Tuesday, 17 October 2017

Pound falls after Mark Carney speaks

Despite inflation hitting 3% as outlined in my earlier post, Mark Carney was a little dovish in his comments to the treasury select committee earlier. While he did say that the case was probably there for a rate hike in the coming months, the Pound has moved lower following his words. It's often the case that when Mark Carney speaks the Pound falls, and this is what has happened again. I think that markets had priced in a rate hike for November, but it's now looking more likely that a move up in rates won't come until December. He re-iterated the usual case about sluggish wage growth.

So with little prospect of interest rates going up next month, coupled with a deadlock in Brexit negotiations, if nothing changes on these 2 fronts then it's likely the Pound will continue to fall against other currencies. Today, GBP/EUR has dropped from €1.1300 to €1.1225. Those who need to buy Euros in the next 3 months should not be too disappointed however, as just last month the pair was in the €1.07's.

If you would like to protect yourself against the rate dropping any further, then you can freeze the current rate using a 'Forward Contract' by lodging 10% of the total you want to convert. This guarantees the current rate and allows you to budget, while protecting you against any adverse movement in the rate of exchange. Click here to find out more or get a quote.

Inflation at 3%; Mark Carney to hint at interest rate rise?

Inflation at 3% as expected

A few minutes ago the UK released it's latest inflation numbers, and the key Consumer Price Index (CPI) number came in at bang on forecast at 3%.

Some other measure were slightly lower than expected, however as the main release matched what the markets were expecting, it has had little effect on Sterling.

Inflation is now running at the highest level in more than 5 years, so it does make it more likely that that BoE will have to raise interest rates sooner or later in order to curb this rising inflation.

Mark Carney to hint at interet rate rise?

Later on today the Bank of England governor Mark Carney gives a speech to the treasury select committee. If he makes any comments that hint at an interest rate rise, then expect the Pound to rise against other currencies.

Brexit Negotations ready to move forwards to next stage?

Elsewhere, last night Theresa May had a working dinner with Jean-Claude Juncker and EU negotiator Michel Barnier, along with Brexit Secretary David Davis. There were no revelations other than all parties stating that talks were constructive and friendly. A key word that was used however was that talks must 'accelerate'. Most would agree that after months of talks, it's time that things moved forwards and significant progress needs to be made. The  next key event with regards to Brexit will come on Thursday and Friday, when the EU commission end their meeting. It's likely that many of the EU27 will be pushing to move Brexit talks forward and if we see any announcements that hint of this, the Pound would probably benefit.

Getting the best exhange rates

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Monday, 16 October 2017

UK inflation figures the key release for sterling this week

Of course on going Brexit negations will continue to have a significant impact on the pound,  however the key release for sterling will come on Tuesday morning with the release of UK inflation figures at 09:30

Recently Mark Carney and the Bank of England (BofE) have hinted at the need for an interest rate rise due to due to rising inflation. Indeed if the core inflation figures, in the form of Consumer Price Inflation, reaches 3% or more, Mark Carney has to write a letter to the Chancellor explaining why levels have increased significantly above the BofE of target level of 2%. 

What impact will an interest rate rise have?

Tuesdays figures are forecast to reach this 3% level, an increase on the previous month of 2.9% - should this occur will we see a rate rise? Some have suggested the Bank of England have simply been hinting about a rate rise to give sterling a much needed boost and would argue due to stagnating wage growth the economy could not handle a rate rise, however the Central Bank cannot keep hinting at a rate rise without having to act at some point. 

Should they keep hinting but not raising then Mark Carney and the Bank of England's credibility may come into question. For this reason Tuesdays figures are key and should we see 3% or more then the Bank of England may have no choice but to raise rates. A move to 3% on Tuesday and I would expect sterling to see a push towards 1.14 against the Euro and 1.34 versus the US dollar. Of course should inflation levels remain flat or fall then sterling could be set for a tough day. Either way expect volatility tomorrow morning,

With so much going in the market it is key to get as much information as possible to help with the timing of your money transfer. Should you wish to get further insight into our opinions on the market or you wish to discuss the currency service we provide then please make an enquiry here 

Friday, 13 October 2017

Pound/Euro rates rise to €1.1250

Yesterday was a strange one for the currency markets and GBP/EUR in particular.

Initially we thought it would be central bank speeches that would be driving the market, but has often been the case recently, political events instead dominated proceedings, causing some large swings in the GBP/EUR rate that were largely unexpected.

As my colleague Michael outlined in his post yesterday afternoon, comments from the EU chief negotiator initially caused the rate to slump into the €1.10's, before more positive comments from him sent Sterling surging higher. This trend has continues this morning and GBP/EUR currently sits at around the €1.1250 mark - this within 1.5% of a 4 month high:

Getting the best exchange rates

Yesterday's movements show how quickly the rate can change due to unexpected announcements. This is where using an expert currency broker can help you save thousands of Pounds. Unlike a bank that usually offer 'daily' rates that don't change, we buy live from the market. The rates we offer therefore change throughout the day in line with market movements, and this means that we can achieve rates much closer to the true market level.

As banks often have to factor in possible movements in the rate, like we saw yesterday, the levels they offer are usually 2% to 3% below what we would typically offer. For large transfers, this often equates to savings that run into thousands of Pounds.

We also offer ways to help you make the most of any currency transfer you need to make, including Forward Contracts, Stop Loss Orders, and Limit Orders

To discuss our services in more detail or simply get a quick quote to see what rate we can offer you, make a free enquiry today.

Thursday, 12 October 2017

Michel Barnier gives sterling the runaround

Today's movements for the pound have been dictated to by comments from the European Unions chief negotiator, Michel Barnier. This morning his comments lead to sterling falling to a 3 week low of 1.1085 as he said there had not been enough progress to move to the next stage of Brexit talks. He said there was "new momentum" but still "deadlock"

David Davis and Barnier have been speaking at the fifth round of Brext talks in Brussels and following his comments the pound fell nearly 1 cent.

Pound goes back up against the Euro

However, come the afternoons session Barnier surprised the market by indicating he may offer the UK a two-year transition stay in the EU market, although his offer was tied to the UK meeting exit obligations.

As a result sterling this afternoon rallied against a number of currencies, pushing to 1.12 GBP/EUR and 1.35 for cable (GBP/USD) - a potential buying opportunity in this uncertain market?

Should you have an upcoming money transfer to arrange then please get in touch as you may find our currency services can save you a lot of money!