Good afternoon,
It has been a relatively slow start to the week in the terms of data as we build up towards the Easter break, however, that has not stopped sterling losing over a point against the dollar since trading opened on Monday. Pound/dollar exchange rates have dropped from the recent high of $1.5250 to its current level of $1.5137. In today's post I will take a look at what has caused the decline and what is in store for the rest of the week.
Despite some poor U.S data today sterling lost ground against the greenback, as we have seen before negative data can actually strengthen the dollar as the currency is seen as a safe-haven. Consumer confidence came in much lower than forecast with data released by the Confidence Board showing figures were nearly 8 points lower than expected. The data captures the level of confidence that people have in the U.S economy and tends to cause some swings in the strength of the dollar.
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Coupled with the ongoing issues in Cyprus and the proposed bailout, safe-haven flows into the dollar seem to be on the up as appetite for the euro seems to be weakening. Once the terms of the bailout have been agreed it is possible the flows will dry up and we could see sterling/dollar profit like we saw when bailouts for Spain and Greece were put in place.
Tomorrow could also see some movements with exchange rates as we await the final GDP reading from Q4 2013. If the figures are revised down from the current reading of -0.3% we could see sterling weaken dramatically and lose the gains made against the dollar in the last couple of weeks.
With so much uncertainty surrounding the UK economy and euro-zone at the moment it is almost impossible to try and predicted which way the FOREX markets will move in the next couple of months. At lot will depend on whether the UK falls back into recession and how the BoE will react if that is the case. If we somehow manage to avoid the triple-dip it will lend some much needed support to the pound and could push sterling's value up against a number of currencies.
If you have a requirement to buy or sell dollars in the coming weeks leaving it to chance could be very costly. With a range of contracts at my disposal I can help you make the most of your currency transfer. If you are a business or private individual and would like to know more about the options available use the link below and complete the contact form for a free, no obligation consultation.
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Good afternoon everyone,
After another choppy few days sterling finished the week at its strongest level since the 23rd of February reaching a high of $1.5242. Over the last five days we have seen rates move at a drastic pace in both directions following the problems in Cyprus, the Bank of England minutes and the UK budget announcement. In today's post will give an overview of the weeks events that have impacted pound/dollar exchange rates.
The start of the week saw rates gradually decline as markets reacted to the uncertainty surrounding the Cypriot bailout, the original plans to hit bank customers with a one off levy on deposits caused huge demonstrations and has left the Cypriot banks on the edge of insolvency.
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In the past we have seen bailouts for Greece and Spain strengthen the single currency which in turn boosted GBP/USD exchange rates as risk appetite shifted. With the Cyprus government due to vote this evening (Friday) on the terms of the bailout it will be interesting to see how markets react on Monday morning and depending on the result we could see rates move in either direction.
It wasn't until Wednesday that we saw a change in sterling's fortunes, a drop in the number of people claiming Jobseekers Allowance and a positive outcome from the latest UK budget saw sterling rally and claw back over a cent against the greenback throughout the course of trading. Since then the pound has not really looked back and reached the high of $1.5242 late this afternoon (Friday). The gains we have seen this week mean sterling has climbed over 1.5% since Wednesdays lows of $1.5034, to put the gains in monetary terms a £200,000 trade would have seen you receive over $4000.00 more today than the same trade booked on Wednesday morning.
It shows how important it is to get the timing right on your currency transfer as a few days can have a huge impact on cost. The next few weeks will undoubtedly see the volatility continue and I am not the only one to think this way, today a number of our brokers have reviewed their forecast for sterling/dollar with one predicting that we will see rates fall to $1.47 in the next few months.
Whether you are a business or a private client and need to buy or sell dollars in the coming months, holding out to see which way rates will move without knowing what tools are available could prove to be very risky. By clicking on the link below and completing the contact form we can discuss a range of currency contracts to ensure you are protected against any adverse market movements but at the same time target rates that might not be currently available. I can also look to secure your rate of exchange for up to two years into the future so even if you don't need your currency straight away you will have the peace of mind that the cost of your dollars or sterling will not change.
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Good afternoon,
Today has seen sterling rise by nearly 1% against the greenback following better than expected jobs claimant data, no movement from the Bank of England (BoE) and a positive budget announcement from Chancellor George Osborne. The pound reacted to reach a peak of $1.5183, the highest we have seen cable since the 8th March. Today's post will take a closer look at the events that improved sterling's fortunes and what my thoughts are for future GBP/USD exchange rates.
