Sterling/dollar hits fresh high

The sterling/dollar cross hit its highest level since September 19th at around 1.6120 early last week. This was however short lived as the president of the ECB Mario Draghi outlined great concerns for the European economy as a whole on Thursday, which saw investors pull money out of the single currency and into the safe haven of the greenback. That was coupled with the eagerly awaited Non-Farm Payroll from the US on Friday, which came out above the forecast of 93,000 at 146,000. These both strengthened the Dollar and pushed the GBP/USD rate back down around a point to the 1.60 level.

Despite the UK coming out of recession recently showing a 1% growth between July and September, the UK economy is still walking a finally balanced tightrope. There were no surprises in store at this month’s MPC meeting as the BOE’s decision to keep interest rates on hold and resist pumping any further funds in to the QE program was widely expected and therefore did little to move the rates. UK interest rates have been kept at a record low of 0.5% since March 2009 and there is little sign of them changing any time soon.

One of the reasons for the BOE’s halt in its QE program was due to the recent consumer price data. This showed inflation jumping unexpectedly to 2.7% in October, compared with 2.2% in the previous month.  Ross Walker, A chief UK economist at RBS said “They (BOE) have a bit of a balancing act at the moment” He said this is because inflation is likely to stay just above its 2% target for several months to come.

From the US the Fiscal Cliff remains the focus of everyone’s attention. The “Fiscal Cliff” is a popularised term used to describe the conundrum that the US government will face at the end of this year, when the terms of the Budget Control Act of 2011 are scheduled to go into effect.

There are two main routes the US can take with regards to dealing with this. They can let the current policy that is scheduled for the start of 2013, go into effect. This involves a number of tax increases and spending cuts that are expected to weigh heavily on growth and possibly send the US economy back into recession. The advantage being that they could see the deficit cut in half. Alternatively, they can cancel some or indeed all of the tax increases and spending cuts. This may help growth but would add to the deficit and increase the chances of the US facing a similar crisis to Europe.

Whichever route the US decides to take, it is likely to face difficulties and we could see some large movements in the currency markets in the coming weeks and months.

The GBP/USD cross saw some fairly modest movements last week but even a small movement can make a substantial difference in the price of a property purchase. A typical purchase of $200,000 would have a difference of around £1000 between the highs and lows of last week. For this reason, it is always important to stay in close contact with me to ensure you are buying at the right time. If you have not already done so, click here to complete the contact form for a free, no obligations consultation.

Cable weekly overview

With the US presidential election out of the way, markets last week were centred around discussions over the impending ‘fiscal cliff’, due to be implemented in the new year. The fiscal cliff is a combination of massive spending cuts and tax increases and is expected to send the US back into recession. Movements in the GBP/USD were also largely driven by events in Europe as the rate tracked movements in EUR/USD, pushing Cable to near a two-month low with concerns over Greece encouraging safe-haven flows into the US currency.

Sterling recovered somewhat on Tuesday morning as better than expected inflation figures were released for October. The pound consequently jumped half a cent against the dollar, breaking back through the $1.59 mark. However, its recovery was only temporary with sterling’s gains evaporating as market players realised that UK policymakers would be more concerned with encouraging economic growth than controlling inflation, fuelling speculation that more quantitative easing would be announced in the near term. Sterling continued to slide, losing nearly half a percent against the U.S dollar midweek, despite official figures showing unemployment had fallen by nearly 49,000 for the months July-September. Cable fell from high of $1.5914 back to $1.5840 as Sir Mervyn King announced that the Bank of England had cut the UK growth forecast for 2013 back to 1%.

We also saw the release of another batch of poor UK data as retail sales for October came in much weaker than expected, falling 0.8% month on month. Analysts saw this release as significant as it had been expected that retail sales would begin to stabilise. This raised fresh concerns that the UK would soon lose its triple A credit rating if the country recedes into a triple-dip recession. As a result, GBP/USD continued to drop further, despite poor data across the pond, with jobless claims worse than expected. However, questions were raised as to whether this was partly due to Hurricane Sandy.

With so much uncertainty in both the US and Europe, markets are particularly volatile at present. It is not unusual to see movements of more than 2 percent over the course of a trading week. If you are buying a property overseas, or if you have foreign invoices to pay, the cost of your goods or property will fluctuate in line with movements in the foreign exchange markets.

As a specialist currency broker,  I can provide you with various tools to limit your exposure to wild swings in the currency markets. Forward contracts, Stop Loss and Limit orders are all useful if you are working to tight budgets or are simply looking to maximise the return on your currency. Click here to contact me today for a free, no obligation consultation and take the first step to making the most of your currency.

Sterling loses ground on the back of BoE growth cut

Sterling fell by nearly half a percent against the U.S dollar on Wednesday despite official figures showing unemployment had fallen by nearly 49,00 for the months July-September. Cable fell from the days high of $1.5914 back to $1.5840 as BoE (Bank of England) Governor Sir Mervyn King announced that the central bank had cut the UK growth forecast for 2013 back to 1%. 


