Currency Forecasts

Sterling pushes to a 6 month high, will it last?

Sterling exchange rates have have rallied 2.5% in less than a week bring the pound to its highest level against the single currency in nearly 6 months. This drive towards the pound has created, in my opinion, some very strong buy opportunities for those looking to secure euros. To highlight how this move can impact anyone buying euros, the cost today for a €300k international money transfer would be £6.5k cheaper than this time last week.

What has caused the pound to rally?

As my colleague Alastair alluded to in his post yesterday the pound found support following an article released in the Sunday Times suggesting that a Brexit deal was close. This all sounds a little bit like the ‘boy who cried wolf’ at the moment with continued rumours creating significant shifts for the pound. Just last week an article was released by the Times late Wednesday night,  report from the Times newspaper suggesting that London had agreed negotiations with Brussels to give UK financial services firm continued access to the Euro Zone. This report was unsubstantiated and following a strong start on Thursday morning the pound devalued sharply.

My point here is that if this report is to be true, then we should see the pound gain momentum and push towards 1.20, however I have my doubts. We seem to have been down this road on numerous occasions and each time, when a deal looks likely, the deal did not come to fruition and as a result the gains made for the pound were short lived. You can see by the graph below that the pound has found support on 4 separate occasions since August, worryingly each time the pound has rallied exchange rates have sharply declined within a matter of days. I for one hope we are on the right track for Brexit buit I have my dowbts and I believe the GBP/EUR seesaw is set to continue.

 

What else could impact the pound this week?

Of ocurse the main drive for the pound will continue to be Brexit negotiations. Rumours were suggesting the cabinet were due to meet this week however that no longer seems to be the case, so whether the Sunday Times article is correct remains to be seen. Brexit aside the main focus for the pound this week will be Friday with data heavily weighted to the UK. Look out for UK GDP data along with industrial and manufacturing data, all scheduled for 09:30. For anyone looking at the US dollar then the Fed interest rate decision on Thursday is also one to look out for.

Do you need to send money overseas? Are you looking for the best exchange rate? We can offer you exceptional rates of exchange that are likely to be significantly better than your bank or existing broker can offer you. We can help private clients buying or selling property overseas, and business clients that import/export or need to make or receive payments in foreign currencies. For more information or to get a quote please get in touch.

 

 

 

Pound rises on Sunday Times report of Brexit Deal

The Pound has had a good start to the week, rising to €1.1430 against the Euro and remaining above $1.30 vs the US Dollar. The rise in the value of Sterling comes as the Sunday Times reported that the UK and EU were edging towards agreeing a deal. A key part of this were reports that as part of the withdrawal agreement, there would be a UK wide customs agreement. If this proves to be the case, then it removes the need for the Irish backstop, which has been a sticking point to moving negotiations forward. Theresa May holds a cabinet meeting on Tuesday, and there may have been enough progress for the EU to announce a special Summit.

There are also reports that the two sides are much closer to coming to an agreement than had been thought. If so, and if there is an EU announcement of a Brexit summit, then it would probably send the Pound higher still. As I mentioned last week, when an agreement is announced it will remove much of the uncertainty that has been keeping Sterling weak. It’s not a done deal yet however. There could still be some bumps in the road, due to the fact that any agreement would need to be voted through parliament. Given Theresa May’s perilous domestic political situation, this might prove difficult.

Brexit, then, remains the main driver for GBP exchange rates. Anything that signals a deal is close sends the Pound higher, as we have seen over the last week. Putting the UK’s withdrawal from the EU to one side for a moment, I’ve outlined below other things that could affect the Pound in the week ahead. If you want to know which way rates are moving and get the best exchange rates, get in touch with one of our expert currency brokers today.

This week’s economic data releases

Monday 5th November – We have already seen UK Services sector numbers this morning. These were worse than expected, and would normally have sent Sterling lower. Optimism over a BRexit deal however counteracted this and the Pound is up on the way. Today is rather quiet on the data front, with only some US PMI numbers the only release of note, at 2:45pm this afternoon.

Tuesday 6th November – A quite day for the UK with the only release some minor Retail Sales numbers. However Theresa May holds a cabinet meeting about Brexit, so any news here could affect Sterling. Other than that, GBP/EUR will therefore be driven by events from the Eurozone. We have various measures of inflation around 9am, and a better than expected reading could strengthen the Euros. Elsewhere, we have Unemployment figures from New Zealand that could affect GBP/NZD prices.

Wednesday 7th November – New Zealand has an interest rate decision today. It’s expected they will leave rates on hold at 1.75%, but any comments that are in the accompanying statement could move GBP/NZD prices.

Thursday 8th November – The EU Releases Economic growth forecasts today. We think that the EU economy will not fare will in the coming months. If the forecasts are lower than expected, it could weaken the Euro and help push up GBP/EUR prices. GBP/USD rates could also move today as we have the latest FED interest rate decision. No change is expected, but any hints of another rate hike in early 2019 could strengthen the USD.

Friday 9th November – After a very quiet week for UK data, today gives investors much more to chew on. At 09:30am we’ll see the latest GDP numbers, and the expected number is a monthly rise of +0.1%. A higher number would push the Pound higher, and vice versa. We will also see the latest Industrial and Manufacturing production numbers. A modest rise of 0.1% is expected. A higher than expected reading would push the Pound up.

Getting the best exchange rates

When converting a large sum of money from one currency to another, getting the best exchange rate is crucial. A fractional improvement in the rate you achieve could save you thousands of Pounds. We have been helping clients achieve exceptional rates of exchange since 2005, and typically our rates are 2% to 3% better than your bank or existing broker may offer. To discuss how we can help you and to get a quote, contact us today.