At the start of trading today sterling/dollar rates dropped in the build up to the UK Jobs data and the release of the Bank of England minutes. Just before the data was released rates hit a low of $1.5028 but in an upturn for the UK economy the number of people claiming Jobseeker's Allowance fell by 1500 to reach their lowest levels for nearly two years. Coupled with the BoE minutes that saw no change in the way policymakers voted for more monetary stimulus, sterling rallied to gain over once cent as all eyes then refocused on the Chancellor and his budget.
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At lunch time George Osborne delivered his new budget package and despite cutting the growth forecast for 2013 by halve to 0.6% there was some positive news to try and stimulate the UK economy. The Shared Equity Scheme has been extended with interest free loans on offer for any home buyers looking at new build properties and although its great news for people looking to buy a new home it is also an attempt to get the UK Construction Sector back on track. Mr Osborne also went onto say that by 2015 they will reduce Corporation Tax by a further percent to 20% to try and encourage businesses to the UK. The news sparked another jump in exchanges rates to push the pound towards $1.52 the highest we have seen for two weeks.
So which way will exchange rates go now?
It is still very difficult to try and predict which way rates will move. The latest announcements from the government might well help strengthen sterling in the long run but short term the outlook is still bleak. I still think it is likely the UK will head back into recession when the figures are released in April so the gains we have seen over the last couple of days could well be short lived. As I have mentioned before some forecasts still see sterling falling to 1.40 against the dollar by the end of the year, although I don't see rates falling that low in April it is possible that rates will slip past the $1.4830 low we witnessed last week.
With so much uncertainty surrounding the currency markets and such a wide spread on forecasts it is more important than ever to know what options are available. If you are a business or private client and are looking to buy or sell dollars in the coming months click on the link below and complete the contact form for a free, no obligation consultation to see how much money you can save.
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Good afternoon,
After the huge swings we saw in exchange rates last week for sterling dollar, today has been relatively quite with rates staying within a 40 pip range. At the time of writing this post the mid-market price was sitting at $1.5100, slightly down from the highs we saw towards the end of last week as markets reacted to the issues in Cyprus over their bailout.
Over the weekend it came to light that if Cyprus were to obtain the 10 billion euros bailout that was agreed with the IMF (International Monetary Fund) and EU (European Union) all bank clients will have to pay a one of tax on their deposits. This led to huge protests and a big surge in cash withdrawals as customers attempted to get as much money out of the banking system as possible.
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This latest problem for the euro-zone has impacted the GBP/USD cross as safe-haven flows into the dollar would have increased on the back of the news. The greenback is seen as a safe-haven currency so problems in the euro-zone will prompt investors to move their money from riskier assets in the EU until the problems subside. These safe-haven flows means it the dollar has strengthened and as result is more expensive to purchase.
It is possible we will see rates continue to fall over the course of the week, in the UK George Osbourne will announce his latest budget and the Bank of England will release the minutes from their meeting at the start of the month. Both are likely to cause some volatility in the currency markets if last month was anything to go by, the BoE minutes caused a huge drop in rates in a matter of seconds as it became clear that policymakers views are starting to change towards more Quantitative Easing. I will keep you posted to how these events impact exchange rates over the next few days.
If you need to buy or sell dollars in the next few days but want to try and get a bit more out of the market then Stop and Limit orders can help. They allow you to target a rate that might not be currently available but at the same time protect you against any adverse market movements. If you would like to know more then use the link below for a free, no obligation consultation.
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Good afternoon,
In today's post I will give a brief overview of events that have impacted the GBP/USD cross over the last 5 days. Since the start of the year we have seen a massive decline in exchange rates across the board where sterling has been involved. This week I am glad to report there has been a slight upturn in the pounds fortunes as cable has gained nearly 2.2% since Tuesday.
At the start of the week sterling slumped to a fresh low of $1.4848 before recovering today (Friday) to reach a high of $1.5172. Having access to range of Forecasts I was interested to see that one broker is predicting we could see exchange rates move back towards $1.56 in the next three months and $1.53 in the next twelve. This to me seems hard to justify especially considering all that has happened to the UK over the last few months which has Britain facing yet another recession. Earlier this week I posted that there is talk that we could see cable fall back towards $1.40 by the end of the year so with such a wide spread across the market it is almost impossible to try and gauge where rates will be a few months from now.
