Thursday, 18 December 2014

Retail figures help the pound

Good morning,

The pound lost over two cents against the dollar yesterday following the latest FOMC meeting but did manage to recover some of the lost ground this morning after UK retail sales figures smashed expectations.

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During yesterday's conference Fed Chair Janet Yellen announced the Federal Reserve will would be "patient" when deciding to raise interest rates. Previously the Fed had stated that interest rates would remain low for a considerable amount of time, so this change in stance helped strengthen the dollar, with GBP/USD exchange rates dropping from $1.5777 to a low of $1.5548.



Mrs Yellen went on to stay there would be no immediate rate hike and that being "patient" meant the central bank was unlikely to raise rates for at least a couple of meetings.

Retails figures trigger recovery.

The pound did manage to claw back some of ground it lost last yesterday after UK retails figures rose at their fastest pace in more than a decade. It seems Black Friday helped boost sales in November after figures released by the Office of National Statistics showed sales climbed by 1.6% month on month, the forecast had only been for a 0.3% rise.

The release had an immediate impact on the currency markets with the pound gaining ground against most of its major counterparts. The GBP/USD cross rose almost a cent climbing from $1.5555 to $1.5648 bringing back into the range we have witnessed for the last few trading sessions.

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Monday, 8 December 2014

Bank of England comments help boost the pound

Good afternoon,

The pound had an unexpected boost this morning following a surprise announcement from the Bank of England. The central bank's annual survey of household finances showed that the majority of people with mortgages in the UK would be able to cope if the BoE raised interest rates by 2.5%. The news helped Sterling climb against most of its major counterparts, pushing GBP/USD up nearly a cent from $1.5543 to a high of $1.5642.

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Although today's announcement is a positive sign, it does not mean we are likely to see the BoE raise interest rates in the immediate future, I think the central bank will wait until after the UK elections before taking any action.

What today's announcement has done is remove some of the uncertainty surrounding what kind of impact an interest rate rise will have on the UK economy. This has given investors some added confidence and if the BoE continue to drop hints like today the pound might be able to put a stop to its demise against the dollar.

Since the end of June GBP/USD exchange rates have fallen around 9% and although it's highly unlikely we will see the currency pair push towards $1.70 anytime soon, positive comments from the Bank of England, coupled with some solid economic numbers from the UK could see exchange rates push back towards $1.60.

If you have an upcoming requirement to buy or sell dollars and want to ensure you are making the most from your transfer it is important to know what options are available to you. As a specialist currency broker I have a range of currency contracts at my disposal, by using these tools you can protect yourself against adverse market movements or target a rate that might not be currently available.

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Tuesday, 2 December 2014

GBP/USD exchange rates suffer after disappointing data.

Good afternoon,

The gains we witnessed yesterday were quickly wiped out during today's trading session as the GDP/USD cross fell nearly a cent after the UK's construction sector expanded at is slowest pace since October 2013.

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The Markits Construction PMI figures, which were released at 9:30 this morning fell to 59.4 from 61.4 in October, causing GBP/USD exchange rates to drop from $1.5731 to $1.5636 over the course of the day.


Although the construction index was comfortably above the 50.0 growth threshold, the upcoming UK elections are starting to cause some uncertain times for the UK economy and it seems business confidence is starting to suffer. If other sectors start to follow suit, the next couple of months could have a severe impact on the value of the pound.

What to look out for tomorrow.

After today's disappointing construction number all eyes will turn to tomorrow as Chancellor George Osborne delivers his Autumn Statement. So why could this impact the currency markets? Well, government spending and borrowing can have a huge impact on the economy, if the government are spending more they generate extra work for contractors which in turn creates extra jobs. If Mr Osbornes comments are positive tomorrow we could see the pound claw back some the ground it lost against some of its major counterparts today.

If you have a requirement to buy or sell dollars in the coming weeks or months and want to ensure you are making the most from your transfer contact me today for a free, no-obligation consultation.

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Wednesday, 26 November 2014

GBP/USD exchange rates climb over a cent

Good afternoon,

The pound had a decent run against the U.S dollar during today's session as the GBP/USD cross climbed over a cent to reach its best trading level since the 12th November. Some positive economic data releases from the UK and some weaker figures from the U.S. helped the currency pair rise from $1.5680 to a high of $1.5795, moving the pound away from the 14 month lows we have witnessed over the past few weeks.

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The pound got off to a solid start today as the second UK GDP estimate for Q3 came in as predicted at 0.7% and Index of Services numbers beat expectations by 0.1% coming in at 0.8%. The figures helped the pound climb against most of the other major currencies, pushing GBP/USD above $1.57.

The pound was then given another boost this afternoon after today's U.S. data releases failed to impress. Core durable goods orders contracted, unemployment claims rose, personal spending & income fell and new home sales missed target by 13,000, leaving the pound on the brink of breaking through $1.58.

With the Bank of England and U.S. Federal Reserve battling it out to be the first central bank to raise interest rates, Mark Carney and Janet Yellen will be looking for signs their respective economies are improving. Just as you think one economy is performing better than the other, they have a terrible run of economic numbers, just like the U.S had today and will once again raise fresh doubts about who will actually be in a position to act first.

