Wednesday, 24 August 2016

Pound continues to rise against Euro

The Pound continues to make gains, and currently sits at around €1.1750 against the Euro, and $1.3240 against the US Dollar (a 3 week high). It is welcome news for those with Sterling to convert to other currencies, as the latest data suggests that the UK economy is holding up surprisingly well following the EU referendum a few months ago. Here’s how the Pound has performed against the Euro so far this week:

Why is the Pound rising, and is it set to continue? 

In the last week or so, Sterling has been given a decent lift following Inflation figures and retail sales that were much better than expected. Yesterday, figures showed that manufacturing exports hit a 2 year high, which of course is probably due to a weaker Pound making our goods more attractive to overseas buyers. I don’t think we should read too much into the recent figures however, as the current weakness in Sterling is a double edged sword; it benefits exporters but also pushes up costs and prices.

While I think that while the UK will avoid another recession, most experts agree that it is likely that it’s set for a sharp slowdown. Small positive snapshots such as Retail Sales and Exports don’t mean that the economy has brushed off ‘Brexit’ and is on course to recover. As further figures are released in the coming weeks and months, we’ll start to be able to build a much clearer picture of how the economy is faring, and there is a good chance that Sterling will continue to lose value. At the moment, it’s just treading water as investors wait for more information to influence its direction.

To buy or not to buy? 

For those needing to convert Sterling to other currencies, the recent gains are a positive however as I’ve alluded to above, there is a very big risk the Pound will fall further. Also, when you remove the blinkers and look a little wider than the UK’s current position, other factors are in play; the world is a big place and other things influence exchange rates too. Take developments in Europe for example that may halt any further gains in the rate. Business growth data in the Eurozone is better than expected rising to a 7 month high, and this means that there’s less chance the European Central Bank (ECB) will cut interest rates or extend its QE stimulus in its meeting next month. This could give the single currency a little strength, making it more expensive to purchase and hinder any further gains in the rate. HSBC think GBP/EUR rates will hit parity!

Get a free GBP/EUR quote

What about those with currency to convert back to Pounds? 

If you have Euros or another currency to convert back to Sterling, then don’t forget that you have gained significantly due to a weaker Pound. Converting €300,000.00 back to Sterling today nets you more than £30,000.00 more than a few months ago. The Pound may weaken further, but at the same time perhaps the Daily Express is right; the UK will have a ‘Brexit Boom’ while the rest of the EU crumbles, and GBP/EUR soars back to €1.30+ by the end of the year, as recently forecast by Barclays. I do believe the economy will prove resilient and Sterling will, in time, recover. However I think that it’s unlikely it will do so in the short to medium term.

The point I’m making is that nobody knows which way exchange rates will move as illustrated by the wildly differing forecasts by major UK banks, with some say it will drop to €1.00 for a Pound, and others stating it will rise to €1.30. Any private or business clients that are exposed to the currency markets need to have a sound strategy to deal with whatever eventualities the market throws at them.

If GBP/EUR falls to parity, can you still afford to buy your villa in Spain? If you’re a business that exports to Europe and the rate climbs back to €1.30, how would that affect your sales and income?

We offer bespoke solutions for every currency requirement, and can help protect you against adverse exchange rate movements scuppering your plans. If you would like to find out more about our foreign exchange services or simply get a quote to compare with your existing broker or bank, click here to send me a free enquiry.  

Thursday, 18 August 2016

Good news pushes Sterling higher against Euro

This morning UK Retail Sales figures were released, and they were much better than expected, showing the post Brexit period might not be as bad as analysts had predicted. Markets thought that the figure for July would only show a gain of 0.2%. The actual figure was an impressive 1.4% up, and the annual figure was 5.4% higher. Retail Sales are a very good barometer of the overall health of the economy, and shows that consumers are still pretty confident. The market reacted immediately and GBP/EUR rates shot up by a cent, recovering most of the weeks losses to sit in the mid €1.16's:

In some other positive news, there has been other news that Britain's economy won't go into recession, and global growth seems to be stabilising according to the ratings agency Moody's.

We all know that the Pound plummeted in the immediate aftermath of the EU Referendum, but stock prices have recovered and many economists believe the effect on the economy won't be anywhere near as bad as the doom mongers had predicted. The lower Pound will help exports and in turn support economic growth. They also said that the EU economy is likely to grown in line with the UK at around 1.5% this year.

Focus might start to shift to the US elections and the fact there might be another interest rate hike in the USA however. If this happens, the Pound and Euro would likely weaken while the USD strengthens, risking a further fall for Sterling exchange rates.

