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Posted July 26th, 2013 by Charles Purdy

Mixed fortunes for sterling | 26/07/2013

After maintaining an upward trajectory for most of last week, sterling experienced more mixed fortunes this week. The pound performed well from Monday as Prime Minister David Cameron announced that improving economic conditions may allow the Coalition Government to implement tax cuts in the near future. Varying levels of trader optimism were seen in the run up to the release of UK GDP figures, which came out yesterday and revealed that the UK economy grew by 0.6% in the second quarter. These figures largely conformed to key predictions, however the possibility still remains that the Monetary Policy Committee may vote in favour of further quantitative easing when they meet again in August and the figures did little to play down that possibility, causing sterling to drop sharply against the majority of its major peers. Additionally, revisions of previous GDP figures revealed that recession in the UK was in fact worse than first thought, which further contributed to sterling weakness. Overall, sterling has certainly plateaued to a degree after performing well last week and we will need to see further strong economic data coming from the UK to maintain hopes of a sustainable recovery, persuade investors that the Monetary Policy Committee will not loosen monetary policy in August. If they do it would weaken the pound. There is little data of note being released today, but further movement may be seen as traders take stock of the GDP data and react to on-going speculation regarding future increases in quantitative easing. Call your trader now to track sterling performance.

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Posted February 27th, 2013 by Charles Purdy

The Italian elections continue to worry markets | Smart Daily Currency Note

GBP/EUR – 1.1532
GBP/USD – 1.5114
EUR/GBP – 0.8665
EUR/USD – 1.3082
GBP/AED – 5.5514
GBP/AUD – 1.4786
GBP/CAD – 1.5492
GBP/CHF – 1.4077
GBP/CNY – 9.47
GBP/HKD – 11.7152
GBP/HUF – 341.49
GBP/INR – 81.03
GBP/JPY – 138.50
GBP/NZD – 1.8304
GBP/RUB – 46.16
GBP/SEK – 9.7372
GBP/ZAR – 13.3356

Sterling

Sterling had a mixed day yesterday – starting off on the front foot reaching highs of 1.1650 against the euro and 1.5220 against the US dollar before losing ground later in the day. Sterling struggled after one of the Monetary Policy Committee (MPC) members from the Bank of England (BoE) suggested he was open to more monetary easing and furthermore, that the prospect of negative interest rates had been raised at central bank meetings. Furthermore, realised sales data from the Confederation of British Industry (CBI) came out lower than expected. Out today we have the second estimate of the UK’s fourth quarter GDP which is expected to show a contraction of 0.3%, the same as the first estimate. Moreover, more MPC members will be speaking today, and following yesterday’s volatility, the market will pay close attention to what they have to say. Call now for the latest updates on sterling.

Euro

It has been a turbulent few days for the euro, news of the inconclusive Italian election yesterday drove the euro to a seven week low against the dollar – whilst weakening by three cents against sterling. The damage was not as widespread as first feared however, as traders became confident that the European Central Bank (ECB) would intervene to limit the fallout, and the euro strengthened in the afternoon. Today is likely to be just as volatile with two important events. Firstly, we expect an Italian 10 Year Bond auction this morning – a key way for governments to borrow money and high yields mean high borrowing costs for the Italian Government. Secondly, in the afternoon the ECB President is speaking in Germany, we traditionally see a great deal of volatility during his speeches as markets look for hints as to future monetary policy. Get in touch now for the latest news and rates.

US Dollar

The US dollar generally performed well yesterday, strengthening against the majority of its currency partners with Consumer Confidence figures and New Home Sales data (rising in January to the highest since 2008) both coming out much better than expected. Along with this, the Federal Reserve Chairman backed the central bank’s current stimulus program, saying that they will support the asset purchases with “little risk of inflation or asset-price bubbles” causing the dollar to strengthen further. In the testimony he stated that “We do not see the potential costs of the increased risk-taking in some financial markets as outweighing the benefits of promoting a stronger economic recovery.” Although he also warned that the automatic federal budget cuts in line to begin 1st of March will add a “significant” burden to the economy if lawmakers are unable to avert from the reductions. Today we will see Core Durable Goods orders along with the second part of the Chairman of the Federal Bank’s “congressional testimony” on monetary policy.

Worldwide

Elsewhere, the Canadian dollar fell to a eight month low versus the US dollar following better than expected data out of the US and the comments from the Chairman of the Federal Bank. The commodity backed currencies struggled in general yesterday whilst the Japanese yen prospered due to risk aversion driving the markets and traders seeking safer havens for their money. The Russian rouble was one of the worst performers yesterday after GDP data released showed that the economy had contracted by 0.3%. Call in now for a market update and a live quote.

