Pound Dollar Exchange, Foreign Currency professionals here to provide all the latest news and analysis for those buying or selling US, Australian, New Zealand and Canadian Dollars. We update on a daily basis with exchange rate movements and market trends keeping readers informed of what is happening and why in the volatile foreign exchange markets.

Latest

Dollar Rally Continues

Last week saw the US Dollar continuing its recent run of strength, with the Greenback hitting its most expensive level for a month. The momentum caused by the Federal Reserve’s likely slowing of its monetary easing programme, has returned the USD to safe haven status, and seen investors buying the currency with a resultant increase in value and drop in rates for those of you looking to send money to the USA. The minutes of the latest Federal Reserve meeting are released on Wednesday evening and could see this pattern gain further impetus.

Closer to home we had a quieter week in the UK and Europe, with the Euro trading in a range of less than a cent against the Pound all week. In Europe this week the only data of note is consumer confidence on Thursday.

In the UK and for the Pound however we have a busy week ahead with key data releases throughout the week. Tomorrow sees the monthly consumer inflation figures releases, which can have a significant impact on the Pound, and on Wednesday the Bank of England minutes will reveal how much the prospect of further QE was discussed by the MPC earlier this month. On Thursday we then have the first revision to Q1 GDP, and we would urge caution on this particularly as the initial reading was better than expected, and most recent revisions have been negative. Needless to say any significant downward revision could raise the prospect of a third period of recession in the UK which would very likely damage the Pound.

Further afield this week there are figures due out in Japan, New Zealand and Canada.

Weekly News

The bank holiday has brought some sunshine to the UK at last, and the Pound has also been basking in good rates for those of you sending money abroad. The Euro in particular has been held at cheaper levels by the European Central Bank’s decision last week to cut interest rates in the single currency area, which as regular readers will know usually weakens a currency’s value. The Euro has not been cheaper since January.

In the USA, the Dollar was not affected too much by Friday’s better-than-expected employment figures, and rates for sending USD, as well as pegged currencies such as AED, remain around their best since February.

There have also been improvements in rates for sending South African Rand, Australian Dollars, and Canadian Dollars in the last week.

Focus this week moves to the Bank of England. The monthly policy announcement on Thursday is unlikely to bring much change to British monetary policy, but any further rumours of Quantitative Easing will be likely to bring grey clouds back to the UK economic outlook. The surprisingly good recent GDP figures are also subject to revision in the coming weeks, so the Pound is unlikely to be surging ahead just yet.

With all this in mind we think most exchange rates are good value at the moment for those of you sending money abroad. There is little other data out this week so we might expect a quiet week on the markets – as always though there is crystal ball and caution may be wise in the current climate.

If you would like to take advantage of any movements in your favour, simply call Simon Eastman (01923 725725)

The Week Ahead

For the US Dollar and UAE Dirham, late last week saw a rally in exchange rates, with an improvement of 2c in rates for the Pound on Thursday. Investors moving away from the US Dollar and back into ‘riskier’ currencies caused the Greenback to weaken.

This week as we head into the end of July, we have some important data due out which is likely to move exchnage rates. In the US on Friday we have the main labour market statistics, and trade balance figures for South Africa and Australia on Tuesday and Thursday respectively are likely to affect the cost of the Rand and Dollar. The Canadian Dollar, which has been fairly stable recently, sees GDP figures released tomorrow.

Sterling Drops Across The Board As UK Recession Deepens

This morning thew pound dropped across the board following the UK GDP revision for Q2 which was estimated to be a slight improvement from the first reading at -0.2% compared to -0.3% last month. Instead it came out at -0.7% which is a massive difference to expectations and shows growth is much worse than first thought. This most likely isn’t being helped by the issues in the Eurozone and the weak Euro making imports/exports more costly. Also the unusually wet summer and additional Bank Holiday have affected the retail sector adding to the UK’s woes.

The pound is trading half a cent down against the US and Canadian dollar, 1 cent down against the Kiwi and Aussie dollars.

Pound Holding Its Ground

Despite a mixed bag of data last week, the Pound managed to improve its value yet further against the Euro, and even managed to post some gains against the US Dollar. Inflation and retail sales figures were both sterling-negative, as were the Bank of England minutes, but the markets seem to be more focussed on macroeconomic problems these days. A slight fall in unemployment was the only vaguely good news for UK plc.

There were also gains for the Pound against the South African Rand.

As rumours of a Spanish default gain pace, many buyers are now taking advantage of excellent Euro rates. The US Dollar (and pegged currencies, eg AED) have seen strength in recent weeks but any signs of weak US data this week will likely increase expectations of more monetary easing in the US, which would probably lead to a weaker dollar and better rates for sending USD payments.

