Tag Archives: Euro

COMPARING CURRENCY MATTERS WITH YOUR BANK

COMPARING CURRENCY MATTERS WITH YOUR BANK

In a recent comparison conducted for one of our clients, Currency Matters saved them a staggering £1,613.96! Please find full details of the comparison below.

 Currency Matters quote:

Client buys EUR 80,000.00 @ 1.1905, client sells £67,198.66. No fees or commission charged.

High Street Bank Quote:

Client buys EUR 80,000.00 @ 1.1630, client sells £68,787.62 + £25 fee = 68,812.62

TOTAL SAVING: £1,613.96.

Currency Matters

 The US Dollar has continued to fall following Tuesday’s meeting of the Federal Reserve. At the meeting the Federal Reserve kept interest rates on hold at 0.00-0.25% and kept quantitative easing at current levels. However, the Federal Reserve opened the door to the possibility of additional quantitative easing indicating that it would be prepared to provide additional accommodation if needed to support a fragile economic recovery.

 On the interbank market GBPUSD currently trades above 1.56 whilst EURUSD trades at 1.33.

 In the UK, Sterling has come under some downward pressure following the release of recent disappointing economic data including poor retail sales and higher than expected government borrowing, which totalled £15.3 billion in August. The Bank of England Minutes released this week showed that the Monetary Policy Committee voted to keep both interest rates on hold at 0.5% and its Quantitative Easing Asset Purchase Scheme at £200 billion. The minutes made no clear indication that further Quantitative Easing (Q.E.) would be needed however many analysts interpreted that the chances of further Q.E. had increased since the previous meeting. The Bank of England remains torn between trying to support a fragile economic recovery, whilst trying to anchor inflation which remains stubbornly above the 2% target.

 As a result of the above, extreme volatility has been seen in the GBPEUR exchange rate, yesterday hitting its lowest level since May before recovering slightly today. The current GBPEUR interbank rate trades at 1.17.

 Given current market volatility, please do not hesitate to contact Currency Matters to discuss any foreign currency exchange requirement. Currency Matters can provide a number of products including Forward Contracts and Stop Loss/Limit Orders which can help you manage your foreign currency exchange risk. The exchange rates mentioned in the above blog are based on the current interbank rate. Please do not hesitate to contact the dealing team on +44 (0) 1695 581 669 for a live quote.

Currency Matters – Euro

The Euro was boosted last week by the successful bond auctions by a number of Eurozone states.  The demand was sufficient enough to ease concerns that Eurozone states would struggle to raise funds on the international markets.

As a result the Euro appreciated against the US Dollar pushing EURUSD through 1.30, and EURGBP through 0.84p. This morning EURGBP trades at interbank 0.8475, forcing the pound below 1.18.

Many analysts are now predicting that the Euro could continue to recover. However, the sustainability of the Euro’s rebound remains uncertain. The Euro will face a number of significant tests including the European bank stress test results which are due to be published on June 23rd.

Elsewhere the Federal Reserve minutes hit a rather dovish tone noting that the economic outlook had softened somewhat. Interest rates in the US are therefore expected to remain at their historic lows for some time. After hitting a high above 1.54, the pound has since settled around 1.52 on the interbank market.

Currency Update – Post Election

After Sterling’s initial bounce higher following the formation of a Conservative-Liberal Democrat coalition majority government the Pound has disappointed somewhat, particularly against the US Dollar which earlier slipped below 1.45. 

The sell off in Sterling started following the Bank of England’s Quarterly Inflation Report which implied that UK interest rates would remain very low for some time to come and are likely to rise only very modestly over the next two years. Furthermore, the Bank did not rule out the possibility of further Quantitative Easing. The combination of loose monetary policy and a tightening fiscal policy in the UK, suggests it is likely that the pound could be under pressure for some time.

Further falls for Sterling against the USD are now predicted by a number of analysts, with some pointing towards a break of 1.40. The ongoing debt crisis in the Eurozone is also expected to drag the Euro lower against the US Dollar; this will also be to the detriment of the Pound against the US Dollar.

Given the difficulties facing both the UK and the Eurozone, the outlook for the Pound against the Euro remains highly uncertain. However, given the significant structural problems of the Eurozone, I would suggest that the Pound will fair better against the Euro than against the other major currencies. GBPEUR currently trades at 1.16 on the interbank market.

