Currency Forecasts

Pound/Euro exchange rate falls below 1.15

Pound/Euro exchange rates have fallen below 1.15 today following news that Prime Minister Theresa May will be outlining her next steps for Brexit and taking her new plans to the vote in June. The vote – which will take place when MPs return from half-term recess – would bring the withdrawal agreement into UK law via the Withdrawal Agreement Bill.

In response to this news Labour party members were quick to state that they would vote against the the new plans as cross party tensions remain. As a result sterling exchange rates have fallen to their lowest levels against the single currency since February and fallen to nearly 1.28 against the US dollar. This all comes following news that UK unemployment had fallen to its lowest level in 45 years, just showing Brexit will dominate movement for the pound and highlighting how vulnerable the pound is.

How do you get the best exchange rate?

The first port of call for many clients that need to exchange currency is to approach their bank. Clients will often lose out by doing this, as bank rates are usually quite poor. By using the service of a specialist currency broker, you can often save in excess of 2 to 3%. When converting a large sum, this can save you thousands. When choosing a broker, ensure you are working with one that is fully authorised by the FCA. Registration usually takes a few minutes by completing a short online application. When the account is activated, you are then in a position to get a quote

I would recommend registering with two companies in order to guarantee you are getting the best price. There is very little point in registering with 4-5 companies, as by the time you call round and decide the best price, you may actually be in worse position than when you started as the market has moved! Many brokers will simply quote you the ‘mid-market’ rate, so make sure you are quoted an actual trading price. It might even be worth seeing if they can guarantee you a ‘fixed spread’. This way you will always know at what margin you will trade.

There are many benefits of using a broker other than just the exchange rate. By using a specialist currency broker, you gain access to multiple contract types. This can help safeguard your money transfer from adverse market movement. You will also find the process to be efficient and far less time-consuming than the banks.

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Will Sterling go up or down this week?

Good morning. In today’s post we’ll have a look to the week ahead and see what economic data releases are due that could affect GBP exchange rates. GBP/EUR has been rather flat of late, while the markets await any news that could break the Brexit deadlock. It could be that cross party talks collapse this week, and that would probably weaken the Pound. Read on to see what else is happening in the coming week that could move the markets. If you need to make an international transfer, then contact us today to discuss how we can help you achieve the best exchange rates.

This week’s economic data releases

Monday 13th May 2019 – There is nothing of note on the calendar today from either the UK or EU, so we expect GBP/EUR to remain flat in the absence of any Brexit news. This afternoon we have some speeches by members of the US and Canadian central banks that could influence GBP/USD and GBP/CAD respectively.

Tuesday 14th May 2019 – Today could affect Sterling, as we will see the latest jobs data from the UK including Average Earnings, the Unemployment rate, and the Claimant count change. UK unemployment is the lowest in decades and wages are growing faster than inflation. If this continues it could help the Pound. Elsewhere, GBP/EUR could also be affected by EU wide measures of Industrial Production and an Economic Sentiment Survey.

Wednesday 15th May – There’s nothing for Britain today, but GBP/EUR could still move on numbers from the Eurozone. Gross Domestic Product (GDP) figrues are release for Germany and the Eurozone as a whole. We expect quarterly growth of 0.3%/0.4%. If higher, the Euro would strengthen and pull GBP/EUR lower. Elsewhere, for those watching GBP/USD and GBP/CAD, we have US Retail Sales, and Inflation numbers from Canada .

Thursday 16th May – It’s quiet again in the UK so focus for GBP/EUR will be on speeches by various members of the European Central Bank (ECB). Any dovish comments would weaken the Euro, while any hawkish signals that stimulus could be scales back would strengthen the Euro and bring the GBP/EUR rate down. We’ll also see a speech by a Bank of England (BoE) member. GBP/AUD could also be affected by the latest Australian jobs figures.

Friday 17th May – We end the week with a raft of inflationary measures from the Eurozone, which could impact future interest rate movements. Other than that it’s quite quiet on the data front.

If you need the best exchange rates to make international transfers, then get in touch today for a free quote to see how much you could save by using our currency services.

GBP/AUD exchange rates heading back toward 1.90

Australian Flag

GBP/AUD exchange rates have rallied back against the Australian Dollar in the last few days pushing back to 1.87 and seemingly heading towards 1.90. This move comes ahead of the Reserve Bank of Australia monetary policy statement overnight which will give clues as to the future direction of interest rates for the Australian economy.

Sentiment from the central bank has been quite dovish this year which has kept the Australian Dollar in check and although they have kept interest rate son hold at the latest meeting, it is expected the latest statement will again hint that the next move will be a negative one in order to try and stimulate the Australian economy.

