Currency Forecasts

Barnier to reject May’s Brexit plan?

The Pound is down significantly against the US Dollar this morning, dropping to $1.28. Against the Euro it is more steady at around the €1.11 mark.

The main reason for GBP/USD dropping is the fact the US Dollar is gaining strength and becoming more expensive to purchase. Emerging markets are facing a crisis at the moment, and that’s helping to strengthen ‘safe haven’ currencies like the US Dollar.

Are the EU about to reject Theresa May’s latest Brexit Plan?

Back to the Pound. Sterling is actually steady despite more disappointing data this morning in the form of lower than expected Manufacturing numbers. Investors are shrugging off economic data releases, instead waiting with baited breath for more news about how Brexit negotiations are going. There are rumours that the EU chief negotiator Michel Barnier is going to reject Theresa May’s latest proposals that were discussed at chequers.

If he does, what effect would this have on Sterling exchange rates?

If he does, it’s likely to weaken the Pound further. Parliament returns from its summer break, and the next month is going to be an important one for May. She’s facing challenges from within her own party as well as elsewhere. There is also the Conservative Party conference at the end of the month, which could give indications of how much support she has. If there were rumours of a leadership change, then this would create even more uncertainty, which in turn would likely to push the Pound lower. There’s could be trouble ahead for May, and anything that increases the uncertainty will also increase pressure on the Pound.

What else is moving exchange rates?

Elsewhere, we have an Inflation Report for the UK at 1.15pm that could affect future interest rate movements. Mark Carney will be speaking, and when he does it’s usually the case that the Pound falls.

Europe has some inflation numbers tomorrow along with a speech by one of the ECB members. Friday sees EU GDP numbers that could affect the value of the Euro.

But as our regular readers will be aware, any announcements about Brexit remain the main driver for GBP/EUR rates for the rest of this week, with significant downside risks present for Sterling.

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Pound falls as Brexit negotiations stall

The Pound has started the week poorly, falling this morning after worse than expected manufacturing data. Sterling has fallen by almost 1 cent against the US Dollar to the mid $1.28’s, and against the Euro it has fallen 0.6% against the Euro, falling back into the €1.10’s.

Even without this morning’s manufacturing numbers, it was probable that the Pound would fall. Last week we saw some renewed optimism surrounding Brexit negotiations, when EU negotiator Michel Barnier said that the UK would be offered an unprecedented deal “such as there has never been with any other third country”. These comments sent the Pound higher last week.

However over the weekend, Barnier stated once again that there could be no cherry picking, indicating that perhaps no progress has been made after all. I can’t see any real negotiating coming from the EU and I fear that this unwillingness to make concessions could mean the UK leaving with no deal, and this would not be favourable for the Pound.

Will the Pound go up or down this month?

The next month or two will be very important for which direction the Pound takes next. Personally I’m expecting a very volatile time, with some significant movement for Sterling. Even if the EU accepted the current proposals, I can’t see how it would be voted through the commons. May has taken a position in the middle of the road, which is a very dangerous place to be, as you can be hit from traffic in both directions. Boris is also trying to position himself, and while the Conservatives are bickering between themselves, the clock is ticking every closer to a ‘No Deal’ scenario.

If Barnier flatly rejects May’s latest ‘chequers plan’, then the Pound will drop sharply. The issue is that they keep rejecting our proposals, without coming up with any alternatives, instead stating that the UK chose to leave, so the UK has to come up with a plan. This has been going on for months and months, and time is running out quickly.  And this is happening against the UK political backdrop – parliament is returning after the summer break, and MP’s seem intent on arguing amongst themselves rather than getting together to get the best deal and act in the best interests of the British people.

Quite simply, if the markets think that a deal will be made, it’s likely the Pound will go up. Anything that indicates that a deal is unlikely, will send the Pound down.

If you need to convert currency in the next 3 months, they you are firmly in the cross-hairs of what is likely to be a very volatile period in the currency markets. If you would like to discuss your options with an expert, or to simply get a quote to see our rates, click here or email me at alastair@currencyforecasts.co.uk

Best GBP/ZAR rates

Sterling has rallied just shy of 10% throughout the course of August to push GBP/ZAR to its highest level since September 2016. The pounds rally started following President Trumps sanctions placed on Turkey – as I wrote about earlier this month. Following these sanctions the Turkish Lira devalued by more than 30% in a day causing some significant market jitters amongst investors, hedge funds and other financial institutions.

