Sterling steady ahead of GDP figures.

Tuesday 23rd July 2013 
Good afternoon. It’s very quiet in the currency markets at the moment, with the media hype currently focusing on the Royal baby and a lack of any significant economic data releases. The Royal baby news had the same impact on the markets as the announcement that Peter Andre and partner are expecting – none whatsoever! 

So in today’s report I will have a look at the most recent UK news that has helped Sterling, and a look at what other releases we have this week that might affect the currency markets. In today’s post: 

  • UK Recovery set to gather pace in 2014 
  • Government borrowing falls helping the Pound 
  • UK Growth figures released this Thursday 
  • How to get the best exchange rates 

UK Recovery set to gather pace in 2014 

The UK’s recovery will gather pace into next year, as exports and business investment help to boost the economy, Ernst & Young’s Item Club has predicted. The forecasting group predicted that UK economic growth would be 1.1% this year, rising to 2.2% next year and levelling out at about 2.5% thereafter. 

These are fairly positive numbers and will do no harm to the Pound, however they also acknowledged that growth currently remains reliant on consumer spending and the housing recovery. Spending all relies on confidence, and the good economic news of late has bolstered this, and the good weather has also boosted retail sales recently, all of which has given the Pound a push. 

 “With consumer confidence returning and the government’s initiatives to stimulate the housing market bearing fruit, consumers are switching their attention back from saving to spending,” the report noted. 

Elsewhere in America there is the risk of possible market reaction to the end of the Federal Reserve’s monetary stimulus programme. This could strengthen the US Dollar and push rates down below the $1.50 mark again. Also, in China there is the risk of an abrupt slowdown in its economy. This would weaken the antipodean currencies such as the Australian Dollar, which could give GBP/AUD rates a lift. 

The other impact of a slowdown in China could be a strengthening of the Pound. This is because a successful re-balancing in China is expected to help the UK reduce its trade deficit in two ways – through more Chinese demand for UK exports of consumer goods, and less Chinese competition for the UK’s imports of raw materials used in the construction industry. 

All in all the Pound has risen nicely since last week, however in the last few days has been very flat indeed. There have been no significant releases of note, so for the time being Pound/Euro remains range bound between 1.16 and 1.1650. 

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Government borrowing falls helping the Pound 

Figures released this week shows that government borrowing fell in 2012-13. Public sector net borrowing was revised down to £116.5bn. It means that total borrowing actually fell, by £2.1bn, from the year before, contrary to a previous estimate in May. 

The Office for Budget Responsibility (OBR) has forecast that total borrowing in the current fiscal year, excluding the effect of financial interventions and the deal with the Bank of England, will be about £120bn, or 7.5% of GDP. The lower figures also lent some support to the Pound. 

UK Growth figures released this Thursday 

The main data release this week will be Thursdays GDP numbers. The Gross Domestic Product released by the National Statistics is a measure of the total value of all goods and services produced by the UK. The GDP is considered as a broad measure of the UK economic activity. 

I expect the Quarterly figure to show growth of 0.6%, and the year on year figure to show growth of 1.4%. These forecasts will already have been priced in to where exchange rates stand, so if the actual number is higher than this, expect Sterling to make gains. If the number is lower, expect a drop in exchange rates. 

Other than some EU inflation numbers tomorrow, the GDP numbers are the most important release of the week in terms of what will affect exchange rates. 

How to get the best exchange rates 

If you are reading my blog, the likelihood is that you are looking to achieve the best exchange rates to convert one currency to another. The rates I can source are up to 5% better than the banks can offer, so why not make a free enquiry today to see how much you can save. 

In addition to better rates, we have various contract types such as Stop Loss and Limit orders, and Forward contracts. These types of contracts can protect you against exchange rates moving against you, and help you achieve the best possible rate within your time frame. 

To find out more about my services, including how the above contracts work, send me a free enquiry today. It costs nothing and carries no obligation, and simply means you can have a free consultation on your particular currency requirement. In this way you can make an informed choice about what type of contract to take and when to fix your rate. This, coupled with our commercial exchange rates could save you thousands of pounds. 