 







The positive news for the UK continued this morning (Wednesday) as the unemployment figures were released, The Office of National Statistics (ONS) announced that unemployment had fallen to 2.51 million largely thanks to a decline in youth unemployment. This latest data release  pushed the pound back over $1.59 mark early doors, but could not sustain the gains as Sir Mervyn presented the BoE quarterly inflation report.

Despite the recent UK GDP growth for the 3rd quarter the report said the UK could be stuck in a "low-growth" environment,  as  the continuing economic issues surrounding the euro zone and the rest of the world would continue to impact the United Kingdom.

Sir Mervyn indicated that growth would continue to zig-zag, and that the growth for the last quarter (July to September) was influenced by a number of one-off events, such as the Olympics and the Queens Jubilee. These events over inflated the figures and are not necessarily "a reliable guide to the future".

Later on today (Wednesday) we could see further movement for cable as The Federal Open Market Committee (FOMC) minutes are released from their latest meeting. The FOMC meet eight times a year  to review economic and financial conditions in the U.S. The minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.

With the volatility set to continue it is important as ever to get the timing right on currency transfer. To put today's rate movements into perspective a £200,000 would have seen a difference of nearly $1500 between the high and low of the day. At Foremost Currency we have a number of different currency contracts that can protect you from adverse market movements or help you target a rate that is not currently achievable. To take next step click here to complete the contact form for a free, no obligation consultation to see how we can make your money go further.

GBP/USD weekly overview

The US presidential elections took centre stage last week as markets eagerly anticipated the results. Polls
suggested the race between Barack Obama and Mitt Romney was too close to call and, as a result, the
uncertainty over the outcome encouraged safe haven flows into the dollar, pushing it higher against the
pound. On Monday alone the buoyant US currency gained 0.4% against sterling.
 

As it was announced that Obama had in fact won the election, and by a fairly substantial margin, the dollar
lost ground against the pound as investors began selling the US currency. Victory for Obama was seen as
ensuring easy monetary policy in the States in the near term. However, sentiment quickly changed and the
dollar subsequently rose to a two-month high against most major currencies.

Concerns over the looming fiscal cliff helped boost demand for the safe-haven greenback, keeping GBP/USD rates below the 1.60 mark. The ‘fiscal cliff’ is essentially a mixture of tax increases and spending cuts, due to extract around $600 billion from the US economy. The year-over-year changes for fiscal years 2012-2013 include a 19.63% increase in taxes and 0.25% reduction in spending. The fiscal cliff is expected to increase the chance of the US entering recession again in 2013. As is often the case, concerns over the world’s largest economy actually strengthen its currency, as investors move their assets into the safe-haven dollar. After the dust had settled from the US election, the focus quickly shifted to Spain and talks of another
bailout for the struggling nation’s economy.

The dollar made further gains against sterling as it was announced that Spain was in no hurry to seek another bailout, encouraging further safe-haven flows into the dollar. Another bailout would be seen as positive for Spain and the Eurozone as a whole.

The attention was entirely on Europe as the week drew to a close with key announcements from both the
Bank of England and the European Central Bank. On Thursday the Bank of England announced that they
would not be opting for further monetary stimulus in the near term after better-than-expected GDP figures
eased concerns over the state of the UK economy.

As stated in the Euro report, the UK’s central bank also decided to keep interest rates on hold, as did the
ECB. Sterling subsequently rose against the dollar, recovering from a two week low of $1.5930 struck earlier in the day.

Despite some positive news from the UK, GBP/USD rates plummeted on Friday, with the cross trading around the $1.59 level as markets began winding down ahead of the weekend. There is so much uncertainty surrounding the U.S and UK economy, getting the timing right on your currency transfer remains critical.


If you need the best exchange rates, the first step is to contact me for a free consultation. Click here to complete the application, I can then let you know the options available to you, making sure you are not caught out by adverse exchange rate movements, and ensure you make the most of your currency.

A volatile week for the Pound/Dollar cross

Last week saw a huge swing for the sterling dollar cross. After the previous weeks high of $1.6178 sterling fell to its lowest levels in six weeks before rallying and gaining 1.5% to claw back the deficit. In this week’s report we will take a closer look at the events which caused the move and what is predicted for exchange rates in the coming weeks.

Early last week we saw the pound fall to its lowest levels since the beginning of September, hitting a low of $1.5919. The move tracked a fall in the euro against the greenback as falling stock futures in the U.S prompted investors to sell riskier currencies and head back to the safe haven of the U.S dollar.

However, the gains for the dollar did not last as there was finally some positive news for the UK economy. Last week saw the release of the UK GDP figures which confirmed that the UK had finally climbed out ofrecession with better than expected data. Official figures from the Office of National Statistics showed the UK economy had grown by 1% in the 3rd quarter beating estimates of 0.6% which pushed cable back over the 1.61 mark.

