Currency Forecasts

What could impact the currency markets this week?

Ahead of the first May bank holiday weekend the currency markets are relatively quiet with parliament recently just coming back from their Easter break we have seen little Brexit news to cause much of an impact on sterling exchange rates. Of course with the new Brexit deadline set for the 31st October we are expecting significant volatility in the coming months and the current lull may well be the calm before the storm.

For those with a more immediate requirement I have given an overview below of what data to look out for this week and how it could have n impact on GBP exchange rates.

Economic data that could impact exchange rates

Monday 29th April 2019 – today is very quiet day from the pound point of view so movements are set to be dictated by data from the US and Europe, although Bank of England Governor Mark Carney is due to speak this morning. In terms of European data this morning has seen the release of Consumer confidence and Industrial confidence figures – little in terms of a surprise from these releases so once again the markets are very stable this morning. This afternoon will be dominated by US data with the main data release being the Dallas Fed manufacturing business index. Not a hugely important data release so today is set to be quiet for both GBP/EUR and GBP/USD.

Tuesday 30th April 2019 – again very quiet for the pound, as it often is towards the end of the month. We have a busy day for Europe with a number of GDP and inflation releases for major economies including France, Spain, Germany and the Euro Zone as a whole. Also look out for the unemployment rate – set to stay at 7.8% so no Euro movement expected. This afternoon will see the release of Canadian GDP along with the accompanying speech from the Bank of Canada’s head Stephen Poloz – any discussion as to future monetary policy could see the Canadian Dollar see some movement this afternoon. Also look out for US consumer confidence data and the unemployment rate this evening from New Zealand.

Wednesday 1st May 2019 – much of Europe is closed for labour day so expect little movement for Euro exchange rates. Today is a little busier for the pound with mortgage approvals and Nationwide House prices. Today will be dominated by US data with the Fed interest rate decision and statement at 19:00 this evening. We are not expecting any movement for interest rates but the accompanying statement and future clues as to monetary policy can cause significant market movement for the US currency – certainly one to watch.

Thursday 2nd May 2019 – today is the busiest day for the pound with the Bank of England quarterly inflation report, interest rate meeting and Governor Mark Carney’s speech. As with the Fed decision last night nothing expected from the decision but movements for the pound will be dominated by any comments, whether negative or positive, from Mark Carney.

Friday 3rd May 2019 – to finish off the week we have Euro Zone inflation data this morning along with UK market services data. This afternoon will again be dominated by US data with the key US jobs release in the form of non-farm payrolls. This is a key barometer for the US economy and can cause some big market movement. The release is scheduled for 13:30.

If you want the best rates of exchange for your currency transfers, then get in touch with us to see how we can help. Our rates are extremely competitive, we are fully FCA authorised and have been helping clients move funds to buy and sell property abroad for 15 years.

Will Pound go up or down in 2019?

2019 has been a volatile year for the Pound, with price movements largely being driven by Brexit related events. So far this year we have seen GBP/EUR hit lows of €1.10, and highs of €1.1750 (the highest in 2 years). In real terms, this means the cost of purchasing a €350,000.00 property overseas has differed in cost by more than £20,000.00. This illustrates the importance of the foreign exchange markets when buying property abroad or making large transfers overseas. The below graph shows how GBP/EUR rates have fared so far this year:

Pound/Euro rates throughout 2019

In today’s post we’ll look at what has been causing the volatility, what could affect Sterling throughout 2019, and ways in which you can limit your exposure to ensure you don’t get caught out by sudden movements in the rate.

What has been causing volatility for the Pound?

By and large it has been political events driving Sterling. In January, it was uncertain whether the UK would leave the EU with a deal, and this kept significant downward pressure on the Pound, hitting 18-month lows of €1.10. As the year progressed, it looked increasingly likely that a deal would be agreed, and this helped drive up the value of Sterling by more than 5% in the space of just a few weeks. The final hurdle was Parliament voting the deal through, however it has been rejected by MPs multiple times. With no agreement in place, the UK edged closer and closer to crashing out of the EU without a deal, and GBP exchange rates dropped. With time running out, the EU agreed to a 6-month delay, giving time to solve the impasse.