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Pound/Euro rises from 3 month low after BoE MPC Minutes

Wednesday 17th July 2013 
Good afternoon. It’s been an interesting week for Sterling exchange rates, with GBP/EUR falling to its lowest in more than 3 months, before recovering on positive news from the Bank of England this morning. In today’s post I’ll take a look at what has caused the swings in exchange rates. 

Pound hits 3 month low vs. Euro 


Earlier this week, poor inflation figures pushed Sterling lower, dropping into the €1.14’s against the Euro, which is its lowest in more than 3 months. The reason the Pound weakened is that the economic numbers lent support to the case for more monetary stimulus from the Bank of England. 


It has been speculated for some time now, that the new BoE governor would pursue aggressive Quantitative Easing, which would weaken the Pound significantly. This view was not to last however, as today we saw the latest minutes from the Bank of England’s (BoE) Monetary Policy Committee (MPC) meeting. 

Bank of England’s MPC vote unanimously to hold QE and interest rates, causing a surge in exchange rates. 

This morning at 09:30am, the minutes to the decision a few weeks ago to hold off QE were released. These showed that the Bank of England had voted unanimously against increasing its quantitative easing programme at its latest meeting, sending the Pound higher. 

The vote surprised those who were hoping to see signs of more stimulus measures from the Bank. Indeed I was expecting at least 2 or 3 of the members to continue voting for QE as has been the case for several months. 

The fact that all 9 members decided against QE dampens speculation that Mr Carney’s arrival might prompt an injection of additional monetary stimulus sooner rather than later. 

As you can see from the clear spike in today’s GBP/EUR chart, the news immediately sent Sterling over a point higher against the Euro, lifting the Pound from its recent slump. 

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UK Unemployment 

Also sending the Pound higher was the news that UK unemployment fell by 57,000 to 2.51 million in the three months to May, the Office for National Statistics said. Ministers said it showed that recovery was taking hold, but critics said the human costs were still too high. 

It seems that even with low growth rates, the UK economy can create jobs. Since this time last year about 300,000 more people are in work. And that continues to surprise economists. In past economic downturns. Unemployment has risen much higher – and fallen very slowly. 

The better figures, combined with the BoE vote, has helped the Pound recover and exchange rates have risen as a result. 

Summary 

Things can turn around very quickly in the currency markets, and this is what we have seen today. Doom and gloom and a 3 month low has turned into economic optimism and a strengthening Pound, all within 24 hours. 

If you are looking for the best exchange rates to buy or sell a foreign currency, send me a free enquiry today. I can discuss your requirements, explain what is moving exchange rates, and help you to decide when to fix your rate. 

When that time comes, I can help you achieve rates of exchange that can be up to 5% better than available at banks and other financial institutions. When converting a large sum, using my services can save you thousands of pounds. 

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Pound/Euro falls despite better data. 2013 forecast.

Friday 12th July 2013 
Good morning readers. Apologies for the blog being quiet for the last fortnight; I’m just back from a few weeks in Fuerteventura, and so today I will take stock of how the major currency pairs have performed over the last few weeks, and take a view on what the forecast is for Pound/Euro rates along with other major currencies. 

In addition to looking at the outlook for Sterling exchange rates, I’ll list the main data releases for the next week that may affect exchange rates. In this week’s report: 

  • UK Interest Rates to remain on hold for foreseeable future 
  • Will Pound/Euro rates rise or fall this summer? 
  • Pound/Dollar rates drop below $1.50 before recovering 
  • Central Banks likely to continue Quantitative Easing 
  • Pound held back despite better economic data 

How has Sterling performed, and where are GBP/EUR rates headed? 

In the last few weeks, the pound had fallen sharply against other currencies after the Bank of England warned that markets were wrong to assume that it would start raising interest rates soon. The fall came just over a week ago when the Bank of England held interest rates at 0.5% and kept its quantitative easing programme (QE) unchanged, which was expected. 

The decisions were made at the first meeting of the Bank’s Monetary Policy Committee since Mark Carney took over as governor from Sir Mervyn King. Next Wednesday we’ll see how the members voted, and whether Carney followed King on voting to increase its asset purchasing programme. The MPC said that the recovery “remains weak by historical standards and a degree of slack is expected to persist for some time”. 