Although at first glance it looks great for the UK, the higher figures can be put down to a couple one off events. Olympic tickets sales are believed to have boosted the economy by 0.2% and with the extra bank holiday for the Queens Jubilee, the figures seemed enhanced when compared to the previous quarters. In the next couple of months the data will be revised and it is possible we could see the growth figures reducedwhich could again cause some volatility in the currency markets.

Despite the positive news last week concerns over the UK economy will remain as we are still seen as being vulnerable to the troubles surrounding the euro-zone, especially as they are our largest trading partner. As a result the majority of market analysts expect sterling to struggle to reach the 1.63 mark we saw earlier in the year. There is also the growing speculation to whether the Bank of England will opt for further stimuluswhen they meet next week. Last week BoE Governor Mervyn King said the central bank were ready to injectmore cash into the economy if the recent positive signs fade.

If policy makers were to add to the £375 billion they have already pumped into the UK, we could well see sterling lose the ground it made against the dollar when Fed Chairman Ben Bernanke agreed to add $40 billion per month in to the U.S economy for the foreseeable future.

With so much volatility surrounding the currency markets at the moment it is as important as ever to stay in touch. I can talk you through the different types of currency contracts that are available to ensure you get the timing exactly right and that you make the most from your currency transaction.Click here to complete the contact form for a free, no obligation consultation.

Sterling rallies following postive UK retail figures

Thursday saw a swing in rates for the pound/dollar cross following better than expected retail sales data. Early trading saw cable climb by nearly half a point following the positive UK data but the cross could not sustain the move a gradually fell away, tracking a fall in the euro against the greenback.

Data released by the Office of National Statistics (ONS) showed that UK retail figures had increased by 0.6% for September compared with a 0.1% contraction in August. The rise was put down to demand for school and winter clothing and helped sales recover following poor figures in August due to the Olympics. The positive news saw the GBP/USD cross rise from $1.6117 to $1.6168, edging back to the high of $1.6180 we saw on Wednesday following the better than expected UK employment figures.

This positive news for the UK will lead to further speculation regarding the Bank of England QE programme. Many experts had predicted the BoE will add to the £375 billion they have already pumped into the UK economy, but if GDP figures show the economy has grown in the third quarter we may see them hold of for the time being. If the BoE were to opt for further stimulus we could see sterling come under pressure and rates could fall against a number of different currencies.

Trying to predict the currency markets is almost impossible to predict, with so much volatility in the markets getting the timing right on your currency transaction in one of the most important things you can do. If you want to make the most from your currency transfer click here to complete the contact form for a free no obligation enquiry.

GBP/USD weekly overview

In this week’s GBPUSD report we will have a look at what events have dominated the cross and how they have affected the markets. Last week the single focus of cable was the run up to the Federal Reserve interest rate and Quantitative Easing meeting on Thursday.

  

Even as early as Monday the market was pricing in some sort of stimulus intervention as Cable reached a 4 month high. The trend of sterling strength against the dollar was maintained  on Tuesday as markets continued to price in movement coupled with a threat by ‘Moody’s Investors Service’ that the US was in danger of losing its triple A debt rating,  if next year’s budget talks do not result in lower debt to GDP ratio.

When the results finally came in late Thursday UK time the conclusion certainly didn’t disappoint those expecting some action. Ben Bernanke backed the purchase of $40 Billion of mortgage backed securities every single month until US growth as well as the US job market improves. In addition Fed Chairman Bernanke added to his commitment to get the US economy moving through spending by confirming that interest rates in the US would remain low and wouldn’t be raised until 2015 at the earliest.

This is probably the most decisive action that the market has seen from the US to deal with the financial crisis since its inception. At the very least it sends a clear signal to the rest of the world that the US are prepared to do everything necessary, including trying new strategies to navigate their way out of recession and into competitive growth.

Naturally following this announcement cable continued its upward trajectory as equities and perceived riskier currencies (including Sterling) made gains against the Greenback. With the Fed Chairman indicating that he would be prepared to pump $40 Billion into the economy every month until it has an effect, the market has the potential to continue the current trend of Dollar weakness. Essentially Mr Bernanke has embarked on an endless amount of quantitative easing and so it will be interesting to see how far the markets move off the back of this uncertainty.

Whilst this is undoubtedly a great time for dollar purchasers to be taking advantage of the recent gains, it would be wise to approach the market with some trepidation as the FX markets are notoriously volatile. Despite a clear shift in fundamentals there is no absolute guarantee that the technical levels will follow suit, and indeed there have been countless occasions throughout history where a sharp market movement has been followed by an equally sharp market retraction. To discuss the different type of currency contracts that are available click here to complete the contact form and take the next step to making the most of your currency exchange.

 

Weekly Economic Data that may affect exchange rates

Monday – The main data today is Trade Balance data from the Eurozone, showing imports and exports. Elsewhere we have UK House Prices. There are no significant releases from the USA today.

