Sterling vs. Euro – 3rd May 2011; Positive GDP figures

EuroSterling vs. Euro – 3rd May 2011; Positive GDP figures brighten outlook for shaky UK economic recovery

The eagerly awaited UK GDP first quarterly figures for 2011 were released on Wednesday and showed the economy expanding in line with general expectation at 0.5%. Given the previous quarter’s negative 0.5% contraction last week’s positive figures depict an economy returning to growth, quelling any fears of a double dip recession.

A closer look at the figures highlights the positive impact of the manufacturing and service sectors.
Currency analysts suggest that UK GDP data was possibly too weak to prompt a Bank of England (BoE) rate rise as soon as next month, although it has still left open the possibility of a rate hike in the summer.

Latest Euro Pound Exchange Rate Graph– April 2011

Euro Pound Exchange Rate Graph April 2011

Indeed, should UK figures show consistent improvement throughout the month of May, then a summer BoE rate rise is still a possibility. As it stands however, the positive figures are too often coupled with negatives ones, leaving the UK recovery in a fragile state. Concerns over the underlying strength of the economy and its ability to withstand the fiscal squeeze remain firmly intact.

In summary, Sterling-Euro rates remain low and may well do so for some time. Therefore if you have a requirement to buy Euros click the link below to open an account with us today – free of charge and without any obligation.

If you have yet to open a trading facility to gain access to commercial rates of exchange click here to open an exchange rate account today and an experienced trader will be in touch to discuss your requirement and offer expert market knowledge.

Sterling vs. Euro 4th April 2011 – Sterling hits 5 month low

Euro4th April 2011 – Sterling vs. Euro – Sterling hits 5 Month Low

Sterling fell to a 5 month low vs. the Euro last week, on expectations that interest rates in Europe will rise faster than in the UK and talk of month-end demand from central banks. Sterling’s falls were exacerbated by sterling selling against the Australian dollar, related to insurance payments for flood damage in Queensland.

“There is a sense that the UK economy is going through a ropey phase and selling in sterling has been very steady since last week,” said Michael Derks, currency strategist at FXPro. “Further gains look likely while the market embraces the more positive aspects of the euro area periphery story, ECB tightening and softening UK data,” he said.

Following Thursday’s movement, the euro was broadly firmer as above-forecast euro zone inflation cemented the case for higher interest rates from the European Central Bank (ECB). Markets see the tightening cycle starting in April.

Current Euro Sterling Graph – 4th April 2011

Euro Sterling Exchange Rate Graph 4th April 2011

Manufacturing growth slowed more than expected in March but companies still ramped up prices at a record rate to cover rising costs, a survey showed on Friday. The Markit/CIPS manufacturing PMI headline index fell to a five-month low of 57.1 in March from a downwardly revised 60.9 in February. Analysts had expected only a slight dip to 60.6.

On a brighter note for sterling, Housing prices increased and the manufacturing survey also showed that companies’ raw materials costs had continued to rise in March, albeit at a slightly slower rate than in February. And companies continued to take on new staff, though not at February’s record pace.

Rising job creation, a surprise rise in house prices and further growth in the manufacturing sector are encouraging signs. However, the economic outlook is still uncertain and the slowdown in the pace of expansion in the sector will not ease the dilemma facing Bank of England policymakers over how to tackle persistently above-target inflation, without harming economic recovery.

The pound fell off the back of the figures, but analysts noted that the manufacturing sector was still on course to make a strong positive contribution to first-quarter GDP growth, which may work to ease concerns of the UK slipping back into recession.

Money markets have pushed back expectations for the first rise in interest rates from a record low 0.5 percent to August from May, largely as a result of weak news on consumer activity. “The Monetary Policy Committee’s balancing act between growth and inflation has perhaps become even more precarious,” said Markit economist Rob Dobson. Markit said the slowdown in demand was most pronounced in the consumer goods sector, which was virtually stagnant, and indicated a fall in domestic orders for such goods.

Rising inflation, muted wage growth and the prospect of government spending cuts have hit consumer morale and dented retail sales, spelling bad news for an economy which has historically been heavily reliant on household spending.