With interest rates expected to remain low for longer and the chance of more monetary stimulus, the pound became less attractive on currency markets, sending sterling lower against other currencies and pulling rates down. 

The pound also fell sharply against the euro, but has now recovered somewhat after the European Central Bank committed to maintaining its interest rates at or below their current level for an “extended period of time”, sending the euro lower against all currencies. 

Releasing a statement alongside the decision is new; Mervyn King didn’t used to do that. IN doing so despite there being no change in policy is significant, as it suggests that further quantitative easing is likely and interest rates will remain low for the foreseeable future. This will keep the Pound weak. 

Many of my clients are expecting rates to rise, and if you take the recent improvement in economic data from the UK alone, I would agree. However the markets are more complex than that. Sterling is being held back global investors, as the view is that the British currency will continue to offer very little return of interest. Couple this with the threat of more QE along with low interest rates, and I would expect rates to fall in the next 3 months, before recovering later in the year. 

If you need the best exchange rates, click here to send a free enquiry now. 

Pound/Dollar rates drop below $1.50 before recovering 

The pound didn’t just fall against the Euro – in the last few weeks it fell below $1.49 against the dollar, close to a three-year low, as markets digested the prospect of UK interest rates staying at 0.5%, and the strengthening US economy. The slide began with the Bank of England saying rates could stay flat. 

In other news last week, we saw that US employment grew by 195,000 in June gave the dollar more support, pushing rates lower. We have since seen rates climb back above the $1.50 level, but we will have to wait and see whether it will stay there. 

Find out how good our GBP/USD rates are. Click here.

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I write this blog to keep existing and potential clients informed what is moving exchange rates, and to give my view on what may happen in the future. 


Hopefully the insight I provide can help to make an informed decision on when to fix an exchange rate. 

We don’t just provide information however – we also provide commercial rates of exchange to private and business clients that are often up to 5% better than the banks. 

So why not find out how much we could save you? You can click here and have a free consultation on exchange rates, and discuss the options available to you to help you make the most of your currency. Combined with the exchange rates we provide the savings can be enormous. 

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Economic Data releases for the next 7 days 

Every day economic data is released across the world, and is often the most common thing that affects exchange rates. 

Below I list the main data releases for the coming week that I think could affect exchange rates. For a free consultation on how these released could affect your particular currency requirement, send me a free enquiry now by clicking here. 

Monday – It’s a very quiet start to the week, with no data of note from the UK or EU. Over in the States, we have Retail Sales which are a good overall barometer of economic activity. In New Zealand we have inflation numbers which could dictate future interest rate movements. 

Tuesday – In the UK today we have a raft of inflation numbers, Retail Sales, the Bank of England inflation letter and a speech by one of the MPC members, so a few things that could affect the value of Sterling. In the Eurozone, inflation numbers come at 10am followed by Trade Balance numbers. There are also measures of Economic sentiment from Germany. In the USA we have further inflation numbers along with industrial production figures. 

Wednesday – Today is the most important one for Sterling. Firstly we have the Bank of England minutes showing the voting and discussion for QE. Released at the same time are the latest unemployment figures, so I expect a choppy day for the Pound. There is nothing of note from the EU. In Canada we have an interest rate decision, and in the USA we have figures from the housing and building sectors. 

Thursday – The only UK data of note today is the latest Retail Sales numbers. In the United States we have unemployment and jobless numbers, along with some manufacturing figures. 

Friday – We end the week with German Trade Balance Data, UK Public Sector Borrowing and inflation numbers from Canada

Have a free no obligation consultation on exchange rates. Click here. 

GBP/CHF Falls After Poor Manufacturing Data

Sterling Suffers After Poor Manufacturing Output Figures

The pound has been left on the back foot as it was announced on Tuesday that manufacturing production for May fell by 0.8%, contracting at its fastest pace for four months, highlighting Britain’s reliance on services to stimulate growth. As a result, GBP/CHF has fallen back into the 1.43’s.


The pound tumbled against most of its major rivals after the data release earlier in the week, losing over a cent against the dollar and around 0.6% against the euro. The figures from the Office for National Statistics showed that the massive contraction in manufacturing output was driven largely by a drop in production of basic drugs and metals.