So what has caused this weeks gains?
I have been a little surprised to see the gains sterling has made against the dollar over the last few days. At the start of the week the UK suffered from poor Manufacturing figures which showed that output had fallen by 1.5% in January which left exchange rates sitting around the mid $1.48's. We also saw some excellent figures come out of the U.S in the form of Retail sales and Factory Output but despite the positive news from the U.S exchange rates started to climb.
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The main reason for the gains seems to be down to some positive comments from Sir Mervyn King. The Bank of England Governor said that a UK economic recovery is in sight and that the pound has fallen enough in recent months. It has been sometime since Sir Mervyn has spoken positively about the situation in Britain and comes as a bit of shock considering that it was only last month that he voted for more quantitative easing. It seems that these latest comments have lent some much needed support to sterling but the positive moves for exchange rates could be short lived.
One thing the last week has proven is that getting the timing right on your currency trade is so important. To put this weeks move into monetary terms a £200,000 trade at the start of the week would have seen you receive nearly $6500 less than on the same trade put through today.
If you need to by or sell dollars in the next few months use the link below for a free, no obligation consultation to discuss how using a currency broker could save you or make you thousands.
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Good afternoon everyone,
After what seems like weeks of negativity for the sterling/dollar cross there were finally some positive moves this afternoon. Over the course of trading today exchange rates have increased by over 1% as the pound responded to some flat data from the U.S, at the time of writing this post the mid-market rate has broken through the $1.50 barrier to reach a high of $1.5092.
After yesterdays positive U.S retail sales figures (which saw spending increase by 1.1% for the month of February) U.S initial jobless claims fell by 18,000 to help ease the burden on the economy. I don't think this the reduced number would have come as much of a surprise following the excellent jobs data we saw come out of the states last week.
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Today also saw the release of the U.S Producer Price Index (PPI) for February, which came in exactly as forecast at 1.7%. The PPI measures the changes in prices of commodities from producers and a high reading can have a positive impact on the greenback.
Markets will have been buoyed by the retail figures but with today's data not causing any alarms it seem as though the wind has been taken out the dollars sails for the time being. I don't think today's gains for sterling mean we have turned the corner, I still believe the pound will come under increasing pressure over the next few weeks as we build up to the release of Aprils Gross Domestic Product (GDP) Figures.
If Aprils initial reading shows the UK economy has contracted in the first quarter it will leave the UK in a triple-dip recession. If that happens (which looks increasingly likely) we can expect sterling to suffer against a basket of currencies and I wouldn't be surprised to see exchange rates tumble. As I have mentioned in previous posts it is widely tipped that the GBP/USD cross could fall as low as $1.40 by the end of the year.
If you have to buy or sell dollars in the next few weeks knowing what type of currency contracts are available could potentially save you thousands of pounds. Click here for more information on the type of contracts. I can help business clients and private clients move their money overseas, whether it is for regular trades or a one off transaction. For a free, no obligation consultation use the link below to complete the contact form.
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Good afternoon,
Sterling had another poor day at the office and fell against the dollar after official figures showed that UK manufacturing output fell by 1.5% for the month of January. Cable dropped from $1.4920 to a low of $1.4832 on the back of the data release and the recent numbers will add to fears the UK is heading towards another recession.
The figures from the Office of National Statistics (ONS) came in much weaker than forecast leaving many economists to believe that this was the final straw for the UK economy and that we have no chance of avoiding the triple-dip.
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Although exchange rates recovered slightly over the course of the day
the recent decline now means we have seen a 9% drop against the dollar
since January. To put that movement into perspective, a £200,000 trade into dollars will now see you receive nearly $30,000 less than at the start of the year.
The one question on clients lips at the moment is do I think rates will move back up? At the moment the outlook for sterling/dollar does not look great. We may see a slight recovery if the UK does somehow avoid recession but I fear the damage may have already be done by the time the figures are released.
If the UK does fall into its third recession since 2008 I think it is highly likely we will witness exchange rates fall even further. It is widely tipped that we could well see the GBP/USD cross reach a low of $1.40 by the end of the year.
This is great news for anyone selling but if you are looking to buy dollars in the coming months further losses could prove to be very costly. As a currency broker I can offer a range of contracts to help you make the most of currency transfer and protect you from any more adverse market movements.Complete the link below for a free, no-obligation consultation.
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