Contract is the most basic and popular foreign exchange product. It is an agreement to buy or sell one currency in exchange for another. You have 2 days to settle the contract, at a price based on the prevailing “spot exchange rate” the current value of one currency compared to another. 

Although the spot market lets you buy or sell currency as you need it, spot exchange rate movements are highly unpredictable, even during a single trading day. Upon receipt of cleared funds currency is available for onward transmission. 


A Forward Contract lets you buy or sell one currency against another, for settlement no later than on the day the contract expires. Unlike spot contracts, a forward contract eliminates the risk of fluctuating exchange rates by locking in a price today for a transaction that will take place in the future (up to a maximum of 2 years). You also have the flexibility to take delivery of your currency in an agreed time period before the expiry date. 

A 10% deposit is required to secure the contract and is payable within two working days with settlement due on the day the contract expires. 


A Limit Order is an order 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. This is one of the two most common types of orders, the other being a Stop Loss Order. 


A Stop Loss Order is used when the market is moving in a negative direction for your currency. An order is placed on file with your broker to help ease the stress of adverse market movements. A stop loss order instructs your broker to buy when the currency hits a certain point. The purpose of the stop loss is obvious – you want to prevent any further movement before the currency falls any further. 

Make a free enquiry with me now 

If you need the best exchange rates, or would like to discuss my service in more detail, click here to send me a free enquiry today. I can provide a free consultation on the options available to you, to help you decide when to fix your rate and on what type of contract. 

There is no cost or obligation involved, and you may be surprised how much you can save in using me to secure currency at the best exchange rates. 

I look forward to hearing from you.

Alastair Archbold.

Leave a Reply

Your email address will not be published. Required fields are marked *