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Posted June 7th, 2010 by Charles Purdy


EURO/GBP – 1.207
US$/GBP – 1.442
CHF/GBP – 1.680
CAN$/GBP – 1.534
AUS$/GBP – 1.771

Sterling fell on Friday against the US dollar but hit a 1 ½ year high against the euro as a worse than expected rise in US employment figures pointed towards a slower than expected US recovery. With Europe in the midst of a debt crisis and China looking to curb spiralling growth, many analysts were hoping that the USA could provide the driving engine of a global recovery. However, with the number of new jobs falling 100,000 short of what was expected, many analysts feel that this opens the door to a double dip recession and fresh round of risk aversion and a flight to US dollar denominated assets. Over the weekend, news was released that David Cameron is to state that the UK economy is in a far worse state than he had initially thought. With £6bn worth of cuts already announced, this is a drop in the ocean compared to the £156bn deficit. Following the Prime Minister’s statement later today, expect some volatility on the currency markets. In terms of data, there is little out aside from some yearly retail sales data. Ensure you do not lose out. Get in touch now for a live exchange rate.

In the euro zone, the region continues to suffer from poor sentiment related to the debt crisis and the euro fell to the lowest level for 4 years against the US dollar last week, dipping below $1.20/ 1. The single currency is also at the lowest level since 2001 against the Japanese yen. One survey of economists in the Daily Telegraph over the weekend suggested that the euro would be ‘dead’ within 5 years – or at the very least, certain countries would start pulling out of the currency as and when they default on loans. Out later today, there is German factory data which is expected to show a mild decline. Call in now for a live price.

In the USA, following Friday’s disappointing jobs report, the US dollar and Japanese yen have both strengthened as investors look for safe haven assets to invest in. With fears of a double dip recession – where growth turns negative after a period of recovery – the US dollar again looks set to take on the role of risk sentiment indicator. Therefore, any negative news in the UK will see sterling fall against the US dollar. In addition, perversely, any strong data for the USA will have the same effect. Call in now for a live exchange rate.

Elsewhere, the pound has strengthened marginally against the Australian dollar and other ‘commodity currencies’ this morning, as risk aversion sees traders move from ‘riskier’ investments in those countries and back into safer sterling/ US dollar assets. It might be an advisable time to look at taking advantage of the improved rate if you have payments to make. Call in now to speak to a trader and make sure you don’t miss out.

Exchange rates change every second – call Smart Currency Exchange for a live up-to-the-minute quote on our Freephone number: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or fill out our online quote form at: SmartCurrencyExchange.com/quote.aspx

Posted May 19th, 2010 by Charles Purdy

EURO/GBP – 1.174
US$/GBP – 1.432
CHF/GBP – 1.644
CAN$/GBP – 1.493
AUS$/GBP – 1.673

So the UK parliament met for the first time yesterday following the general election. Some people were sitting next to people they probably thought they would never sit next to ever in Parliament [e.g. David Cameron and Nick Clegg]. But we are in a brand new world after 15 plus years of New Labour and as such everyone was full of smiles and high spirits. Sadly this didn’t flow through to sterling. Sterling had a strange start to the day as consumer price inflation came in at 3.7% which was way ahead of the target of 2% and ahead of market expectations. Initially sterling benefitted but then lost ground as the market realised that interest rates in the UK are not going to increase any time soon [which is normally the solution when inflation is ahead of target] due to our “difficult” economic conditions. Very difficult times for sterling so please call now so that you can properly manage your currency exposure.

Now to the euro zone and the euro. The German government decided to ban the short selling of euro zone government debt. Not sure how effective this is going to be given the ability of the markets to find a way round such bans. And the markets kept the pressure up on the euro, especially against the US$ where the euro hit 4 year lows. Against sterling the euro gave back in the afternoon the gains its had made in the morning. So we seem to be in a fairly narrow range between sterling and the euro and who knows which way the next significant move will be. That is why it is important to give us a ring sooner than later so as to make sure you are not in the wrong place at the wrong time with your currency requirements.

The US$ continues to be flavour of the month/year at the moment and is living up to market expectations increasing in strength against sterling and the euro [hitting 4 year highs against the euro]. Not really surprising given the problems in the UK and the euro zone, the US$’s safe haven status and the expectation that the US is leading the western world out of recession. So call now as it doesn’t seem like a good idea to hold off on buying your dollars.

