Friday 14th February 2014
Sterling exchange rates have held on to the gains made earlier in the week, due to the Bank of England comments that I talked about in my last post. We are now at multi-year highs against many currencies, so it’s a great time to need to convert Pounds to another currency.
Today, I’m going to have a look at some of the most widely traded currencies, including charts to show how the rate has moved over the last 3 months, and the forecast for whether exchange rates will go up or down during 2014.
Rates to buy Euros with Pounds are around the best they have been for over a year. This is due to the strong UK economy. Even data today that showed the Eurozone is growing at a faster rate than expected did little to dent the rate, and we remain around €1.22.
It’s hit these levels several times over the last few months only to drop away again. Whether that will happen again, or if these levels will now be sustained remains to be seen. The BoE hinted this week that it’s not happy with rates being too high, so one danger is they will try to weaken Sterling should it rise much further.
Euro buyers should consider a Stop Loss order to protect against a downturn, but should the market keep rising you can still take advantage. Personally I expect the rate to go up further as the year goes on, but not until the summer when I expect it to be around the €1.25 level.
The current rate to buy Dollars is the best in nearly 3 years. Again Sterling strength is part of the story, but the USD weakening in recent months has also had an impact.
I don’t expect rates to keep rising against the US Dollar. The US economy is slowly starting to follow the UK in building back towards sustainable growth. So at this continues, the USD will likely gather strength which would pull the rate lower. So if you need to buy USD, consider locking the rate in while it is so good.
Sterling /Australian Dollar
Only last year the GBP/AUD rate was at a 20 year low, however has risen over 20% in value since then which is remarkable. Right now the rate is the best it’s been in over 4 years. Again the Pound is strong which has helped, but most of the gains have been due to the AUD weakening.
They have cut interest rates recently, may do so again, and the fact China’s economy has slowed down quite a bit has meant that there is less demand by them for Australia’s raw materials which are a huge export. Given the huge increase in the rate, I can’t see it going that much higher in the short to medium term. If China’s economy picks up again, expect the rate to drop back away.
If I needed to buy AUD any time soon, I would look at the charts and think that going from a 30 year low to a 4 year high is no bad thing, and would want to put some protection in place to make sure I don’t lose out.
Sterling/New Zealand Dollar
GBP/NZD sits around $2 to the Pound at the moment. We haven’t seen the same trends we’ve seen with the Aussie, due to the fact the NZD hasn’t weakened as much as they don’t export raw materials like Australia.
Despite this, the rate is still around the best it’s been in 18 months, and 10% higher than last year. We’ve not seen much of an increase recently, and I can’t see it going much above 2% as New Zealand has much higher interest rates than us.
Sterling/South African Rand
GBP/ZAR has risen in value by 45% in the last 4 years. That is not a typo! Back in 2011 rates were just above 10 rand to the Pound; right now it’s over 18 to the Pound. It’s only hit these sorts of levels twice in the last 13 years.
The Rand has weakened enormously in recent years due to a big drop in mining, political problems, and investors looking elsewhere to emerging markets.
If I needed rand, a 45% increase in value is all I would really need to know – of course it may go higher still, but why hold out for an inch and risk losing a mile.
Do you need competitive exchange rates?
The above is a quick snapshot of my view of some main currencies I can offer. I trade nearly all major currencies such as EUR, USD, JPY, CHF, CAD, NZD, AUD, ZAR, HUF, DKK, SEK, AED, SGD, THB, CNY, PLN to name just a few.
If you are looking for the best exchange rates, you can get in touch with me for a free quote. Usually the rates I can offer you are up to 5% better than the banks can offer.
So contact me today to have a brief chat regarding the currency pair you are interested in, and I can explain how my service works and the rates I can offer. Even if you currently use a broker elsewhere, taking a few minutes to compare the rates on offer can save you a significant sum.
Have a great weekend.