If you have a requirement to buy or sell dollars in the coming weeks or months and want to ensure you are making the most from your transfer, it is important to know what tools are available to help. For more information on the different types of currency contracts or to find out what rates of exchange I can offer, use the link below to complete the contact form or call me directly on 0044 (0) 1442 892 065.

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Thursday, 20 November 2014

Positive day for the pound


Good afternoon,

As I mentioned in yesterday's post today was fairly heavy on the data front and as a result the releases led to another choppy day for the GBP/USD cross.

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After opening today's session at $1.5637 the pound got off to a good start as French, German and Euro Manufacturing all missed target, with the news sending sterling/dollar up around a quarter of a cent. The pound was then given another boost as UK retail figures came in at 0.8% against a predicted level of 0.4%, giving the pound some much needed support following last week's inflation report.

The gains for sterling did not stop there though as this afternoon saw a number of key releases from the States. To start we had U.S. unemployment claims and core CPI figures. Unemployment claims came in 5K higher than forecast and there was no change to the CPI numbers which came in on forecast at 0.2%. The weaker figures had an immediate impact on the dollar's value and pushed GBP/USD exchange rates over $1.57 for the first time since Monday, reaching a high of $1.5731.

However, any gains for the pound were extremely short-lived as later this afternoon saw the release of the Philly FED Manufacturing index. The manufacturing sector is seen as leading indicator of overall economic health and with today's figure coming in at 40.8 against a predicted level of 18.9 the dollar was able to fight back and push exchange rates back below $1.57, settling around $1.5680 at the time of writing.

The UK and U.S. economies seem to be neck and neck at the moment and unless something drastic happens it is difficult to see rates moving massively in either direction. As I have said before I think a lot will depend on which central bank acts first in regards to interest rates but that won't be until the middle of 2015 at the earliest. As a result we may see GBP/USD rates bounce between $1.56 and $1.59 for the next few week's, reacting to the daily economic data releases just like today.

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Wednesday, 19 November 2014

Bank of England minutes save Sterling


Good afternoon,

It looked like Sterling was in for another difficult trading session this morning as GBP/USD exchange rates hit a fresh low of $1.5593 in the build up to the release of the Bank of England meeting minutes.

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Fortunately for Sterling the minutes showed that two of the Monetary Policy Members (MPC), Ian McCafferty and Martin Weale, voted to raise interest rates in the UK for the third straight month. The announcement had an immediate impact on the currency markets and helped push the GBP/USD cross up by a cent over the course of the day, reaching a high of $1.5694 before settling around $1.5670.


As I mentioned yesterday, if there had been a change to the overall vote the knock-on effect to Sterling could have been huge. Over the last three months the vote on interest rates has remained at 7-2 in favour of keeping interest rates at their current level.  Those two votes to raise interest rates have given the pound a boost in recent months and if this morning's minutes had shown Mr McCafferty or Mr Weale had jumped back on the bandwagon to keep rates on hold, the pound would have suffered massively.

What could impact exchange rates tomorrow?

Tomorrow is pretty heavy on the data front with a number of economic data releases coming from either side of the pond. In the UK we will see the latest retail figures, while from the U.S. we will get manufacturing numbers, inflation figures, unemployment claims and existing home sales. There are also a number of manufacturing numbers coming from the Eurozone. All of the above the ability to cause some volatility in the currency markets depending on the results.

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Tuesday, 18 November 2014

GBP/USD avoids further losses.

Good afternoon,

With UK inflation figures coming in higher than forecast this morning the GBP/USD cross finally put a stop to its recent decline. Over the past week the pound has lost over 2% against the dollar with exchange rates sliding from 1.5932 to 1.5609 but with CPI figures coming in 0.1% higher than anticipated at 1.3% there was finally some good news for the UK and Sterling.

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As you can see from the graph above today's trading session has been fairly choppy with GBP/USD exchange rates bouncing between $1.5635 and 1.5680. The pound initially found some support following the UK inflation figures but was unable to sustain the gains throughout the afternoon as the U.S produced some positive economic figures to help boost the value of the dollar.

Better than forecast PPI month on month, Core PPI and an improvement to the NHAB housing market index, meant the gains made from by the pound this morning were quickly wiped out.

What could impact rates tomorrow?

It is another big day for the UK and Sterling tomorrow as the Bank of England release the minutes from their MPC meeting two weeks ago. We know the central bank left interest rates at 0.5% but if there is any change to the 7-2 vote we have seen over the last few months we could witness some volatility to the currency markets.

I think its unlikely we will see any change to the number of MPC members voting in favour of rate hike, especially after Mark Carneys comments last week. However, if the vote changes to 8-1 or 9-0 in favour of keeping rates on hold the pound could come under some serious pressure tomorrow morning.

If you have a requirement to buy or sell dollars in the coming weeks or months and want to ensure you are making the most from your transfer, use the link below to complete the contact form or call me directly on 0044 (0) 1442 892 065.

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