It was the fastest contraction since January and was much worse than the 0.3% growth that economists had been forecasting. The data came as a surprise to most economists as recent surveys seemed to be indicating that British manufacturing activity had increased significantly in May and had picked up in June, helped by strong demand for British made cars and clothing.



“Today’s figures feel a little out of kilter with other industry data and what our manufacturing clients are telling us,” said Mike Rigby, head of manufacturing at Barclays.

“To many it feels like we are experiencing a more positive outlook but today’s figures do show that a number of challenges still persist. It’s not surprising to see the manufacture of base metals and products has contributed to the fall in manufacturing as commodity prices fell during the period.”


Despite the recent weakness in the pound, separate data from the ONS showed that Britain’s overall trade deficit hit its highest in three months as the volume of exports of goods fell in May. This has fuelled further speculation that Mark Carney may attempt to increase the UK’s level of monetary easing in an attempt to weaken sterling further. The trade deficit was estimated to be £2.4 billion in May, compared with £2.1 billion in April. The negative data pushed GBP/CHF rates into the 1.42’s before recovering slightly.

“Overall, our trade deficit is still too large, and we are not making fast enough progress in rebalancing our economy towards net exports. Our recent economic survey revealed huge untapped potential among British exporters, especially in services, and releasing this potential will help to secure a sustainable recovery.”

On the Swiss side of things, the Franc has been supported by safe-haven demand with continued uncertainty over the US Federal Reserve’s plan to start tapering its quantitative easing programme, helping bring GBP/CHF rates down.

If you need to buy or sell Swiss Francs, or any other currency, contact me today for a free, no obligation consultation by completing the enquiry form on the right.

GBP/CHF Falls After Poor Manufacturing Data

Sterling Suffers After Poor Manufacturing Output Figures

The pound has been left on the back foot as it was announced on Tuesday that manufacturing production for May fell by 0.8%, contracting at its fastest pace for four months, highlighting Britain’s reliance on services to stimulate growth. As a result, GBP/CHF has fallen back into the 1.43’s.


The pound tumbled against most of its major rivals after the data release earlier in the week, losing over a cent against the dollar and around 0.6% against the euro. The figures from the Office for National Statistics showed that the massive contraction in manufacturing output was driven largely by a drop in production of basic drugs and metals.

It was the fastest contraction since January and was much worse than the 0.3% growth that economists had been forecasting. The data came as a surprise to most economists as recent surveys seemed to be indicating that British manufacturing activity had increased significantly in May and had picked up in June, helped by strong demand for British made cars and clothing.



“Today’s figures feel a little out of kilter with other industry data and what our manufacturing clients are telling us,” said Mike Rigby, head of manufacturing at Barclays.

“To many it feels like we are experiencing a more positive outlook but today’s figures do show that a number of challenges still persist. It’s not surprising to see the manufacture of base metals and products has contributed to the fall in manufacturing as commodity prices fell during the period.”


Despite the recent weakness in the pound, separate data from the ONS showed that Britain’s overall trade deficit hit its highest in three months as the volume of exports of goods fell in May. This has fuelled further speculation that Mark Carney may attempt to increase the UK’s level of monetary easing in an attempt to weaken sterling further. The trade deficit was estimated to be £2.4 billion in May, compared with £2.1 billion in April. The negative data pushed GBP/CHF rates into the 1.42’s before recovering slightly.

“Overall, our trade deficit is still too large, and we are not making fast enough progress in rebalancing our economy towards net exports. Our recent economic survey revealed huge untapped potential among British exporters, especially in services, and releasing this potential will help to secure a sustainable recovery.”

On the Swiss side of things, the Franc has been supported by safe-haven demand with continued uncertainty over the US Federal Reserve’s plan to start tapering its quantitative easing programme, helping bring GBP/CHF rates down.

If you need to buy or sell Swiss Francs, or any other currency, contact me today for a free, no obligation consultation by completing the enquiry form on the right.

Choppy Day for GBP/CHF

Volatile Day for GBP/CHF with BoE and ECB Meetings

It’s been a fairly volatile day for the sterling/franc cross with key announcements from the European Central Bank and the Bank of England with sterling initially losing ground against both the franc and the single currency before heading back up towards the 1.44 mark.