Tuesday – Some important UK data today including Inflation data, House Prices and Retail Sales, all of which are a barometer of overall economic health. In the Eurozone we have Economic sentiment surveys from Germany and the EU. In the USA we have a speech from the Federal Reserve, and some Housing data.

Wednesday – The Bank of England release their minutes today, which often causes volatility for Sterling. In the Eurozone we see the latest construction data output. In the USA there are Homes Sales data and another speech from the FED. Over in New Zealand we see the latest GDP figures at 11:45pm.

Thursday – UK Retail Sales are released today, showing full monthly and annual comparisons. In the Eurozone we have inflation data from Germany, Manufacturing data from Italy, Germany and France. We also see measures of EU Consumer confidence. Over in the USA we see the latest Jobless Claims, Manufacturing data, and yet another speech from the FED.

Friday – We end the week on a quiet note, with the only UK data of note Public Sector borrowing. There is nothing of note from the EU today. Over in the United States we have, you guessed it, another speech from the FED.

Weekly overview

The UK markets reopened after the bank holiday weekend and with no major data releases at the start of the week Sterling was driven by events from the States and Euro zone as everyone awaited Ben Bernanke’s speech on Friday.

Increased optimism around the Euro zone saw investors move from the safe-haven of the dollar as the Euro gained ground. We did have some good news out of the States as revisions showed that the economy had slowed less than previously estimated (1.7% up from 1.5%). The US is in much better shape than Europe and the UK but the next couple of weeks will determine in which way the rates will move and be affected.

 

If the Euro crisis continues as many expect; we could see more uncertainty as investors will instinctively move back into the safe haven of the dollar and we could see GBP/USD rates in the 1.54’s and EUR/USD rates back into the low 1.20’s. Sterling dropped against the dollar on Thursday as investors awaited the speech by Federal Reserve Chairman Ben Bernanke.

Bernanke spoke at Jackson Hole on Friday; his comments were to determine the value of the dollar and ultimately whether we were seeing a positive or negative trend for the US Economy. Bernanke stated that “the first two rounds of Fed asset purchases had raised US output by almost 3% and lifted employment by 2m jobs and thus wasn’t going to rule out further asset purchasing. The Fed chairman also urged Europe to press ahead with policy initiatives to resolve the ongoing crisis. Markets remained relatively unchanged as Bernanke said the “Fed would act as necessary to strengthen the struggling global economy, but there was no suggestion that action was imminent” halting speculation of more Quantitative Easing (QE).

September is notorious for being very volatile and no doubt this month will not disappoint, all eyes will be on the single currency and whether the ECB and German courts can wave through a realistic and convincing EU rescue plan, which could see EUR/USD rates back towards 1.30 and GBP/USD rates up near the 1.60 mark. With the Bank of England meeting due to take place next week all eyes will again be focused on Mervyn King and we will wait to see if there is any talk of another interest rate cut for the UK.

If you have an upcoming currency requirement now is the time toact, click here to complete the contact from for a free, no obligation quote to see how much you can save.

Sterling hits highest level in two weeks

Sterling reached its highest level in two weeks against the U.S dollar on Tuesday and for the first time since August the 23^rd cable broke through the $1.59 mark.

The pound shrugged off poor construction data released at the start of the day, UK construction Activity came in lower than forecast with PMI figures showing the sector had dropped from 50.9 in July to 49.0 in August. A figure under 50 shows the sector has contracted.

The reason behind cables rise this afternoon (Tuesday) was to the UK service Sector hitting its highest levels for 5 months. Official figures indicated a jump from 51 in July to 53.7 in August on the PMI index. This latest data could be seen as a sign the UK economy is improving and will have lowered expectations of a interest rate cut and further Quantitative Easing from the Bank of England when they meet on Thursday.

We could see further gains for the GBP/USD cross in the coming days if the European Central Bank announces a plan to reduce the borrowing costs of Italy and Spain when they meet later in the week. Any positive vibes from Mario Draghi could lend support to the single currency as investors leave the safe haven U.S dollar and return to the Euro.

If you are thinking of buying or selling dollars, the events in the next couple of days could mean a major swing in rates. If you want to know what contracts are available to protect you from adverse movements or take advantage of a sudden spike in the market click here to complete the contact form and take the next step in making the most of your currency transfer.

Sterling falls ahead of Jackson Hole meeting

Sterling slipped back against the dollar on Thursday ahead of Friday’s meeting at Jackson Hole. Cable fell sharply in the afternoon and hit a low of $1.5803 after reaching a high of $1.5872 earlier in the day, 

On Friday Fed Chairman Ben Bernanke is speaking and there has been growing speculation that policy makers could opt for another round of stimulus, which if implemented could see the dollar fall against a number of currencies.

The past week has seen the GBP/USD cross being driven by events in the states and Thursday saw the dollar claw back some of the ground it had lost to the pound.  In the few days the U.S dollar has benefited from some positive data releases and it seems it has lowered the chances of Mr Bernanke and the FED adding to their QE programme.