If you have yet to open a trading facility to gain access to commercial rates of exchange click here to open an exchange rate account today and an experienced trader will be in touch to discuss your requirement and offer expert market knowledge.

Sterling vs. Euro 28th March 2011 The weekly report

Euro28th March 2011 – Sterling vs. Euro – The weekly report.

In the build up to last week all eyes were focussed on George Osborne’s budget on Wednesday, however, in what was a busy week it was UK retail sales that most affected Sterling’s performance against the Euro.

Monday started well for the UK with Rightmove house prices showing a slight increase although movement in the market is mainly limited to the top end. The market’s reaction was limited as traders were waiting for Consumer Price Inflation (CPI) out on Tuesday.

Consumer Price inflation is a key measure of the economy that looks at the change in prices of consumer goods and services purchased by households. February’s CPI figures were expected to show a growth from 4% to 4.2% but in fact came out better at 4.4%. As expected the Pound began to gain against the Euro as the figures were interpreted that an Interest rate rise in the UK is more probable.  However there were some in the market, including currency analysts at HSBC, who believed the Pound was overpriced, saying rising inflation at a time of fiscal austerity was a reason to sell the Pound, rather than buy. As expected this curbed Sterling’s performance somewhat.

Euro Pound Graph – March 2011

Euro Pound  Graph March 2011

On Wednesday the Bank of England’s Monetary Policy Committee maintained its 6-3 split in favour of keeping rates on hold this month, seeing no major change in the medium-term outlook despite the CPI data on Tuesday. At lunchtime on Wednesday George Osborne’s budget unveiled cuts in the 2011 growth forecast to 1.7 percent from 2.1 percent as well as commenting that soaring oil prices mean inflation will remain between 4 and 5 percent this year. As Alejandro Zambrano, market strategist at FXCM commented, ‘Low growth and high inflation does not make good news for the currency’.

Despite the budget, Sterling remained relatively stable against the Euro and it wasn’t until disappointing UK retail sales were released on Thursday that we saw the Pound start to lose value. Sales in February fell 0.8% on the month against forecasts for a smaller decline of 0.6%, sharply slowing the annual rate of growth to 1.3% from a downwardly revised 5.1% in January. Added to this,  the ratings agency ‘Moody’s’, said that Britain’s triple-A credit rating could be at risk if slower growth makes it harder for the government to rein in its budget deficit.

These two pieces of information effectively threw the Pound into freefall against the Euro throughout Thursday and well into Friday with the Pound falling to its lowest level in 2011. The Pound’s fragility against the Euro was based on concerns over the state of the UK economy and uncertainty as to when rates in the UK will be raised which BOEWATCH suggests is more likely to be in August rather than July as previously thought. Whilst in the Eurozone, Trichet confirmed he planned to press on ahead with the raising of interest rates potentially as soon as April despite deep concern over some of their member states, such as Portugal, who are looking almost certain to require a bailout from the European Central Bank.

If you have yet to open a trading facility to gain access to commercial rates of exchange click here to open an exchange rate account today and an experienced trader will be in touch to discuss your requirement and offer expert market knowledge.

Sterling vs. Euro – 14th March 2011

Euro14th March 2011 – Sterling vs. Euro – The weekly report.

Sterling had another poor week last week heading toward a 6 week low against the Euro. The main blow to Sterling was landed at Thursdays Bank of England meeting where the Monetary Policy Committee again voted for a hold on interest rates.

This hold coupled with the news that chief rate hawk Andrew Sentence is to step down from the MPC in May  triggered most analysts to reduce their expectation of a UK rate rise in 2011. The knock on effect to the currency market saw many UK banks & traders cut their pro GBP long positions on Sterling, deciding instead to sell the pound short with little confidence in the future performance of the pound.

Euro Pound Graph – 14th March 2011

Euro Pound Graph

These moves came in the backdrop of Jean Claude Trichet’s statement last week that the ECB could raise rated as soon as April, so acting as a second quick blow that appears to have left the Pound on the ropes.
Indeed, callous as it sounds the earthquakes and tsunamis that tragically struck Japan and the Pacific Rim on Friday only worsened the pounds plight, with a knock on effect felt from a dip in UK stocks to a 3 month low.