Do you need to exchange currency at the best rates?

Today's news will be welcomed by those that need to buy Euros or any other currency with Sterling, however the economy is still very fragile and exchange rates are still at risk of sharp movements in either direction. We can help you achieve fantastic rates of exchange, and also have various types of contracts to protect against adverse exchange rate movements.

If you need to convert currency in the next 6 months, and would like a quote or simply a quick chat to find out what your options are, click here to send me a free enquiry today.

Wednesday, 17 August 2016

Will Sterling keep dropping against other currencies?

The past week has not been a good one for the Pound, with Sterling/Euro exchange rates falling close to the lowest in around 5 years. The charts below show the GBP/EUR and GBP/USD rates over the last month:

Why has Sterling continued to fall?

As you can see from the graphs, the general trend is a weakening of the Pound. Against the Euro, we're now pretty close to the lowest it's been in 5 years. Against the US Dollar, we're around the lowest it's been in 31 years.

As anyone following the currency markets will know, the EU referendum result has caused a huge amount of uncertainty for the UK economy. In recent weeks the Bank of England have warned of further weakness in the economy, and it's also likely they will have to cut interest rates again before the end of the year. We have also seen figures showing that the housing market is slowing. The Euro has also gained slightly against the Pound due to strong German GDP figures, showing that Europe's largest economy is growing at its fastest pace in 5 years.

There have been a few positives however, with UK inflation higher than expected, and the UK unemployment claimant count this morning coming in much better than expected. The numbers however haven't done much to lift exchange rates.

Will Pound/Euro exchange rates fall further?

I think there is a good chance rates could fall further still, and it's all to do with the continued uncertainty. The Prime Minister isn't likely to invoke article 50 until next year, meaning it could be 2019 before the UK actually leaves the EU. Once article 50 is invoked then there are 2 years to negotiate our exit, and until then nobody knows what leaving the EU will actually mean for the economy. Investors hate uncertainty, and until there is a clearer picture of what 'Brexit' means, the Pound is unlikely to make a significant recovery.

What can you do if you need to buy or sell the Pound?

There is unfortunately no way to predict or forecast what will happen with exchange rates. Those that need to buy Euros can consider using a 'Forward contract'. This is where you can guarantee the current rates for up to 2 years by  lodging 10% of the total to be converted. This protects you against a further decline in the rate and helps budgeting for property purchases abroad.

Clients that need to convert a foreign currency back to Sterling however are looking at very attractive rates. They may improve further, but this is no guarantee. In this scenario you can use a 'Stop Loss' order, which allows you to continue taking advantage of gains in the rate, but if the market starts moving against you, you have a level at which your rate is fixed. This means you don't lose out too much if the Pound does start to regain some strength.

Can we help you with more competitive rates of exchange? 

We are one of the UK's leading foreign exchange brokerages, and source rates of exchange for private and business clients that are much better than your bank or existing broker may offer. We can help anyone looking to convert more than £5k+ and have the currency wired to an account by telegraphic transfer, perfect for this buying or selling property, or businesses that make international payments.

Wednesday, 10 August 2016

Pound continues to drop

The Pound seems to have found new direction this week, and that direction is south. Today we saw a report from the Bank of England that showed a rather mixed picture of the UK economy. It said the economy is likely to slow further, and business revenues would also be lower. There have been some positives recently, mainly Retail sales figures coming in better than expected, and also major retailers like Tesco and John Lewis also saying that there hasn't really been an affect on consumer spending following the referendum.

However, despite this it is likely the UK economy will slow due to the uncertainty, and investors have taken today's news and sold the Pound in droves, pushing GBP/EUR rates lower down to the low to mid €1.16's. (click here to view live interactive graphs for all currencies)

Looking for help with currency exchange?

If you are looking to buy or sell foreign currency and want to achieve the best exchange rates, contact me today. I can source rates that are up to 5% better than banks can offer. When looking to move large sums, for property purchases overseas or for businesses sourcing goods from abroad for example, the savings can be considerable. We also have various contract types so even if you don't need your currency for some time, you can still fix the rate today and protect against adverse exchange rate movements.

The first step is to get in touch for a free consultation so I can discuss you particular requirements, and run over the options available to you. 

Send me a free enquiry now by clicking here. 

(The blog will again be quiet for the next week as I'm away on a short business trip. I'll be back in action on Wednesday 17th. You can still make an enquiry about our foreign exchange services on our contact page, and a colleague will get in touch to discuss your requirements and provide you a quote.)