Currency Forecasts

GBP/USD: Will the Fed cut interest rates?

Pound Vs US Dollar

GBP/USD exchange rates have reached a near two year low today sliding to 1.26 bringing the pounds slide to over 4.5% since the beginning of May. Will this trend continue?

Today’s US retail sales figures were poor coming in at 0.5% against a forecast of 0.6% and with a run of recent poor jobless data from the US pressure is rising on the Federal Reserve to cut interest rates at their meeting scheduled for the 19th June. I wouldn’t expect them to act at Wednesdays meeting but the resulting press conference may well hint at a future cut and therefore the GBP/USD exchange rate could be volatile come next week.

Is the Pound vulnerable?

It is widely expected that the Fed will cut interest rates in the coming months and therefore this should be heavily priced into the market. This therefore shows how vulnerable the pound is in my view. We are currently trading close to a two year low against the US dollar – yes we may see some dollar weakness next week but longer term the pound is vulnerable. The current political uncertainty and fight for number 10 is the likely drive for this.

Boris Johnson, an ardent supporter of Brexit is favourite to be the new Prime Minister and this is where the pound could come under further pressure. With Boris at the helm there is a real chance we could leave the EU with no deal come the 31st October. This will keep the pound firmly on its toes.

Avoiding adverse exchange rate movements

Current sterling exchange rates are precariously placed and vulnerable to some significant downside losses, particularly if we leave the European Union without a deal. 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.

EUR/GBP reaches a five month high. Euro forecast.

EUR/GBP exchange rates have reached their highest levels against the pound since January having moved over 5% in the last 6 weeks. This has created some great selling opportunities with those looking to exchange euros to sterling.

Why is the Pound so weak?

To buck the recent trend and run of good data from the UK, this week started poorly with some concerning industrial and manufacturing production figures. Both came out significantly lower than forecast posting -2.7% and -3.9% against expected levels of 0.1% and 0.2%. Is this the sign of things to come? Maybe not but it certainly was a worrying release and it has been one of the main reasons as to why the pound has devalued of late.

What can we expect for the pound in the short term?

For me the pound is in an extremely vulnerable position. With the prospect of a ardent Brexiteer getting into Number 10 we have a real possibility of leaving the European Union with a ‘no deal’. And it is this that will continue to weigh on the pound. For this reason anyone hoping for the pound to recover in the coming days and weeks could find them self disappointed. I therefore expect EUR/GBP rates to continue to strengthen.

Looking for the best exchange rates?

If you need to send funds overseas, to buy or sell property or importing/exporting goods, then it’s likely we can save you money. We offer exceptional rates of exchange that could save you thousands when converting a large sum. Follow the link below to make an enquiry and get a free quote.

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GBP/EUR falls to €1.12 as economy slows

The Pound has started this week on the backfoot, falling further against the Euro and US Dollar, continuing it’s downward spiral that started in May. In just 6 weeks the Pound/Euro rate has fallen from €1.1750 to €1.12, and has the potential to fall further this week.

GBP/EUR falls: Poor economic data hurts the Pound

Today we had some key UK economic data that painted a gloomy picture of how the economy is performing. The latest GDP number was -3.9% against an expected +0.1%. Industrial and Manufacturing production numbers also came in significantly below forecast, indicating that the cloud of uncertainty surrounding the UK is starting to affect the economy.

It had been the case until recently, that despite the uncertainty caused by Brexit and politics, the economy was resilient and robust. Indeed, jobs numbers are very good and production levels were also holding up. That no longer seems to be the case. With Brexit being delayed, it has simply increased the uncertainty over what is happening in the UK, and that is started to affect the economy and the Pound is falling as a result.

What other data is due out this week?

Today showed that factory output is at it’s lowest since 2002. Tomorrow (Tuesday) we’ll see the latest jobs market data, including average earnings and unemployment numbers. These are at record lows, but if the result is worse than expected, then it will be a further sign that Brexit fatigue is starting to take hold. It would also send the Pound lower against the Euro and other currencies.

In addition to the jobs numbers, the UK Conservative leadership contest will heat up this week. It’s only going to create more uncertainty and it’s unlikely that the Pound will rise on political news in the coming weeks. So all in all the outlook for Sterling is rather poor.

Do you need to convert Pounds to Euros?

Given the rate seems to be in freefall, those that need to exchange Sterling to Euros or any other currency, should take action to ensure you’re not caught out by the rate continuing to fall. We offer exchange rates that are usually much better than banks or other brokers can offer. You can also take advantage of tools like Forward Contracts, and free rate alerts if you are targetting a particular rate of exchange.

The first step is to contact us to have a quick chat on the phone with one of our currency experts, to discuss the options and get a free quote.

June Currency Forecast GBP, EUR, USD, AUD, CAD

June Currency Forecast: Good afternoon. In today’s post I’ll take a look at how some of the major currencies performed over the last month, and what June could have in store. We have seen rising political uncertainty in the UK which has caused the Pound fall sharply throughout May, while reignited US-China trade tensions have seen investors flock to the safe-haven US Dollar. I’ll take a detailed look below at Sterling (GBP), Euro (EUR), US Dollar (USD), Australian Dollar (AUD) and the Canadian Dollar (CAD).