This delay has removed any immediate risks of a no-deal Brexit that would have hit the pound hard. It also reduced the volatility the Pound had been experiencing, with GBP/EUR stabilised at around the €1.15 to €1.16 level. While extending Brexit has avoided no deal, it has also extended the uncertainty, and this will limit any further gains for Sterling. It’s likely that the Pound won’t move much while the markets await a breakthrough in Britain’s EU divorce process. Currently it doesn’t look like there is any progress being made in talks between the Labour opposition party and the ruling Conservatives to resolve the parliamentary deadlock.

Which way could rates move in the coming months?

There is much that could happen between now and October. A deal could be agreed and if the withdrawal agreement is passed, then we think the Pound will rise in value. However, while no deal is agreed Sterling will probably do very little. There are various other scenarios that could play out and have a significant impact on the British Currency, from a new ‘Brexiteer’ Prime Minister, a General Election, a new referendum, and leaving with No Deal, which remains the default option should an agreement not be forthcoming. Many of these options could very easily send the Pound back down to 2-year lows of €1.10 or below.

Avoiding adverse exchange rate movements

Currently, exchange rates are stable, and GBP/EUR rates are still very close to the best we have seen in 2 years. With this in mind, anyone purchasing property in the Eurozone or elsewhere in the coming months, should take steps to ensure that a sudden movement in the value of the Pound doesn’t increase the cost of your property unnecessarily.

A popular option is to freeze the rate using a Forward Contract. This is usually done when you have paid your deposit, and guarantees the price you will be paying in Pounds. A 10% deposit is required, and your rate is fixed for up to 2 years. Those less risk averse that want to take the chance of rates improving should Brexit be resolved, can use Stop Loss and Limit Orders. These instruct your broker to purchase your currency if it reaches a particular level, or starts to drop. This allows you to take advantage of any gains while not leaving yourself exposed to a sudden drop in the rate. These types of tools, along with exchange rates that are significantly better than your bank may offer, are why many people choose to take advantage of the services we can offer. On large transfers the saving usually run into thousands of Pounds.

To find out more about how we can help you save money on currency transfers, get in touch today.

Currency Forecasts for GBP, EUR, USD, AUD

Sterling (GBP) forecast

Trade has been very quiet over the last week, with little movement for GBP exchange rates. Parliament has also been on holiday, so the absence of any developments with Brexit talks have also left the Pound unappealing, causing exchange rates to remain relatively range-bound. Things are now likely to get busier as the week presses on. There are likely to be developments with Brexit talks in the next few weeks, and I think that the UK confirming a closer tie with the EU as part of the Brexit deal could help the Pound rise as we enter May. In terms of data, there is little on the calender for the week ahead, but in any case the currency markets see Brexit as more important, so until we get any clues as to the next steps, GBP/EUR is likely to remain in the mid €1.15’s.

Euro (EUR) forecast

GBP/EUR rates have also been kept bouyed by weakness in the single currency. The outlook for the Eurozone economy is not very good at the moment, and investors are not keen on buying the single currency while these fears remain. There are fears that the European Central bank may need to continue stimulating the Eurozone economy, helping to keep the Euro weak. If it were not for this Euro weakness, GBP/EUR rates would likely be lower than they currently are. As with the GBP outlook above however, any significant moves for Pound/Euro will likely be driven by what happens with Brexit over the coming weeks.

US Dollar (USD) forecast

In contrast to the weak Euro, the US Dollar has strengthened of late. This is evident what you see that the GBP/USD rate has fallen from $1.32 to $1.29 over the course of the last 4 weeks. The main reason for the stronger (and therefore more expensive) USD is due to it’s safe haven status. Events over the weekend in Sri Lanka have caused investors to seek relative safe currencies like the USD. Trade war fears have also helped to keep the USD stronger than it would otherwise be. If we see a Brexit deal agreed in the coming weeks, then it’s likely GBP/USD will recover above it’s recent highs of $1.32..

Australian Dollar (AUD) forecast

As my colleague Michael recently pointed out, GBP/AUD rates have fallen recently. Despite the Aussie weakening on expectations that Austrlian could cut interest rates again, it has not helped the GBP/AUD pair recover. The reason for this is, youv’e guessed it, Brexit. It’s the driving force for GBP exchange rates at the moment, and is likely to remain so until we see a deal agreed.

Looking for the best exchange rates?

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Easing global growth fears help to boost the Australian Dollar: GBP/AUD

Australian Flag

Easing fears fro global growth and a better outlook for US and China trade negotiations has helped the Australian Dollar post some strong gains in the past few weeks.