There is not a huge amount of data out this week, although the revision to UK GDP, on Wednesday, could affect the pound. Any downward revision would mean the recession is deeper than previously thought and could bring exchange rates down. Conversely, sterling would gain some strength if there are any signs of recovery – although the IMF have just downgraded their forecast for UK growth this year to just 0.2%, so we won’t be holding our breath for positive news.

Elsehwere, the New Zealand and Australian Dollar rates both fell last week, as both currencies gained in price. We have the New Zealand interest rate decision and Australian inflation on Wednesday, so if you are looking to send a transfer in either currency, check for any helpful movements on Wednesday morning.

The Week Ahead

This week’s scheduled economic news releases which are most likely to affect exchange rates, are as follows. Contact us at Currency Index for the latest rates and views.

Monday 9th
0645 – Swiss unemployment rate
0700 – German trade balance
2000 – US consumer credit

Tuesday 10th
0230 – Australian business confidence
0600 – Japanese consumer confidence
0930 – UK industrial & manufacturing production
1500 – UK GDP estimate (Q2)

Wednesday 11th
0700 – German consumer inflation
1330 – US trade balance
1900 – US Federal Reserve minutes

Thursday 12th
0230 – Australian unemployment rate
1000 – Eurozone industrial production
1900 – US monthly budget statement

Friday 13th
0530 – Japanese industrial production
1330 – US producer inflation

Commodity Currencies Continue To Gain

The Pound continued to fall on Thursday and Friday against most other currencies, including the US, New Zealand, Australian and Canadian Dollars and UAE Dirham.

The ‘commodity currencies’ have all gained significant strength recently, giving worse rates for sending money to South Africa, New Zealand and Australia in particular. On the other hand, if you have assets in any of these countries to bring back to sterling, now could be a good time to consider fixing an exchange rate.

This week, we don’t have any major data due out in the UK, and now that Wimbledon and the British Grand Prix are also over, perhaps headlines will all be focussed overseas. Foreign exchange rates are still as unsettled as the British summer, so do let us know at Currency Index is you have a transfer that you would like us to help with in the coming weeks.

Currency Index Open UAE Office

Currency Index announced the opening of their UAE office, by sponsoring the PropertyFinder.ae networking event in Dubai.

Attended by nearly 200 real estate professionals, and coinciding with the PropertyFinder.ae quarterly awards, the event at OKKU was a successful evening and a chance for Dubai’s property community to meet Currency Index’s MENA manager Neel Gondhia, and UK Managing Director Robin Haynes.

For more information on our Dubai office, please see www.currencyindex.co.uk/uae or contact Neel Gondhia on +971 (0) 56 771 3174.

China’s Surprise Rate Cut

Yesterday was a day lead by Central Banks around the world, with great anticipation the markets awaited news from the Bank of England at midday to see if they would indeed, as greatly speculated recently, increase the asset purchase program known as Quantitative Easing. Noon came and indeed they did, pumping another £50 Billion into the UK economy. Normally this would lead to sterling weakness but with much speculation already the markets had seemingly overpriced in this event and the pound took advantage gaining across the board.

More surprisingly was that at the same time in the Far East, China decreased their overnight lending rate by 25 basis points giving instant strength to those currencies affected by trade in that part of the world. The Aussie dollar went on the offensive, gaining all day against the pound by over a cent. Those looking to move money across to the other side of the world quickly saw their returns diminish. The US dollar also took favour from this making good gains against the pound.

With the markets having little time to digest these moves the European Central Bank made the surprise move to cut their interest rates by 25 basis points to their lowest levels ever, to 0.75 percent. The reaction was instant Euro weakness, a welcome sight for those sending money overseas to the Eurozone. The Euro lost a cent to the pound and similar against the US dollar, giving some great buying levels close to the best levels in 3 ½ years we saw a couple of months ago.

This morning levels open where they closed yesterday and we have a raft of data to bring the week to a close. UK PPI data comes out at 9.30am followed by German Industrial Production. Across the pond Canadian unemployment data and building permits are released around lunchtime along with Ivey Purchasing Managers Index later on.

The main event today though is the US Non Farm Payrolls, always a key release and potential big mover of the currency rates. With the familiar effect of the dollar on GBP/EUR rates we could be in for some volatile trading this afternoon and potential buying opportunities so be sure to keep in touch with your broker at Currency Index if you have a requirement coming up soon.

Commodity Currencies Get A Boost

The Pound ended June at reasonable levels against the Euro and US Dollar, despite the European summit providing a surprise deal for Eurozone bonds which had strengthened the Euro overnight on Thursday. Rates recovered somewhat on Friday, even though Bank of England governor Mervyn King gave a speech on Friday, which often softens sterling.

With a newly found confidence in the prospects for the global economy, commodity currencies have also performed well against the pound over the last week with the Australian and New Zealand Dollars, and South African Rand, strengthening 2.09%, 1.7% and 3.48% respectively (giving lower rates for sending money to Australia etc).