With the UK economy still balanced on a knife edge it is quite possible we could see cable move back towards $1.56 if UK data doesn’t improve. With the BoE meeting due to take place next week all eyes will again be focused on Mervyn King and we will wait to see if there is any talk of another interest rate cut.

If you are thinking of buying or selling dollars recent market movements have shown just how important it is to get your timing right. By clicking here and completing the contact form you can get a no obligation quote and find out about the different types of contract that are available so you can make the most from your currency transfer.

Sterling holds its ground against the US dollar

It has been an interesting couple of days for the GBP/USD dollar cross. With little data being released in the UK today the pound has been at the mercy of events elsewhere. 

Sterling held its ground against the U.S dollar on Wednesday despite being close to a three week low against the Euro; cable reached a high of 1.5850 with growing speculation that U.S policymakers are getting closer to more monetary stimulus to boost the U.S economy.

FED chairman is Ben Bernanke is due to speak at the central banks annual meeting in Jackson Hole on Friday, and any indication of further stimulus could see rates push past the $1.59 mark, briefly seen a week ago.

Last week saw sterling gain ground against the dollar following the U.S Congress Budget report, with a rise in tax and spending cuts the potential is there for the U.S economy to slip back into recession in 2013.

There was some positive news for the US today though; figures released on Wednesday afternoon showed that the U.S economy had grown more than forecast for the second quarter. Official figures showed that the economy grew by 1.7% compared to the 1.5% originally predicted, but will all eyes on Fridays meeting it did not have much of an impact on exchange rates.

It is certainly a good time if you are looking at buying dollars, if you want to achieve the best exchange rate click here and complete the contact form for a no obligation quote. I can also look at providing you with the tools to protect you against any adverse market movements to make the most from you currency transfer.

GBP/USD weekly overview

Last week saw sustained positive moves for the pound/dollar cross, after the run of poor data we have seen in previous weeks there was finally some good news for the UK economy. In this week’s report we will take a closer look at the events in the UK and U.S that had the greatest impact on sterling and the greenback and how it affected the currency pairing.

 

 It was a solid start to the week as Sterling pushed through the $1.57 barrier for the first time in two weeks, and it was largely thanks to the Euro. Gains made by the troubled single currency prompted investors to leave the safe haven US Dollar and look at riskier alternatives, causing the dollar to weaken and meant rates hit their highest level since the end of July.

Tuesday saw sterling continue to rise after data released showed annual British inflation had unexpectedly increased for the month of July. Rates rallied to a high of $1.5730 on the back of the news but could not sustain the move as retail sales data from the US caused rates to fall. Figures released showed that sales had increased for the first time in four months, dampening the chance of the FED initiating another round of quantitative easing, which meant cable finished the day back at $1.5680.

Last week also saw the release the Bank of England minutes from their meeting at the start of the month; the minutes can often cause some volatility in the market so all eyes were on Mervyn King and other BoE policy makers. But sterling held its ground as the minutes showed a unanimous vote against further monetary stimulus and an interest rate cut.

It wasn’t only the U.S that benefited from positive Retail Sales data last week, Thursday saw figures released for the UK sector and the results were much better than had been predicted. A rise of 0.3% compared to the 0.1% originally forecast and coupled with poor U.S jobless claims and housing data, Sterling hit a fresh high of $1.5739.

Over the past seven days Sterling has gained almost 1% against the dollar and last week’s movements once again show just how unpredictable the currency markets can be.

It is impossible to predict which way rates will move but completing the contact form means you will have all the tools available to make the most from your currency transaction. Click here to complete the contact form and take the next step to making the most from your currency.

Cable weekly overview

The last two weeks have brought us some of the greatest sporting moments the world has ever seen, and with the Olympics now over we wait to see if the UK economy has benefited from this event. Last week saw the volatility in the currency markets continue though as comments from the Bank of England (BoE) and results from UK data releases impacted the performance of the GBP/USD cross.

 The week did not start well for the Pound as it fell against the Dollar; Sterling was down by 0.4% to $1.5584 as investors looked towards Wednesday’s quarterly inflation report, the report is always eagerly anticipated as the BoE give their latest predictions for growth and inflation, giving us an indication that more quantitative easing or a potential interest rate cut could be on the cards.

Positive news followed and sterling edged slightly higher after UK manufacturing and industrial output data released on Tuesday was better than forecast. Although manufacturing output dropped by 2.9% in June it beat expectations the sector would fall by 4.1%. Industrial output also dropped to 2.5% but again beat the predicted 3.4% decline.

So, onto the long awaited inflation report. As outlined in the Euro report above, the BoE forecast that the UK economy will hardly grow for the remainder of 2012 and also cut their projections for future years. As Mervyn King spoke cable reached its highest level for a week as rates pushed towards $1.57.

