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.

Sterling holds its ground despite more poor data

Sterling managed to shrug off poor UK construction data this morning to hold its ground against the U.S. As the UK markets opened the GBP/USD cross was sitting over $1.57 but as the construction data was released rates began to drop and hit a low of $1.5660, the decline was short lived as over the course of the afternoon rates began to recover and at the time of writing had broken back over $1.57. With all eyes now turning to Thursday the next 24 hours will be interesting as we may start to see some pricing into the market as talk of another cash injection by the Bank of England (BoE) looks more and more likely.

In the UK the construction sector fell at it quickest pace for two and half years for the month of June. According to the PMI index activity fell in the sector from 54.4 in May to 48.2 in June. Any figure below 50 indicates contraction and added to the poor manufacturing data released on Monday today’s news will add to the calls for the BoE to add to its quantitative easing programme.  

But how will quantitative easing affect exchange rates? It’s a tricky one, if you look around you will find arguments for both sides. On one hand a round of QE could reduce the value of the pound which would see pound/dollar rates fall back from their current levels, but on the other hand some analyst believe that the BoE resuming its asset purchasing scheme coupled with the European Central Bank (ECB) cutting interest rates could help push sterling’s value higher as it could shore up the UK economy.

It is another example of how difficult it can be to predict which way the market will move, as everyone has their own opinion and there are no set rules in place. What you can do is make sure you are using all the tools available to ensure you are making the most from your currency transaction. Click here to complete the contact form and we can discuss the options that are available which can protect you against adverse market movements or help you make the most from a sudden rise.

Sterling hits it highest level for over a week, but will it last?

 

It has been a fairly choppy day for the pound/dollar cross as data from the UK, US and Euro-zone all had an impact on exchange rates. Over the course of the day cable increased by 0.5% from $1.5644 to reach a week and a half high of $1.5722 before slipping back to $1.5665 at the time of writing. With all eyes focused on Thursdays Bank of England meeting and their interest rate and quantitative easing decision the volatility is sure to continue.

With the UK economy struggling to grow there have been calls for the BoE to add to the £325 billion they have already pumped into the system. Today’s data in the UK will have added to those calls as UK manufacturing continued to slump. Although the pace of the decline eased slightly the sector still registered a mark under 50 on the Purchasing Managers index (PMI) which indicates contraction.

If the Bank of England votes in favour of more stimuli Thursday could see some major movements in the currency markets. In the past an announcement of QE has reduced the value of sterling and caused the pound to fall against a basket of currencies. Thursday decision could have the same impact which would see the GBP/USD cross fall away from the recent high.

In the US, the manufacturing sector grew for the month of June but not at the rate that had been forecast. The Manufacturing PMI released by Markit showed the sector fell from 54 in May to 52.5 in June and as the manufacturing sector in the U.S makes up large part of the total Gross Domestic Product it is a good indicator of conditions in the states.

With so much uncertainty surrounding the markets especially with the chance of more QE in the UK this week it is vital you know how to protect yourself from any adverse market movements. So if you are buying or selling dollars in the next couple of weeks click here to complete the contact form to discuss the options that are available