In the last calendar month the GBP/AUD exchange rate has fallen from 1.8750 to 1.8290, a gain of 2.5% for the Australian Dollar. Will this run continue?

As UK parliament is on recess for the Easter break there will be no discussions regarding Brexit meaning the pound will be vulnerable to data sets and market movements elsewhere. Of course longer term, the pounds direction will be dictated by on-going Brexit negotiations but it is important for those that have international money transfers to keep a close eye on data from around the world and the impact this will have in the respective currency you are dealing with.

Will the AUD continue to rally?

Along with improved global sentiment and improving figures from China, Australia’s largest net importer of raw materials, sentiment from the Reserve Bank of Australia also seems to be changing.

Earlier in the year, and one of the reasons the AUD devalued so much in March, was due to a dovish tone from the Reserve Bank of Australia (RBA) suggesting the next move could see interest rates fall – something that historically has a negative impact on the value of a currency.

This sentiment seems to have changed and they dispelled rumours that the next move would be a cut, reversing the impact on the value of the Australian Dollar. As a result I would not be surprised to see GBP/AUD exchange rates trend towards 1.80.

Do you need to buy AUD? Can we help?

Currency Forecasts is a blog that’s regularly updated with information on what’s happening with the currency markets. Our aim is to help those looking for the best exchange rates stay up to date with market movements, and to help our clients make an informed decision on when to fix a rate of exchange.

The authors and contributors to this site work for one of the UK’s leading foreign exchange brokerages, and have been helping private and business clients achieve exceptional rates of exchange for over 15 years. We’re fully authorised by the Financial Conduct Authority and have an annual turnover in excess of £7bn. We offer rates for over 44 major international currencies.W

If you want the best rates of exchange for your currency transfers, then get in touch with us to see how we can help. Our rates are extremely competitive, we are fully FCA authorised and have been helping clients move funds to buy and sell property abroad for 15 years.

What could affect GBP exchange rates this week?

Good morning. Markets are quiet this week. Lots of people are off for Easter, the Brexit can has been kicked down the road again, and parliament are also on their Easter Break. There are still on-going talks between Labour and the Conservative Party, and if there are any developments that look like they could come to an agreement, the Pound could go up in value.

In the absence of any Brexit related developments however, markets do have other events in the coming week to focus on. There are various economic data releases this week that will show us how the British economy is faring despite the uncertainty about leaving the EU. Below, I have outlined the main releases and how they could affect GBP exchange rates. If you need to make a transfer and would like to speak to an expert about which way rates are going, contact us today.

Economic data releases that could affect exchange rates

Monday 15th April 2019 – There is little on the calendar today to move the currency markets. There’s a survey from the Bank of Canada that could affect GBP/CAD rates. Elsewhere the only other item of interest is a speech by one of the Bank of England members that could affect the Pound.

Tuesday 16th April 2019 – A busier day for UK data, with the latest Unemployment and Wage data. This has been impressive of late, with UK unemployment at record lows. We expect levels to remain at 3.9% but if they are lower, the Pound could go up. Wage growth is expected at 3.4%, so again if the actual number differs Sterling could move. Elsewhere we have Economic Sentiment data from Germany and the EU, and Inflation numbers from New Zealand that could move the GBP/NZD pair.

Wednesday 17th April 2019 – The Pound could also move today as we have a raft of inflation numbers from across the world including the UK, Eurozone and Canada. Inflation figures affect interest rate movements, which in turn affect the value of the currency concerned as higher rates equal a higher return for investors. If inflation numbers are above forecast, it often causes the currency concerned to rise in value. The UK release is at 09:30am so we could see some volatility around this time.

Thursday 18th April 2019 – The only UK data of note today are the latest Retail Sales numbers. These are a good barometer of the economy as a whole, and so often moves GBP exchange rates. We expect a slight monthly drop of -0.2%. Elsewhere we have Australian jobs numbers that could move GBPAUD. Across the pond, the USA has some lunchtime data including Retail Sales and Jobless numbers.

Friday 19th April – It’s a long weekend in the UK for the Easter Break, so expect a very quiet currency market. The USA has some minor Housing data but it’s likely to have much of an impact on exchange rates.

If you want the best rates of exchange for your currency transfers, then get in touch with us to see how we can help. Our rates are extremely competitive, we are fully FCA authorised and have been helping clients move funds to buy and sell property abroad for 15 years.