Tag Archives: sterling

UK GDP DISAPPOINTS

The Pound has reacted negatively this morning to the revised UK GDP figures. Many analysts were hopeful that the disappointing UK GDP data numbers released at the end of January would be revised higher. However, the new data showed that the UK economy contracted by -0.6% in the final quarter of 2010 compared to the previous estimate of -0.5%.

Despite recent signs that the Bank of England Monetary policy Committee were shifting towards a hike in interest rates the highly disappointing data may mean a rise in interest rates may not come as soon as previously thought.

Currently the Pound trades in the region of 1.60 against the US Dollar and at 1.16 against the Euro.

Bank of England

Sterling has appreciated modestly this morning following the release of February’s Monetary Policy Committee (MPC) minutes by the Bank of England showing that interest rates were kept on hold by a 6-3 vote.

Bank of England chief economist Spencer Dale joined Andrew Sentance and Martin Weale in backing a rise in interest rates. Dale and Weale both voted for a 0.25% rate hike whilst Sentance strengthened his call for an interest rate hike from the Bank by voting for a 0.50% rate hike.

The remaining six MPC members voted to keep rates on hold. All members of the MPC with the exception of Adam Posen voted to keep the Bank’s Quantitative Easing (QE) programme on hold, whilst Posen voted for a further expansion in QE of £50 billion.

Whilst the Bank of England is clearly divided, the case for increasing interest rates is strengthening. The expectation of future rate hikes should help underpin Sterling’s value.

Please do not hesitate to contact the dealing team on +44 (0) 1695 581 669 for a live quote.

Better week for Sterling

This week has seen a number of better than expected pieces of UK economic data. The Purchasing Manager Index data released this week by Markit Economics has shown a better than expected expansion in the UK manufacturing, construction and service sectors. This data has eased concerns relating to the sustainability of the UK economic recovery and gives weight towards the prospect of an interest rate hike from the Bank of England later this year.

Elsewhere, the European Central Bank (ECB) continued to hold its interest rate at 1% and in the following press conference, ECB President Trichet was less hawkish than many analysts had expected, signalling that despite recent price rises he believed the current rate was appropriate. Any interest rate rise from the ECB in the near term now seems rather unlikely.

As a result the Pound has appreciated to 1.18 against the Euro and remains above 1.60 against the US Dollar.

The exchange rates mentioned in the above blog are based on the current interbank rate. The exchange rate you are able to achieve will depend on the amount of currency being purchased. Please do not hesitate to contact the dealing team on +44 (0) 1695 581 669 for a live quote.

Currency Update – UK GDP

Sterling has tumbled this morning following the release of UK GDP figures which were much worse than analysts had expected. The shock numbers showed that the UK economy shrank by 0.5% over the last 3 months of 2010.  The severe weather seen in December dramatically hit GDP, particularly in the construction and service sectors. However, according to The Office for National Statistics, even if the impact of the poor weather was excluded, economic activity would have been ‘flattish’.

The governor of the Bank of England is due to make a speech tonight, whilst the minutes from the previous Bank of England Monetary Policy Committee (MPC) meeting will be released tomorrow at 09:30. Recent calls by some economists and in particular MPC member Andrew Sentance to increase interest rates in the face of above target inflation will now be weakened.

Currently the Pound trades in the region of 1.57 against the US Dollar and at 1.15 against the Euro.

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

Last week the Pound appreciated strongly against the Euro rising from 1.15 on Monday 3rd January to 1.20 by close on Friday the 7th January.

Today GBPEUR continues to trade near 1.20 on the interbank market, the best rate since September 2010 and only 3 cents below the 2010 high of 1.23 seen in June. Against the US Dollar the Pound continues to trade between 1.53-1.55.

 If you have any currency exchange requirements in 2011, please do not hesitate to contact the dealing team to discuss how best to manage your currency exchange and international payments.

 The exchange rates mentioned in the above blog are based on the  interbank rate at the time of writing. Please do not hesitate to contact the dealing team on +44 (0) 1695 581 669 for a live quote.

Currency Update

Following the release of minutes from the Bank of England Monetary Policy Committee (MPC) and the Government’s Spending Review, the Pound has remained relatively stable near its current levels in the region of 1.13 against the Euro and 1.57 against the US Dollar.

The Bank of England Minutes confirmed that there was a three way split in the nine member MPC October meeting. Seven members voted to keep interest rates and quantitative easing (QE) on hold, whilst one member voted for a 0.25% interest rate hike, whereas Mr Posen voted for a £50 billion extension of QE.

The minutes indicated that whilst the clear majority of MPC members did not see the case for further QE at present, they did indicate that the chance of further QE in the future had increased. Going forward the prospect of further QE and low interest rates will continue to weigh on Sterling’s value.

During the UK Spending Review, Chancellor George Osbourne unveiled the largest UK spending cuts since World War II. Departmental budget cuts averaged 19%, which was less severe than the 25% cuts expected, largely thanks to an additional £7 billion found in savings to the welfare budget. The Spending Review aims to cut £81 billion from public spending over four years.

The exchange rates mentioned in the above blog are based on the current interbank rates. Please do not hesitate to contact the dealing team on +44 (0) 1695 581 669 for a live quote.

Sterling

This week we have seen the Pound fall further against the Euro as the probability of further Quantitative Easing (QE) from the Bank of England increased. Earlier in the week Mr Posen a member of the Bank’s Monetary Policy Committee (MPC) became the first member of the MPC to openly call for further QE since November. However, today his tone seems to have softened suggesting that the other MPC members may be able to convince him that his calls for further QE are premature.

Whilst further QE is by no means a foregone conclusion, the increased risk of further QE has weighed significantly on the Pound. Despite a raft of bad news from the Euro-zone; including the downgrading of Spain’s credit rating from AAA to AA1 and the mounting costs of  the Irish bailout of Anglo Irish bank, the Euro has appreciated strongly against the Pound, trading above 0.86p (GBPEUR 1.15).

Further falls in Sterling could be seen, particularly if support for further QE gains momentum. Many analysts are now predicting that GBPEUR could fall further, with 1.12 being noted as the next downside level.

Given the current uncertainty surrounding the Pound, you may deem it appropriate to hedge against any future falls in the Pound’s value. Currency Matters can suggest a number of products and strategies which can eliminate currency risk. Please do not hesitate to contact the dealing team to discuss any upcoming currency requirements.

The exchange rates mentioned in the above email 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

 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.

Bank of England

The Bank of England has today kept UK interest rates on hold at 0.5% and the Bank’s current asset purchase scheme known as quantitative easing also remains on hold at £200 billion.

The Pound continues to look firm against the US Dollar trading above 1.58 on the interbank market and against the Euro the pound trades near 1.20.

The market will now await the European Central Bank announcement later today and on Friday the latest US employment data will be released.

Please do not hesitate to contact Currency Matters for a live quote. Please note the exchange rate you are able to achieve will depend on the amount being exchanged.