 

Pound rises on Brexit hopes and BoE signals

Sterling has rallied this week, hitting €1.14 against the Euro. This is within 1% of the best we’ve seen GBP/EUR in about 18 months, so a great opportunity for client that need to convert Pounds to Euros. The Pound is also up against other major currencies including the USD, AUD, NZD, CAD. In today’s post I’ll look at the reasons why the Pound has risen, and the ways in which you can take advantage of these gains.

Why has the Pound gone up?

There were 2 things yesterday that caused the rate to rise. The first of these was outlined in my colleague Michael’s post yesterday. There were some very positive signals regarding the Brexit negotiations, and it’s looking like maybe a deal can be agreed this month. It comes as the EU made concessions about UK financial Services. It’s often viewed that the UK needs the EU badly, whereas in many areas it’s the other way around.

The UK is a major economy with huge strengths, one of which is the city of London. The EU have finally realised this and made the necessary concessions to ensure that the £350 trillion Pounds that is traded in he city is protected – £41 trillion of this comes from the EU, and if they don’t agree a deal, they will lose out massively. Michel Barnier knows this and that’s why the EU have made concessions.

The other reason the Pound rose were comments from the Bank of England. Earlier this week I outlined the BoE meeting, and while rates were indeed left on hold as expected, the Monetary Policy Committee (MPC) signalled that if a Brexit deal is agreed, they could raise interest rates twice in 2019. The prospect of higher interest rates usually strengthens a currency due to the higher return on offer for investors. This was the case yesterday, and the Pound rose to €1.14 vs the Euro and it’s also back above $1.30 against the US Dollar.

Will the Pound rise further?

This is impossible to know. If a Brexit deal is agreed then there’s every reason to believe that Sterling will strengthen further. If however they kick the can down the road, then these gains are likely to evaporate. If you need to convert Pounds to Euros, then there are a few options you can consider. Simply hoping the rate will get better isn’t recommended.

Ways you can take advantage of this spike

Option 1 – Freeze the rate now with a Forward Contract. This guarantee’s the rate for up to 12 months, protecting you against any drop in the rate. This is a great tool when you need to budget, when purchasing property overseas for example. However if rates improve further, you cannot take advantage and you are stuck with the rate you have fixed.

Option 2 – Use a Stop Loss Order.This is where you instruct us to secure your rate if it drops below a pre-agreed level. e.g. for GBP/EUR you could place a Stop Loss order at 1.12. If the rate does plummet, then you have a worst case scenario and are protected against a sudden adverse movement in the rate. If rates continue to rise though, you can take advantage of the better rate, and even move your Stop Loss level up in line with the market. This is a great option when the rate is moving in your favour.

To discuss our services in more detail, get a quote, or even just have a chat about which way the market is moving, get in touch with us today.

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Pound gets a boost as hopes rise of a UK-EU financial service deal

Pound exchange rates received a welcome shot in the arm overnight following a report from the Times newspaper suggesting that London had agreed negotiations with Brussels to give UK financial services firm continued access to the Euro Zone. As a result sterling has pushed up over 1% against the US dollar to move through 1.29 and GBP/EUR to 1.1350.

As of yet this is just a rumour and nothing has been set in concrete. The Times article said that the deal was expected to be completed within the next three weeks. Prime Minister Theresa May’s senior advisor on Europe, Oliver Robbins, is continuing the negotiations in Brussels.

Will this rally last?

According to the newspapers report, this deal means that after Brexit, UK financial services companies will be able to operate within the EU as they do now. The issue is that there has not been an official confirmation of this report. We have been down this path on a number of occasions with rumours suggesting a number of aspects of the UK divorce bill have been agreed. On more than one occasion, when a rumour has been reported, the deal did not come to fruition and as a result the gains made for the pound were short lived. There is real hope that this report will be confirmed but of course there is a risk, once again, that a deal cannot be struck with businesses across the board already preparing for the worst.

Do you need to buy or sell currency at the best rates?

We can offer you exceptional rates of exchange that are likely to be significantly better than your bank or existing broker can offer you. We can help private clients buying or selling property overseas, and business clients that import/export or need to make or receive payments in foreign currencies.

Click here to make an enquiry and get a free quote

Pound rises slightly ahead of BoE Meeting

Bank of England

The Pound has bounced back against the Euro slightly today. However against the US Dollar, continued USD strength pushed the rate as low as $1.27 this morning, however it’s bounced back a little this afternoon.

Sterling had been trading around a 2/3 month low early, but as focus shifts to the Bank of England meeting tomorrow, the Pound has fared a little better.

How could Bank of England meeting affect Sterling?

There is little to no chance of the BoE raising interest rates tomorrow, and I think they will be left at their currency level of 0.75%. However what will be interesting is what they say about further monetary tightening and what hints they may give as to when interest rates may rise.

At 12pm midday tomorrow they will announce their decision on rates, the quarterly inflation report and we will also see the minutes of what they discussed in their meeting, along with a breakdown of how the 9 member committee voted on the rate decision.

Analysts expect all 9 members to have voted to hold rates. What will be of interest is the inflation report, because if inflation is forecast to continue to rise then it’s likely interest rates will go up to 1%. This could happen as soon as February next year, and if this is hinted at in tomorrow’s minutes, the Pound could climb.

The press conference will also be closely watched for any comments from Governor Mark Carney. If he is hawkish about the MPC tightening policy in 2019 than that would help the Pound rise. If however he hints that any rate rise could be delayed due to Brexit, then the Pound could fall.

If you would like to discuss your currency requirements with an expert, and get a free quote to see what rate of exchange we can offer, please contact us today.