The gains were short lived as data released on Thursday showed that the U.S trade deficit narrowed for the month of June while the UK trade deficit for the same month hit its highest levels in 15 years. This wiped out the gains seen the previous day and caused the pound/dollar cross to fall by 0.6% which meant rates dropped back to the same level that we saw at the start of the week.

It is widely expected that sterling will continue to fall and by the end of the year we could see rates hit $1.53, that would mean a 2% drop from where we are now and to put that kind of movement into monetary terms it would see you receive $6000.00 less on a £200,000 trade.

It shows how important it know what tools are available to ensure you are making the most from your currency transfer. Click here to complete the contact form for a free, no obligation consultation.

GBP/USD weekly round up

Last week the Pound lost nearly 2 cents against the US Dollar as poor 2^nd quarter growth figures continued to weigh on Sterling, and fears of a Bank of England rate cut on Thursday failed to subside. Poor UK consumer confidence on Tuesday morning was followed by worse than expected Manufacturing data on Wednesday which showed that the sector has now contracted for 3 months in a row, further denting Sterling’s performance, while US data was mixed. Most eyes however were fixed on the FOMC (Federal Open Market Committee) decision on Wednesday evening. At 7:15pm they announced that at least for this month there would be no further quantitative easing or change in the interest rate. While they pointed out that growth was slower than expected and there were more downside risks, they also made sure to point out that the housing market was showing some signs of improvement.

Sterling dropped from 1.57 to 1.56 between market close on Wednesday and opening on Thursday as the BoE and ECB rate decisions came into view. At this point it looked as though the only factor that could help Sterling recover back towards the previous weeks 5 week high against the Greenback would be the ECB announcing some more credible measures to help try and support the single currency as this could sway investors to start seeking more risky assets again. In the end neither central bank cut their interest rate or announced any kind of asset purchase programme which meant we saw the Pound continue to fall until we saw lows in the mid 1.55’s. Friday saw many traders and analysts being caught out but the surprising jump in US non-farm payrolls, a key economic release in the US. It showed that there were 163,000 new jobs created in July, well above the expected 101,000 but more importantly it was the first time since March this year that the actual reading was above forecast, and in the build up to the release the Pound reached a low of 1.5505.

As we know, the FX markets are pretty reactive at the best of times and within 2 hours of the NFP release on Friday increased investor risk appetite saw the Dollar losing ground against both the Pound and the Euro. We think that investor confidence will be the key driver of cable for the next 7-10 days as we are pretty light on the data front from both sides of the Atlantic, and the minutes from Thursday’s Bank of England meeting that we will see a week on Wednesday will be the next big release. These will hopefully give us some insight into how seriously the MPC discussed whether or not to cut the UK interest rate or to expand the asset purchase programme.

With the GBP/USD rate moving so quickly in a single trading day at the moment it is key that you keep in touch and use tools available to make the most from your  transaction. Click here to complete the contact form for a free no obligation quote.

Sterling falls to 1 week low against the dollar

The wet weather disappeared on Monday and so did the gains for sterling against the U.S dollar. Rates slipped to their lowest levels for a week as the growing concerns in the Euro-zone debt meant investors looked for alternative safe haven currencies.  

The pound lost ground against the greenback after the markets reacted to news that the yield on Spanish 10 year bonds increased to the highest level since the euro was created, adding to speculation that the country will seek further aid in the form of a bailout.

Cable fell by nearly 0.8% to $1.5486 falling from the $1.57 seen last week. It is another indication of just how volatile the currency markets can be and with more talk of Greece leaving the single currency it is possible we could see rates fall even further.

Let’s not forget that UK is not much better. In recent weeks we have seen a run of poor data that has lead to further monetary stimulus from the Bank of England (BoE) and the possibilities of another interest rate cut. If the BoE decide that a interest rate cut is needed we could see sterling fall against a number of currencies, not just the dollar. So the results of the BoE meeting in August will be eagerly anticipated.

Later this week could also have a bearing on exchange rates, GDP data released on Thursday will show if the UK has contracted for a third consecutive quarter and could lend further support to the dollar.

With so many conflicting opinions on where markets are headed, it’s more important than ever to know your options and the tools available so you can achieve the best possible exchange rate. Click here to complete the contact form and take the next step to making the most of your currency.

Sterling/dollar weekly overview

The last few days have been better if you were looking to buy U.S dollars. Rates pushed to a new one month high following the decline we witnessed the previous week; negative data from the US and better than expected unemployment data from the UK helped rates climb back above the $1.57 mark:

 

Last week saw a generally disappointing week for the US Dollar which in turn helped the Pound; unfavourable data releases meant we saw the GBP/USD rate reach the 1.5734 (a fresh one month high at mid-market) compared to a high of 1.5562 in the previous week. Euro weakness did persist throughout the week, helping safe haven currencies such as sterling, and whispers did bring up whether we might see parity between the EUR/USD before the end of the year should the continue to weaken as it has been in recent weeks. The EUR/USD rate fell 0.77% to a low of 1.2216 after German Chancellor Angela Merkel’s comments added to Euro zone fears, causing people to seek safer investments.

