Monday 30th June 2014
Good afternoon and I hope everyone had a lovely weekend. The Glastonbury festival is now over, and nearly 200,000 revellers will now be suffering the post festival blues. They are not alone, as the currency markets seem to be suffering post Carney blues, with his recent mixed messages over interest rates pulling exchange rates up and down over the last few weeks.
The volatility has continued this morning however the current GBP/EUR rate and GBP/USD rates are hovering in their recent familiar positions of around €1.25 and $1.70, around the level they have been for the last week or so.
There is still no consensus in UK interest rates, with the BoE governor still giving mixed signals over when rates may rise, and this is reflected in the Pound/Euro rate going up and down around the €1.25 level.
Which way will Pound/Euro rates move in 2014?
It depends on UK economic data and what the markets think the data will mean for the timing of a UK interest rate hike. In short, good news will push the Pound higher, worse than expected figures will push it lower. It should be noted that in the last month or so, the GBP/EUR rate has hovered around €1.25 but has failed to break any higher, as the chart below shows:
So those holding out hoping for rates to go higher should consider the possibility that they might not. If it becomes less likely interest rates are going up this year, the Pound could drop away. Of course good data could cause it to go higher, but given we’ve seen the rate climb 7% already this year means there may not be much left in this cross to go higher.
If you need to buy Euros then you can either fix the rate now while it’s close to a 20 month high. Even if you don’t need your currency for up to 2 years, you can lock in the rate now if you have 10% of the total you want to convert to lodge as a deposit.
Alternatively if you are keen to hold out in the hope of a higher rate, a Stop Loss order allows you to do this without leaving yourself open to the risk of rates dropping and ending up with a worse rate than currently available.
This week’s economic data releases
Below I’ve listed this week’s figures that I think will affect rates. Of course the way this could affect your currency requirement depends on the currencies you are buying or selling.
For a free consultation on my views on which way exchange rates to go, click here to send me a free no obligation enquiry today.
Monday 30th June 2014
This morning we had UK mortgage approvals, which while slight better than expected was almost as forecast so this had little effect on exchange rates. We also saw worse than expected German Retail Sales but again this did little to weaken the Euro as the number was close to forecast. Later this afternoon, we have Canadian GDP figures that could affect GBP/CAD rates, and UK Home sales data that could move the Sterling/Dollar rate.
Tuesday 1st July 2014
A quiet start to the new month from the UK with Manufacturing PMI figures the only data of note. More likely to affect the Pound/Euro rate will be the German Unemployment data due at around 9am. We also have EU wide inflation data and unemployment. Elsewhere we see US inflation data in the afternoon.
Wednesday 2nd July 2014
Nothing major from the UK today, but we do have the latest EU growth figures that could affect GBP/EUR rates. We also have Australian Trade Balance data and a speech from a member of Australia’s central bank, so we could see some volatility in GBP/AUD rates. Over in the USA we have employment data, Factory Orders, and a speech from the FED chairman Janet Yellen. The last time she spoke the Dollar weakened pushing GBP/USD through the $1.70 level, so what she has to say today will be closely watched by the markets.
Thursday 3rd July 2014
The only UK data of note today is inflation data due at 09:30am. Of more importance will be events in Europe, as we have a raft of inflation figures, Retail Sales, and the ECB’s latest decision on interest rates. There is also a press conference afterwards at 13:30pm and often the comments made have a big impact on GBP/EUR rates. This will be the biggest mover of rates this week in my opinion.
It’s also a busy day in America, with Jobless Claims, Non-Farm Payrolls, Trade Balance data and inflation numbers all likely to change the GBP/USD rate depending on the results.
Friday 4th July 2014
US Markets are closed for Independence Day, and it’s quiet elsewhere with German Factory Orders the only data of note.