Obviously your currency requirement can be affected by events ranging from the commonplace such as central bank meetings and unemployment figures and by the unimaginable events like those last week. Keeping in contact with an experienced broker is your only way of trying to navigate the notoriously volatile currency markets.

If you have yet to open a trading facility to gain access to commercial rates of exchange click here to open an exchange rate account today and an experienced trader will be in touch to discuss your requirement and offer expert market knowledge.

Sterling vs Euro Exchange Rate Report – 7th March 2011

Euro7th March 2011 – Sterling vs. Euro

Sterling vs. Euro exchange rates have not fared well over the last week. Through most of the week Sterling had actually recovered quite well against the Euro, supported by better than expected housing data and inflation figures early in the week. All that was overshadowed however when the European Central Bank (ECB) president said on Thursday that interest rates were going to rise in the EU as soon as next month. As the chart below shows, this caused rates to fall close to a 3 month low:

European Central Bank President Jean-Claude Trichet said on Thursday that euro zone rates could rise next month — stunning markets which were expecting a rise late this year. He also pledged “strong vigilance” on rising inflation, a phrase that in the past has signalled a forthcoming rate rise.

Euro Pound Graph – 7th March 2011

Euro Pound Graph 7th March 2011

“There are significant risks on the upside for euro/sterling and yields spreads have moved in favour of the euro after yesterday’s comments from the ECB,” said Adrian Schmidt, FX strategist on Friday.

For most of the year so far, most analysts thought the UK would raise interest rates by mid year, with the ECB following suit much later in the year. This is reflected in the upwards trend shown in the graph above. Now however it seems that the tables have turned, and the EU will be raising rates before the UK. This has reversed the trend, and the Euro is now gaining on Sterling.

Higher interest rates strengthen a currency because of the higher return on offer to investors. The recent comments have therefore strengthened the Euro significantly, making it more expensive to purchase.  So the gains the pound has made all year have now been largely eroded. Given the harsh austerity measures on the way in the UK there is not much to suggest rates will bounce back any time soon.

If you have yet to open a trading facility to gain access to commercial rates of exchange click here to open an exchange rate account today and an experienced trader will be in touch to discuss your requirement and offer expert market knowledge.

Sterling vs. Euro hits 3 week low – 28th February 2011

Euro28th February 2011 – Sterling vs. Euro; 3 week low

Sterling fell on Friday as data showing a deeper fourth-quarter UK economic contraction reduced expectations of an interest rate hike by mid-year and raised concerns about how the economy can deal with rising inflation. Revised data showed the UK economy shrank 0.6 percent in the last three months of 2010, more than the preliminary reading of a 0.4 percent contraction. This data highlights the dilemma faced by the BoE in balancing rising inflation, which is double the central bank’s 2 percent target.

Due to this, Sterling slumped to a three-week low against the Euro, extending its downward movement versus the single currency this week. Also helping to boost the single currency was hawkish rhetoric on Euro zone interest rates, as European Central Bank policymaker Axel Weber kept the speculators on their toes when he stated that Euro zone rates could only rise from here. The Euro looked to end the week nearly 2 percent higher on the week, its best performance since late October.

Euro Pound Graph – February 2011

Euro Pound Graph Feb 2011

The negative risks to the Euro’s health have been repressed for some time now. The real financial uncertainties that remain behind the Euro-region have been offered a temporary stay of execution when policy officials offered their open-ended promises to further bolster the bailout effort going forward. Yet, in the weeks since, conditions have continued to deteriorate. And, reminding of the trouble ahead, German policymakers discussed proposals aimed at insuring a hard-line approach to further bailout accommodations at EU meetings. It just so happens, that the Parliament plans to vote on these proposals on March 17 – one week before the EU summit.

The volatility last week highlights the risk that private individuals are exposed to when international financial events entirely out of their control move the markets. With this inherit risk in the background and your life savings in the foreground it is well worth while seeking the guidance of an experienced currency trader to assist you through your currency purchase.

If you have yet to open a trading facility to gain access to commercial rates of exchange click here to open an exchange rate account today and an experienced trader will be in touch to discuss your requirement and offer expert market knowledge.