Wednesday, 20 September 2017

How could Theresa May's speech affect the Pound?

 Sterling/Euro rates have fallen back away from last weeks 2 month high of around €1.14. The BoE governor gave a speech and he was typically gloomy about the effects of Brexit on the economy, stating that any interest rate hikes that may come would be small and gradual. This took the wind out of the sails of the Pound and it dropped back away against other currencies.

Retail Sales pushed Pound back up

This morning, the latest UK Retail Sales figures were released. The figures showed sales rose by 1% on the month, against an expected 0.2% rise. The Annual figures were also much better than expected showing that consumers are still spending, and this has pushed GBP/EUR rates back above €1.13 again. With much coming this week that could push the Pound lower, those that want to fix a rate now while things are close to a 2 month high can click here to get a free quote.

Important end to the week for Pound/Euro rates

Tomorrow (Thursday) we have the latest UK mortgage approvals and Public Sector net borrowing figures that could affect the Pound. Of more importance however will be a speech by one of the ECB members. If they hint at ending their stimulus programme, the Euro could strengthen pulling GBP/EUR rates lower.

The most important event of the week however is a key speech by Theresa May on Friday, where she is expected to give further information about Brexit negotiations. It may be the case that some of her points are leaked beforehand, and I think there is real potential for the Pound to be affected between now and Friday depending on what is revealed.

If the markets take her words as positive for UK/EU negotiations, then the Pound is likely to rise and push rates higher. If however the markets don't like what she says or it's looking like a harder Brexit will be pursued, then the Pound could be in for a rough ride.

If you need to convert currency and would like a free quote, or to simply discuss which way the rates may move, get in touch today.

Friday, 15 September 2017

Pound/Euro hits 8 week high of €1.1360

Sterling has strengthened further this morning, after one of the Bank of England members said in a speech that a rate hike would be needed soon, confirming what the MPC said yesterday.

What is interesting is that this particular member, Gertjan Vliegh, is considered to be a 'dove' which means he has been pushing for rates to stay on hold. The fact that more MPC members are now leaning towards an interest rate hike has helped the Pound.

(You can view live currency graphs here.)

Currency markets move more on rumour than fact, so an interest rate hike is now being priced into the value of Sterling and that's why the Pound has risen so much. The graph below shows how Pound/Euro rates have risen over the last few weeks:

Pound/Dollar rates are now sitting at $1.35+ which is back to the level it was at just after the EU Referendum last June. Again Sterling strength is much of the reason for the gain. GBPUSD has risen higher than GBPEUR because the USD is also weak helping to make it cheaper to buy.

With Pound/Euro at a 2 month high, and Pound/Dollar at a 15 month high, those that need to convert Pounds to a foreign currency may wish to take advantage of the recent gains. Some clients have been asking if they should wait for the rate hike to see if exchange rates rise further, however as mentioned above, I think this hike is now largely priced into rates already so it may be that even when it comes, it won't affect the rate that much.

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Thursday, 14 September 2017

GBP/EUR rises above €1.12 after Bank of England meeting

The Pound has gained again today after the
Bank of England meeting. Only 2 members voted for a rate hike meaning rates have been left on hold at 0.25%. However, they gave hints and were much stronger in their talk of a rate increase, stating that it's likely to happen in the coming months.

They said there was a stronger picture of a firmer housing market, retail sales and car sales. Also with inflation running at nearly 3%, it's looking quite likely rates will now rise before the end of the year.

The reaction in the currency markets has been the Pound rising by over a cent against the Euro, with the chart below showing the big jump the moment the news came:

The Pound has now risen 4% in the last few weeks from lows of €1.0760 to where we are now, so a very welcome development for clients that need to buy Euros to purchase property in the Eurozone. We offer exceptional rates of exchange that are very close to the published mid-market level. If you have an upcoming transfer to make, then why not get a free quote to see if we can offer you more favourable terms than your bank or existing broker.

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Wednesday, 13 September 2017

Pound falls on wage growth numbers

After rising to a high of €1.1130 this morning, GBP/EUR rates slipped back by half a cent, following the latest UK jobs data. While unemployment and jobless numbers were better than expected, wage growth was lower than forecast at 2.1%. This is important, as it will have a big impact on when the Bank of England will raise interest rates, and the prospect of higher rates will push Sterling higher.

Yesterday's inflation numbers on their own, would probably lead to the BoE raising rates soon and boosting the Pound in the process. However, with wage growth lagging behind inflation, it's likely that they will continue holding off until the 2 figures are more in line, so that actual real income is growing. That's why when this morning's figures came in at 2.1% the Pound fell by about half a cent (inflation is at 2.9%).

We also had EU employment figures coming in a little higher than markets had expected, giving the single currency a small lift.

All eyes will now be on the Bank of England meeting tomorrow and it could provide some new direction for where the Pound will move. At 12pm we will probably hear that rates have been left on hold at 0.25%. We will also see how the 9 members voted. If 3 or more vote for a hike then it's likely the Pound may rise a little, but if only 1 or 2 do, then the Pound will probably slip back.  The minutes will also show what they discussed, and this will also be important and could move the Pound.

If you would like to find out what currency rates we can offer you, then get a quick quote today.

Tuesday, 12 September 2017

Pound/Euro rises to €1.11 due to rising inflation

This morning UK Inflation numbers were released showing a number of 2.7% against a forecast of 2.5%. The higher number increases the chance of the Bank of England raising interest rates this year.

While they are unlikely to do so this week, I think several members of the MPC will now be voting to do so.

GBP/EUR rates have now risen 3% in the last week, as you can see from the chart below:

If you need to convert Pounds to Euros, this is a welcome development. Converting £200k to Euros is netting you €7000.00 more than a few weeks ago. If you are looking to make a transfer and want to take advantage of these gains, then get in touch for a free quote. 

What else could affect Sterling exchange rates this week?

On Wednesday, the UK releases it's latest Employment and Earnings data. The Average earnings numbers will be the most important for the Pound, as if these continue to rise closer to the inflation number, then it's more likely UK interest rates will rise, which may help the Pound.

Thursday is important too, as we have the latest Bank of England meeting on interest rates. While it's likely they will be left on hold again, the minutes and press conference will be interesting to see how many members voted for a rise. I think if 2 or more did, then the Pound may push higher. Any comments or hints in the press conference as to when rates may rise will also affect Sterling, as the prospect of higher interest rates usually strengthens a currency due to the higher return on offer.

Elsewhere, EU Industrial production and Employment numbers on Thursday could affect the price of the single currency.

Looking for the best exchange rates?

If you need to convert Pounds to Euros, or convert a foreign currency back to Sterling, then we can help you achieve fantastic rates of exchange. Even if you are already using a currency broker, you may find that we could save you thousands of Pounds. To get a free quote, click here.