Over in the states, mixed messages from Fed Chairman Ben Bernanke caused further uncertainty as he said easing tools are still available if they are required but might not actually be necessary, hinting at further Quantitative Easing in the USA. Towards the end of last week Sterling became the better performer out of the major currencies, although there was no way you could have described its performance as strong, it did at least move higher against the dollar and Euro on Thursday and Friday as outlined in the Euro report. The US Dollar’s disappointing or negative data included weekly jobless claims, existing home sales and the Philadelphia Fed's manufacturing index.

The dollar will always benefit from being a safe haven currency; as soon as investors are “spooked” or want to get out of riskier currencies they will flock back to the US dollar making it more expensive to purchase. If you need to purchase dollars it is important to try and take advantage of movement in the markets and to use our different contracts to make sure you are budgeting effectively.

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Sterling loses ground aginst an upbeat US dollar following FED comments

After the gains seen yesterday (Monday) sterling fell against the U.S dollar this afternoon following comments by U.S Federal Reserve (FED) Chairman Ben Bernanke. Pound/dollar rates dropped by nearly 0.6% to $1.5550 as Mr Bernanke gave no indication that the central bank would be looking to pump further funds into the U.S economy. 

 

Early in the day the run of poor UK data continued as the annual inflation rate (measured by the Consumer Price index) fell to 2.4% for the month of June compared to 2.8% in May. This caused sterling to drop against a number of currencies and once again underlines the Bank of England’s decision to add the extra £50 billion to their asset purchasing scheme.

Mr Bernanke claimed that central bank were ready to jump in should additional monetary support be required, but due to his lack of detail it boosted the dollars value making it more expensive to purchase.

With some analysts predicting we could be back down to $1.53 (mid market) in the coming months it is vital you know what options are available so that you can make the most from your currency transfer. To put the move into perspective, if exchange rates fell back to $1.53 a £200,000 trade would see you receive around $6000.00 less than if you booked a rate of exchange now.. By clicking here and completing the contact form you can send me a no obligation enquiry and protect yourself from any adverse market movements

Sterling falls to lowest levels in five weeks

 It was another choppy week for the pound/dollar cross as exchange rates fluctuated by over 1% as investors grew hesitant following news from the UK, U.S and euro-zone. Last week saw rates peak at $1.5562 while the low was down at $1.5393, so in this week’s report we will take a closer look at the events that caused cable to hit its lowest levels for five weeks.

 

The week started off in quite fashion as appetite for the pound was subdued due to the lack of data from the UK, but with investors waiting for the FED (U.S Federal Reserve) minutes from their June meeting sterling held just over the four week low seen the previous Friday. Despite a lack of data sterling gained nearly 0.2% against the dollar to reach $1.5520 but if the FED minutes give any indication of further stimulus it would lend further support to the pound and could see rates push even higher.

After the run of poor data we seen over the last few weeks (which led to the Bank of England to add to their asset purchasing scheme) there was some positive news for the UK economy on Tuesday as British Manufacturing and industrial production data came in higher than forecast. Manufacturing was up by 1.2% month on month in May while Industrial production was up by 1% from April.

This caused another rise against the greenback as rates peaked at $1.5550 for the day but the gains were short lived as Bank of England chief Mervyn King said the UK economy was not showing signs of recovery and that he was also concerned by the outlook for UK exports, causing a half point drop for cable as rates fell back to $1.5494. With 50% of the UKs exports going into the euro-zone Mr King will have one eye on the value of the pound as this week saw the GBP/EUR rate hit its highest levels for nearly four years, making UK goods more expensive for the cash strapped euro-zone countries.

Thursday morning gave traders in the UK their first opportunity to respond to the eagerly anticipated FED minutes which were released on Wednesday evening. Early on sterling fell back to $1.5456 as the minutes lowered expectations that further monetary stimulus was on the cards which quickly increased demand for the greenback. The decline did not stop there as later in the day cable dropped to its lowest level since June the 6^th after U.S jobless claims fell to their lowest in the past four years with rates slipping back to $1.5393.

But with one final twist sterling recovered on Friday, shrugging off poor UK construction data to push back towards $1.5550. Construction output fell by 6.3% in May compared to the same month in 2011. The main driver was the fall in new public works, which fell by about 22%, reflecting the impact of government spending cuts.

The last week has once again shown just how quickly the currency markets can change and how important it is to stay in touch so I can protect you against adverse market movements.

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GBP/USD weekly round-up

The US currency fared well against the struggling pound last week, benefiting from its status as the world’s safe-haven currency of choice and the Bank of England’s decision to inject an additional £50 billion into the troubled UK economy.