Next week sees the release of several important pieces of economic data across the globe. In the UK we have the Consumer Price Index and Retail Price Index, Bank of England Minutes and Retail Sales. For a full economic calendar please visit: http://www.currencymatters.co.uk/market-data/economic-calendar/

 If you would like to discuss any upcoming foreign exchange requirements, please do not hesitate to contact the dealing team.  

Currency Update

The Pound has spiked higher against the Euro, earlier breaking through interbank 1.17. Financial markets continue to be concerned that the €110 Billion Greek bailout package won’t be enough to prevent the crisis spreading to other vulnerable Eurozone states namely Portugal, Spain and Italy.

In the UK, markets will await the outcome of the general election, with the prospect of a hung parliament still possible.

Currency Update – UK CPI

The Pound has strengthened this morning (20/04) following higher than expected UK inflation data. The official measure of inflation known as the Consumer Price Index (CPI) beat market expectations coming in at 3.4% year on year. As inflation remains above target it means it is more likely that at some point the Bank of England will have to start reversing its programme of Quantitative Easing and increase interest rates which have been held at a historic low of 0.5% since March 2009.

However, the timing of any changes in monetary policy remains highly uncertain as it is likely the Bank of England will want to further secure the UK’s economic recovery from recession before we see any monetary tightening. 

The deemed threat of a hung parliament following a further narrowing in the opinion polls also adds to the uncertainty around the future direction of the Pound.

Elsewhere, the cost of Greek debt continues to climb and is putting increased pressure on the Euro. The interest rate charged by investors for ten year Greek bonds hit 7.6%, the highest level since the Euro was introduced. Germany, viewed as the safest European economy is only charged at 3%.

The financial markets will now await the outcome of the next meeting in Athens, now due on Wednesday following the disruption to flights, between officials to agree the terms of the joint European and IMF rescue package. Full details of the plan, including the rate of interest have yet to be finalised.

The following rates are shown for indicative purposes only. Please note the rate you are able to achieve will depend on the amount of currency being purchased.

 EURUSD: 1.35 

GBPEUR: 1.14

GBPUSD: 1.53

If you would like to discuss any upcoming foreign exchange requirements, please do not hesitate to contact the dealing team on 01695 581 669.

Currency Update – Sterling pressured

Sterling has started March under significant pressure. Monday morning saw a dramatic fall in the value of Sterling with the Pound falling as low as 1.0930 against the Euro and 1.4780 against the US Dollar. There are currently a number of factors contributing to Sterling’s sharp fall in value.

Firstly, the latest opinion polls are suggesting that following the UK general election, it is likely that we could see a hung parliament with no single party holding a workable majority. This political uncertainty has troubled investors as they are concerned that any new government may not be able to implement the measures needed to cut UK debt and revive the economy.

Secondly, the Bank of England has hinted recently that we could see further expansion of its asset purchase scheme known as quantitative easing (QE). Any increase in QE would likely depreciate Sterling further.

Finally, Prudential’s $35.5B bid for the Asian life insurance unit of AIG has caused large flows out of Sterling into the US Dollar.

Following Monday’s sharp falls, the pound has recovered some of its losses. This morning, the release of the latest Purchasing Manager Index (PMI) suggested that the UK service sector is recovering at a stronger rate than many analysts had expected. This has helped push Sterling back above the psychological level of 1.50 against the US Dollar and above1.10 against the Euro.

In the Eurozone, the Greek government has approved a fresh austerity package of tax rises and spending cuts worth €4.8B. This has gone a small way to help convince financial markets that Greece can pay off its massive debts. The Euro has risen against the US Dollar and currently trades above 1.36.

Elsewhere, The Reserve Bank of Australia has hiked their cash interest rate by 0.25% to 4%. The Bank of Canada left rates on hold at 0.25%. However, the Bank of Canada’s accompanying statement showed that the Bank was more upbeat on the economic outlook. This has forced Sterling to a low of 1.6491 against the Australian Dollar and 1.5387 against the Canadian Dollar.

Both the Bank of England and the European Central bank meet tomorrow at 12:00 and 12:45 respectively. The markets will eagerly await any announcement from the Bank of England regarding QE and the European Central Bank’s latest economic forecasts.

With all the uncertainty regarding the general election, the Bank of England’s QE programme and the UK’s ability to tackle the deficit, it is likely that Sterling will remain under pressure for some time.

If you have any upcoming foreign exchange requirements, please do not hesitate to contact the dealing team to discuss how best to manage your currency requirements and eliminate currency risk.