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)
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.
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.
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 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.
Along with most of the other commodity based currencies the Canadian dollar is no different and has been sold off recently as investors shy away from the perceived riskier currencies due to the Eurozone crisis. It had some slight reprieve as prices of oil increased, with Canada being one of the worlds largest exporters, with the gas guzzling nation of Amercia its main importer but still the pressure remains.
Since March we have seen the Loonie weaken by some 5 cents on average against the pound giving some good buying opportunities. While things remain uncertain in the Eurozone the likelihood of the market staying around the 1.60 mark are fairly high but any increase in oil prices or resolve in the Eurozone could quickly turn this around.
Sterling enjoyed another good week after the Easter break, particularly against the Euro where we saw the best exchange rates since August 2010. However we have a busy week ahead, and any signs of economic weakness in the UK will be likely to send the Pound lower, since sterling may prove not to be the safe haven currency that investors are hoping for.
The key events to look out for in the UK are likely to be Tuesday’s inflation figures, Wednesday’s Bank of England minutes, and Friday’s retail sales. Remember that it is good for UK exports if the Pound weakens, so the Bank of England may be keen to halt the recent rise in sterling’s value too.
Last week also saw improvements in exchange rates for sterling against the South African Rand, but falls against the Australian Dollar and Japanese Yen. In trading today, the Pound has lost value against the Euro, but gained against the Canadian and US Dollars and UAE Dirham, despite better than expected US retail sales figures.
Spanish debt problems also continue to hit the headlines, with the cost of borrowing for the Spanish government this morning rising above 6% for the first time since December. Spain may now impose tough spending cuts on the 17 regional authorities in an effort to placate markets and avert a Greek-style crisis, which of course will have implications for Euro exchange rates in the coming weeks and months.
Canadian dollar exchange rates against the pound dropped today fuelled by investor worries over China and Europe following the poor PMI figures earlier today. The Loonie is very much commodity based (with Canada being a huge oil suplier) so downbeat sentiment affects its strength as mentioned with the New Zealand and Aussie dollars the past couple of days here on pounddollarexchange.
At lunchtime Canadian retail sales came out much lower than forecast having further negative impact on the currency but making rates for those of you buying Canadian dollars much better. The monthly figure was expected to be 1.7% but in fact came in at 0.5% , significantly lower. This underlines concerns from the Bank of Canada about global economic weakness and the affect that is having on Canada’s growth, fueling speculation that interest rates will stay low for some time.
This in mind I personally think we could be heading back towards the 1.6 mark in the near term so if you have dollars to sell and are holding off for rates to drop back below the 1.55 level seen recently, I’m not convinced this will happen.
If you are watching the rates hoping it will go in your favour you may find it helpful to speak to me directly and discuss the current drivers behind what’s moving the rates. I can keep my eye out for you and inform you of upcoming events and data releases regarding your specific requirements to try and achieve that bit more for you. Fill out your details on the contact form or email me directly firstname.lastname@example.org
Last week saw a dip in exchange rates for the Pound against both the Euro and US Dollar. In the USA, non-farm payrolls on Friday showed that more jobs had been created than expected, which gave the dollar some strength, and in Europe private creditors holding Greek debt agreed a write-down of value which means that the EU bailout can go ahead, giving the Euro strength too.
The Pound also finished the week lower against the Canadian, Australian and New Zealand dollars. Interest rates were held as expected last week in the UK, Eurozone, Australia and Canada, having little effect on exchange rates, and the Bank of England also held Quantitative Easing at its current level.
This week, the main data in the UK is unemployment, due out on Wednesday morning. After recent news has been positive for the UK and the Pound, sterling is vulnerable to any negative data and exchange rates could fall on Wednesday if the headline unemployment rate increases from 8.4%.
Elsewhere, if you are buying or selling US Dollars, keep an eye on the FOMC minutes released tomorrow (Tuesday) at 7pm, and Friday’s inflation figures, while if you are looking to make a Euro transfer, the ECB monthly report on Thursday will be important, as will Wednesday’s CPI inflation figures. The Euro may have scope for more strength (lower exchange rates) this week now that the Greek bailout looks set to happen, despite question marks over the long-term sustainability of the deal.
Many of our clients are currently using Forward Contracts to lock into rates for the coming months, and if you would like to see what kind of rates are available to fix for your own requirements, please fill out the contact form or contact me directly email@example.com.
The Canadian dollar has gained a cent against the pound since figures showed unemployment rate was lower than expected at 7.6% (from 7.8%) and International Trade figure also showed a better than expected figure at $2.1 billion compared to $2 billion. This is quite a knee jerk reaction according to traders so if you have a selling CAD requirement it could be a great opportunity to take advantage.
We expect the rates to remain at 1% when the decision comes later today as worries about global growth continue. Canada relies heavily on exports (some 33% of output is exports) and higher interest rates making the currency stronger could harm this by making product more expensive to buy.
The Loonie, as the dollar is known, is commodity based as Canada is a large exporter of crude oil (mainly to the US) so price rises in the cost of a barrel causes the Loonie to strenghten which has been the problem recently with their recovery. The strong dollar has been a cause oof concern, trading near parity against the US dollar for some time so any change in the interest rates would cause more harm. We expect interest rates to remain unchanged for some time.
If you have a Canadian dollar requirement coming up I don’t expect there to be much movement following the interest rate decision. It will be down to the usual array of data releases to cause the movement and recently unemployment has hit a nine month high and manufacturing has dropped. Looking out for these type of releases for improvements or declines will be where you can expect to see buying or selling opportunities.
Contact me directly and register your interest if you have a buying or selling requirement in the near term and would like me to keep an eye on the markets for you. Send me your contact details and a brief outline of your requirements to firstname.lastname@example.org. You can also register for a free, no obligation trading facility at Currency Index.
Pound to US dollar exchange rates (known as Cable) fell as the Halifax house price index figures came out lower than expected. We have seen a full cent gain by the dollar since trade opened, dropping below 1.58. Recent figures from the US have been good and although one would expect a stronger currency off the back of positive figures the case has been the opposite. Euro Dollar rates also pushed lower following the weak Euro zone GDP figures earlier today, with the dollar gaining 75 points so far.
The USD is seen as a safe currency so when investors are worried about global economic factors the dollar is bought up making it stronger. As America is the largest global economy, if data is coming out better than expected investor confidence grows, they are less worried and investments become riskier. The result of this is selling off the safe haven dollar and buying riskier currencies like the “commodity” led Canadian, Aussie and NZ dollar and to some extent sterling.
With no data out from the States today we may well see the slide in cable continue but over the rest of the week comes a raft of employment and jobs data so check back for updates on how the rates are affected. If the key non-farm payroll figure on Friday comes in better than expected I predict we will see higher pound to dollar exchange rates. If you have a requirement register your interest at email@example.com and I can keep you posted as data releases unfold.