From the graph below you can see how much the pound has rallied this year. As you can see the major move was seen in early August. The reason for the move was due to significant selling for ‘higher risk’ currencies, such as the ZAR, AUD and NZD. Historically the ZAR is the most volatile currency in the market due to the high yield it offers. For this reason it can be susceptible to significant market movement, particularity during times of economic uncertainty. This current trend may not hang around for long so anyone buying ZAR may wish to look at their position sooner rather than later.

Do you need to send money overseas?

Do you need to transfer money internationally? Do you need help getting the best rate? If so then we can help.

If you would like to discuss our services you can email me michael@currencyforecasts.co.uk to get a quote. Alternatively you can make a free enquiry today by clicking here. Our rates are up to 5% better than your bank could offer. We’ve never had a problem beating rates from other currency specialists.

 

Sterling gains 1% against EUR and USD

We have seen the Pound recover nicely today, rising by more than 1% against the Euro and US Dollar. Yesterday the Pound had a very poor start to the week, with GBPEUR dropping below €1.10.

What has caused the Pound to rise today?

It won’t come as a surprise that it’s Brexit that has caused today’s gain, much as it was the reason for yesterday’s fall. On Tuesday the markets didn’t like comments from Theresa May about leaving with no deal. Investors duly sold the Pound, causing it to weaken significantly. Today the tide has turned however, and we’ve heard rumours that the EU are finally willing to make some concessions. The EU’s chief negotiator is said to have made comments saying that a unique partnership will be formed.

I’ve also read that other high-ranking EU officials have said that an ambitious and close relationship between the UK and EU can be achieved. It’s nice to hear some positivity surrounding Brexit, and the markets have certainly seemed to like it. The Pound has risen by just over 1% against the Euro and US Dollar.

What this shows, is how susceptible Sterling exchange rates are to any small developments with regards to our departure from the EU. As today has shown, and positive news sends the Pound higher. Any news that indicates the UK may leave with no deal, sends the Pound lower. Expect more of the same in the coming weeks as negotiations progress.

If you want to have a chat about exchange rates, and get a quote to see what rate we can offer you, click here.

GBP/EUR falls through 1.10

GBP/EUR has fallen through the 1.10 level for the first time since September 2017 and brings the recent falls for sterling to nearly 2.5% in the month of August.

Although sterling has been on the back foot in recent weeks much of the movements seem to be EUR based as we have seen EUR/USD push back through the 1.17 level this afternoon and the pound has posted gains against the US dollar throughout the course of the day.

What is in store for the pound?

This recent trend for sterling against the euro is worrying. It is the first time the pound has fallen through the 1.10 level in nearly a year. This 1.10 level is somewhat of psychological barrier and if the pound remains consistently below 1.10 for the next few days, then a further move downwards could easily happen. Theresa May has attempted to cool the market regarding Brexit, suggesting a ‘no deal’ could be better than a ‘bad deal’ – but how did the market interpret these comments? In one word ‘poorly’. Either of these scenarios will not be good for the pound and, in my view, there is a real possibility further moves towards parity as Brexit problems rumble on.

What data is important this week?

This week is relatively quiet from the pounds point of view. with the majority of the key data coming form the Euro Zone and US. Should you have an interest in these respective currencies then Wednesday is the key day for the US dollar with the release of the US Gross Domestic Product (GDP) data. A slight fall is expected which could cause USD weakness at 13:30. For those looking at the euro then Thursday and Friday may see the greatest movement. On Thursday look out for Euro Zone industrial and consumer confidence data at 10:00 followed on Friday with the unemployment rate and inflation data, both at 10.

Do you need to send money overseas?

Do you need to transfer money internationally? Do you need help getting the best rate? If so then we can help.

If you would like to discuss our services you can email me michael@currencyforecasts.co.uk to get a quote. Alternatively you can make a free enquiry today by clicking here. Our rates are up to 5% better than your bank could offer. We’ve never had a problem beating rates from other currency specialists.