 After ending the previous week at a peak of $1.5718 after a supposedly successful EU summit reversed risk appetite, the pound started last week badly against the greenback, as a survey showed UK manufacturing activity contracted for a second month running in June. The weak data fuelled speculation that the Bank of England would announce further quantitative easing at Thursday morning’s policy meeting.

Sterling shrugged off weak UK construction activity data on Tuesday which did little to affect GBP/USD rates as investors were more concerned over the outcome of Thursday’s Bank of England (BoE) meeting and the European Central Bank’s (ECB) interest rate decision. However, it was a different story midweek as sterling lost ground against the dollar as a survey showed the UK's dominant service sector grew at a much weaker pace than expected last month cementing expectations the BoE would opt for more stimulus to aid the flagging economy.

Sterling suffered its heaviest losses against the greenback towards the end of the week, with key central bank announcements and further weak data weighing heavily on the UK currency, driving Cable down. On Thursday the pound lost around 0.5% against the dollar, trading at $1.5524, after a surprise interest rate cut by China, which came at the same time as the BoE decision, with the ECB later taking centre stage.

On Thursday the BoE increased asset purchases under its quantitative easing programme by 50 billion pounds in order to try and stimulate economic growth. Attention then turned to a move by the European Central Bank to reduce its main interest rate by 25 basis points to 0.75 percent and cut its deposit rate to zero in an attempt to revive a deteriorating euro zone economy beset by debt problems. The dollar gained as a result of its safe-haven status, bringing GBP/USD rates down.

The GBP/USD pair ended the week in the same vein. Weaker than expected US employment figures drove rates down, as is often the case, bad economic data from the largest economy in the world actually strengthens its currency as concerned investors seek security in the safe-haven dollar.

If you need to buy or sell dollars in the coming weeks or months click here to complete the contact form and we can discuss the different options available which will help you make the most from your currency transfer.

Pound/dollar rates fall as the ECB interest rate decison causes a flight to saftey

Sterling slumped by 0.8% on Thursday as a rate cut by the European Central Bank (ECB) caused investors to head back to the safe haven U.S dollar. It was a busy day in terms of data releases as we also had the results of the eagerly anticipated Bank of England (BoE) monthly meeting. Sterling fell back to $1.5502 over the course of the day, erasing earlier gains following a surprise interest rate cut by China.

Over the last few days talk of the BoE meeting has dominated the headlines as everyone braced themselves for another round of quantitative easing. At midday Sir Mervyn King announced that policymakers had voted in favour of further stimulus by adding another £50 billion to its asset purchasing programme over the next four months.

The figure did not come as a surprise due to the UK being in a double dip recession and the recent run of poor data, what was a surprise was the impact it had on exchange rates. The pound started to increase against a number of different currencies including the USD, however the gains were short lived as news from the ECB broke of their decision to cut interest rates.

The ECB reduced its main interest rate from 1 percent down to 0.75 percent and also cut its deposit rate to zero in an attempt to jump start the euro-zone economy which has be hit by growing debt problems. This weakened the Euro considerably and actually pushed the GBP/EUR rate up by a cent to take it close the three and half year high witnessed earlier this year. But the USD seems to still be the currency of choice and as investors headed back across the pond cable suffered and rates fell over the duration of the afternoon.

Over the next few days we could see rates move either way depending on the results of the data releases coming from the U.S, UK and euro-zone, so if you are thinking of buying or selling dollars in the coming weeks click here and complete the contact form to send me a direct enquiry and take the next step to making the most of your currency transfer.

Sterling falls against the dollar with more QE on the horizon

Today has seen sterling fall at a steady pace against the dollar despite the U.S market holiday. Once again the UK has come under pressure from poor PMI data and the expectations of further monetary stimulus from the Bank of England (BoE) at their meeting tomorrow (Thursday). 

Rates slipped back to a low of $1.5581 following a data release that showed the UK’s service sector had grown at a slower pace in June, cementing expectations the BoE will add to the £325 billion they have already pumped into the UK economy. It has been forecast the BoE will add £50 billion to their asset purchasing scheme when policymakers meet on Thursday morning which could reduce the value of the pound and cause exchange rates to fall further.

Growth in the UK’s service sector fell to it lowest level for eight months in June, the sector fell to 51.3 compared to 53.3 in May and although the figure indicates some growth it was less than originally expected. Today’s data follows poor construction and manufacturing figures which will almost certainly lead to more quantitative easing tomorrow.

In the past a cash injection by the Bank of England has led to the pound falling against a basket of currencies and tomorrows meeting could have the same impact. However, the calls for more QE and the run of poor data mean that if the BoE opt for further stimulus it will not come as a surprise so we may not see the markets react as much as we have seen before. Tomorrow also sees the European Central Bank (ECB) interest rate decision and if they cut rates it could counteract any negative movements caused by QE.

If you need to buy or sell dollars in the coming months it is important to stay in touch so you can make the most from your currency transfer. Click here to complete the contact form and send me a no obligation enquiry.