It was the first meeting of the Monetary Policy Committee since Mark Carney took over at the Bank of England on July 1st. As was widely expected, the Bank of England decided to keep interest rates at their record low of 0.5%, unchanged for over four years. It was also announced that they would not be adding to the £375 billion of quantitative easing already proposed. The decision not to embark on further Q.E. had been expected after a string of positive data suggested that the UK economy may finally be on the road to recovery. The better figures of late have reinforced hopes that growth in the second quarter of 2013 will be stronger than the first, when GDP increased by 0.3%.

“At its meeting today, the committee noted that the incoming data over the past couple of months had been broadly consistent with the central outlook for output growth and inflation contained in the May [inflation] report. The significant upward movement in market interest rates would, however, weigh on that outlook; in the committee’s view, the implied rise in the expected future path of Bank rate was not warranted by the recent developments in the domestic economy,” the MPC said.

Despite leaving interest rates and Q.E. unchanged, sterling lost a percent against the euro and the dollar in the half an hour following the announcement. It’s thought that sterling lost ground after the Bank of England confirmed that they would not be putting an end to monetary stimulus anytime soon, criticising the US’s decision to do so after causing turmoil in global markets.

Across the channel, Mario Draghi said the European Central Bank were taking unprecedented measures to re-assure markets that it had no plans to raise interest rates anytime soon. Considering the rising bond yields in Portugal, Draghi admitted the ECB had considered a rate cut, sending the single currency lower against sterling and the greenback.



“The governing council expects the key ECB rates to remain at present or lower levels for an extended period of time,” Draghi told a news conference.

The Franc tracked movements in the euro, first gaining against sterling and then losing ground as the euro weakened, ending the day in the 1.44’s. If you need to buy or sell Francs, the key is to catch the market as it spikes in your favour. Currency brokers can help with the timing of your purchase to ensure you’re making the most of your currency. Contact me today for a free, no obligation consultation by completing the contact form on the right.




Choppy Day for GBP/CHF

Volatile Day for GBP/CHF with BoE and ECB Meetings

It’s been a fairly volatile day for the sterling/franc cross with key announcements from the European Central Bank and the Bank of England with sterling initially losing ground against both the franc and the single currency before heading back up towards the 1.44 mark.


It was the first meeting of the Monetary Policy Committee since Mark Carney took over at the Bank of England on July 1st. As was widely expected, the Bank of England decided to keep interest rates at their record low of 0.5%, unchanged for over four years. It was also announced that they would not be adding to the £375 billion of quantitative easing already proposed. The decision not to embark on further Q.E. had been expected after a string of positive data suggested that the UK economy may finally be on the road to recovery. The better figures of late have reinforced hopes that growth in the second quarter of 2013 will be stronger than the first, when GDP increased by 0.3%.

“At its meeting today, the committee noted that the incoming data over the past couple of months had been broadly consistent with the central outlook for output growth and inflation contained in the May [inflation] report. The significant upward movement in market interest rates would, however, weigh on that outlook; in the committee’s view, the implied rise in the expected future path of Bank rate was not warranted by the recent developments in the domestic economy,” the MPC said.

Despite leaving interest rates and Q.E. unchanged, sterling lost a percent against the euro and the dollar in the half an hour following the announcement. It’s thought that sterling lost ground after the Bank of England confirmed that they would not be putting an end to monetary stimulus anytime soon, criticising the US’s decision to do so after causing turmoil in global markets.

Across the channel, Mario Draghi said the European Central Bank were taking unprecedented measures to re-assure markets that it had no plans to raise interest rates anytime soon. Considering the rising bond yields in Portugal, Draghi admitted the ECB had considered a rate cut, sending the single currency lower against sterling and the greenback.



“The governing council expects the key ECB rates to remain at present or lower levels for an extended period of time,” Draghi told a news conference.

The Franc tracked movements in the euro, first gaining against sterling and then losing ground as the euro weakened, ending the day in the 1.44’s. If you need to buy or sell Francs, the key is to catch the market as it spikes in your favour. Currency brokers can help with the timing of your purchase to ensure you’re making the most of your currency. Contact me today for a free, no obligation consultation by completing the contact form on the right.