Pound Sterling Forecast (GBP)

The Pound suffered its worst monthly slide in over two years in May, as political turmoil in the UK weighed heavily on Sterling sentiment. This was mostly due to division within the UK’s two main political parties, particularly in the Conservatives where there were growing calls for Theresa May to step down as PM. Eventually, and in the face of overwhelming pressure, May announced her resignation on 24 May.

While this provided a brief boost for the Pound as it ended weeks of speculation over her future as PM it failed to last, with Sterling striking a four-month low in the final week of May on fears that a hardline Brexiteer will become the next PM and increase the risk of a no-deal Brexit.

Looking ahead, this political uncertainty is likely to continue to shape the Pound throughout June as the Tory leadership contest officially begins. GBP investors are also likely to pay close attention to the Bank of England’s upcoming rate decision as they look to see if signs that global growth will result in a more dovish outlook from the bank this month.

Euro Forecast (EUR)

Trade in the Euro was mixed last month, with the single currency facing pressure from some weak data and political uncertainty in the Eurozone, but was still able to hold its own due to the weakness of some of its peers.

In terms of data, the Euro was punished by the continued slump in Eurozone PMI readings as well as some weak industrial data out of Germany. This painted a fairly negative picture of growth in the Eurozone, something which was not helped by the European Central Bank warning of increased downside risks to the bloc due to deteriorating global trade conditions.

On the political front EUR investors were concerned by a surge of support for Eurosceptic parties in the European parliamentary elections, and concerns this could hinder further Eurozone integration. In the month to come, the focus will likely remain on any data coming from the Eurozone as economists forecast a sustained slowdown in the bloc could cause the ECB to push the boat out even further on its next rate hike.

US Dollar Forecast (USD)

The US Dollar enjoyed considerable support throughout May as demand for the safe-haven currency surged following a sudden reigniting of US-China trade tensions.

USD exchange rates touched new recent highs last month after the US hiked tariffs on $200bn worth of Chinese goods to 25% and effectively banned Chinese telecoms giant Huawei from dealing with US companies. On top of this the appeal of the ‘Greenback’ was bolstered by some solid US economic data as US payrolls and inflation both impressed at the start of the second quarter.

So far in June the US Dollar has seen its fortunes begin to reverse on growing speculation that the Federal Reserve may cut interest rates later this year – something that will likely put a lot of focus on the Fed’s policy decision later in the month.

Australian Dollar Forecast (AUD)

The Australian Dollar was hit by volatility last month, mostly as a consequence of the risk-sensitive currency being slammed by renewed global trade tensions. Propelling the currency lower through mid-May was a run of weak domestic data, which analysts speculated would make a rate cut from the Reserve Bank of Australia in June almost inevitable.

However AUD exchange rates were able to spring back from multi-month lows towards the end of the month, part in thanks to surging iron ore, as prices for Australia’s single largest export struck a five-year high.

Despite the RBA kicking off June by cutting interest rates to a new historic low, the Australian Dollar has shown remarkable resilience so far this month. But as the US opens a new trade dispute with Mexico we could we see a slump in risk appetite undermine AUD exchange rates once again.

Canadian Dollar Forecast (CAD)

The Canadian Dollar traded in a relatively narrow range last month, with the currency struggling to find momentum in the face of rising trade uncertainty. However, at the same time the ’Loonie’ was prevented from giving up any ground thanks to a particularly strong employment report despite slumping oil prices.

Looking ahead, the Canadian Dollar is likely to face some notable headwinds this month as a consequence oil prices slipping further as well as fears that the US trade tariffs on Mexico could also hurt Canada, seeing as the three countries participation in the USMCA trade pact together.

Looking for the best exchange rates?

If you need to send funds overseas, to buy or sell property or importing/exporting goods, then it’s likely we can save you money. We offer exceptional rates of exchange that could save you thousands when converting a large sum. Follow the link below to make an enquiry and get a free quote.

Click here to get a quote today.

RBA cuts interest rates. GBP/AUD forecast

Australian Flag

The Australian Dollar has weakened fractionally against the pound as the Reserve Bank of Australia (RBA) has cut the base interest rate to 1.25%, the lowest recorded level. It was a widely expected move and heavily priced in to the market – hence the reason the Australian Dollar hasn’t weakened more significantly.

What can we expect for the Australian Dollar?

This move by the central bank was expected, with some analysts expecting a stronger cut it suggests there could be further future moves from the RBA. This move was an attempt to get the ailing Australian economy moving, with house prices falling and unemployment levels rising the threat of a first recession since the 1990s is becoming more real.

Historically the RBA have always held their cards very close to their chest and have not been ones to act hastily, therefore I would expect this move to be the last for some while. In my view they are now likely to adopt a ‘wait and see’ approach.

It is also quite telling that he AUD hasn’t weakened further, again showing how vulnerable the pound is in the current climate. Of course Brexit will dominate the pounds movements against most majors for the foreseeable, and therefore anyone expecting to see the AUD weaken in the short/medium term may well be disappointed and I would look for the GBP/AUD levels to fall below 1.80.

Worried about exchange rates falling?

If you need to make a large international transfer, to purchase property overseas or emigrating to pastures new, then get in touch for a free consultation with one of our expert currency brokers. We can discuss your requirements, explain the options available, and provide you with a quote so you can compare our exchange rates with your bank or existing broker.

Typically our rates can be up to 2% to 3% better than available elsewhere, potentially saving you thousands of Pounds.