The reasons the Reserve Bank might cut rates are fairly obvious – stagnant household incomes, weak retail trade spending, weak wages growth, low inflation growth, a weak economy overall. This has been the case for a little while now but the RBA has decided not to act. However it appears this tactic has not been having the desired impact and hence whey many analysts expect a rate cut is just around the corner.

Will the AUD weaken further?

In my view yes. We may actually see a further decline overnight if the monetary statement supports the view that the next move will be a cut.

Often central banks will keep their cards very close to their chests, and again this may be the case with the RBA. However it seems clear that their current policies are not having he desired impact with a slowing Australian economy. I would look for a dovish tone from the RBA statement and hence would expect further short term losses for the Australian Dollar. Look for GBP/AUD exchange rates to move towards 1.90

Need to buy AUD at the best exchange rates?

Even if you don’t need to make your transfer right now, we offer the option to freeze the current rate for a future date by lodging a 10% deposit. If you would like to have a chat about how we can help you with your currency requirements, contact us today.

What could impact the currency markets this week?

Good afternoon and I hope you all had an enjoyable bank holiday break. Following last weeks late surge for the pound I will explore what could impact the pound and other select major currencies (USD, AUD, NZD) in the coming week.

In the absence of any major key Brexit news, something that will dominate the pounds movements over the short to medium term, Theresa May is set to meet the chairman of an influential committee of backbench Tory MPs, Sir Graham Brady, amid calls for her to set a firm resignation date. This comes following a very poor show for the Conservative Part during last weeks local elections. This meeting, which No 10 insists is routine, will heap more pressure on the PM, with local Tory associations confirming they will hold a vote of confidence in her leadership on 15 June.

Brexit and political uncertainty aside below I have outlined the key data this week that could impact the currency markets.

Economic data releases that could affect exchange rates

Tuesday 7th May – today has been very quiet from the pound point of view but this afternoon there will be a speech from the Bank of England member Andrew Haldane. There will also be a series of speeches in the US from key Fed members including Randal Quarles. Nothing expected from these but one to keep an eye on.

Wednesday 8th May – those looking at the NZD may have an early start as overnight will see the release of the latest Reserve Bank of New Zealand (RBNZ) and accompanying monetary statement. Rates expected to remain on hold but the statement will be closely scrutinised for clues as to the future direction of interest rates. For those looking at the Euro there will be a speech from ECB President Mario Draghi at 12:30

Thursday 9th May – this morning look out for the NIESR GDP estimate, this is often very close to the actual release and can cause movements for the pound. This afternoon will see jobless data in the US at 13:30 followed by a speech from Fed Chair Jerome Powell.

Friday 10th May – this morning will see the release of the Reserve Bank of Australia (RBA) monetary policy statement. Look out for clues as to he future direction for interest rates. Sentiment from the RBA has been changing quite frequently and again the statement could influence the short term movement for the Australian Dollar.

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.

Pound/Euro breaks above €1.17

Bank of England

Sterling has had a relatively decent end to the week, breaking the €1.17 barrier vs the Euro, and comfortable above $1.31 vs the US Dollar. The main reason for the gains is a slightly more Bullish Bank of England coupled with slightly better than expected data. Gains are likely to be limited however while Brexit uncertainty remains.

Bank of England helps boost Sterling

This week’s Bank of England (BoE) meeting had a more hawkish tone, and this helped the Pound strengthen a little. While interest rates were again left on hold for the 8th month in a row, as expected, comments made by the Governor Mark Carney helped Sterling. He stated that interest rate increases will happen faster than the markets currently expect, and that they will rise more in the next few years if the economy grows as expected and inflation reaches target levels. The prospect of higher interest rates generally strengthens a currency as it means a higher return for investors. However, few expect any moves before Brexit is sorted out, so gains were a little muted.

The BoE also raised its growth forecasts for the UK to 1.5%, as the global economy starts to show signs of stabilising. They also said that unemployment could fall further from its current record lows.

Further gains unlikely while Brexit remains unsolved

The upbeat tone from the BoE is positive for the UK economy and has helped the Pound. However we feel that there aren’t likely to be any significant gains for the Pound until there is more clarity over the UK’s exit from the European Union. The current GBP/EUR levels however are only just below the best we’ve seen in 2 years. For this reason, any clients that need to buy Euros may wish to consider fixing a rate while these levels are available. If a Brexit deal is agreed then we may see exchange rates rise further, however this may not happen for several months.

Need to buy Euros are the best exchange rates?

Even if you don’t need to make your transfer right now, we offer the option to freeze the current rate for a future date by lodging a 10% deposit. If you would like to have a chat about how we can help you with your currency requirements, contact us today.