Exchange rates change every second – call Smart Currency Exchange for a live up-to-the-minute quote on our Freephone number: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or fill out our online quote form at: SmartCurrencyExchange.com/quote.aspx

Posted May 14th, 2010 by Charles Purdy

EURO/GBP – 1.165
US$/GBP – 1.458
CHF/GBP – 1.634
CAN$/GBP – 1.493
AUS$/GBP – 1.629

Sterling fell yesterday against the US dollar and euro as the UK’s trade balance widened by more than expected. In March, the UK imported £6.3bn more than it exported and in April this gap increased by more than £1bn to £7.5bn. Exports remained steady and imports jumped, which disappointed the markets. Sterling is weak compared to most major currencies and the fact that this has not encouraged foreign investment into the UK is worrying, but also shows that global demand as a whole is weak. The ongoing saga in Greece could be blamed for a lack of demand for UK goods, but this is likely to continue as the Euro zone looks to curb spending and avoid debt default. Mervyn King hinted that the UK would benefit if Germany injected funds into the economy to encourage spending and ultimately boost UK exports. Elsewhere, the new government sent a clear message of its intentions to cut spending by cutting their own pay by 5% – frozen for 5 years. Whilst this saves roughly £3m (a drop in the ocean compared with the deficit) it is a clear message to the markets. So far, financial markets have welcomed the new coalition. Unfortunately, the pound is in a poor position. If the Greek crisis spreads further, we will effectively lose demand from a major marketplace for UK exporters. Out today we have no real data for the UK, but the currency traders will keep a close eye on David Cameron as he continues to forge ahead with plans for a ‘New Britain’. Call in now for a live exchange rate.

In the Euro zone, Portugal announced tough ‘austerity’ measures including tax hikes and pay cuts for public sector workers. The measures follow yesterday’s announcement by Spain of similar cuts which were met an angry response and threats of public sector strikes. The tough measures are the price that needs to be paid for the 750bn bail out that was announced over the weekend. There was little data out yesterday, but the euro rose against sterling as sentiment improved towards the Euro zone with European stock markets up nearly 8% this week having recovered losses. There is no data out today, so expect more of the same – trading on sentiment. Call in now to get a live rate.

In the USA, unemployment claims fell by 4,000 last month, but this fell short of the expected 8,000 drop. Import prices showed a mild improvement on the month. One analyst made the bold prediction that the USD would strengthen against the euro and reach or go beyond the 1999 entry rate of $1.18/ 1 as European countries are not following budget deficit rules laid down by the Maastricht treaty. The euro’s status as an alternative to the US dollar is in doubt as a result. Out today we have retail sales data for the US which is expected to show a decline month on month. Get in touch now, as many are predicting lower than $1.40/£1 in the coming months.

Exchange rates change every second – call Smart Currency Exchange for a live up-to-the-minute quote on our Freephone number: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or fill out our online quote form at: SmartCurrencyExchange.com/quote.aspx

Posted May 12th, 2010 by Charles Purdy

EURO/GBP – 1.182
US$/GBP – 1.501
CHF/GBP – 1.666
CAN$/GBP – 1.527
AUS$/GBP – 1.676

Sterling rose yesterday as Gordon Brown tendered his resignation from office and David Cameron became our new Prime Minister, agreeing a coalition with the Liberal Democrats that sees them part of government for the first time in 70 years. After a volatile day, sterling recovered some of the losses against the US dollar that have seen the pound fall to a 13-month low as markets feared political uncertainty following the UK’s first hung parliament since 1974. There are concerns (as there always are with coalitions) that the deep rooted ideological differences between the two parties will lead to the dissolution of any agreement. However, with a rumoured 4 year ‘no-compete’ clause (i.e. an agreement from the Lib Dems that they will not vote against the Conservatives for 4 years) and the galvanising effect that tackling a record UK deficit will have, there is potential for this coalition to work. Although we shall have to wait and see, the initial reaction from the financial markets is good. The pound jumped to 1.18/ £1 and $1.49/ £1 on David Cameron’s appointment. What is next? The focus will now shift to the Conservative ‘emergency budget’ which is expected within 50 days and will outline the details of how the new government intend to deliver spending cuts of £6bn as a ‘down payment’ on the deficit within a year. Sterling was also boosted by unexpectedly strong manufacturing data. Out today we have unemployment data for the UK and the Bank of England’s inflation report. Call in now to take advantage of today’s jump in the value of sterling as it may not last long.

Following the bailout earlier in the week, the euro zone took a back seat yesterday as the UK election dominated the headlines. A piece of German inflation data showed a better than expected improvement. The big piece of data out today though is the first estimate of GDP for the 1st Quarter of 2010. This can have a large effect and is expected to show growth of 0.1%. Any higher than this and the euro is expected to react well. Get in touch now to take advantage of any movement.

In the USA, the major driving factor behind the US dollar movement against the pound was the UK election. As a degree of certainty returned, the pound strengthened against the US dollar. In other news, the investment bank Morgan Stanley is likely to come under investigation for securities fraud in a similar vein to Goldman Sachs did recently. This could cause uncertainty on Wall Street – get in touch now for a live exchange rate.

Exchange rates change every second – call Smart Currency Exchange for a live up-to-the-minute quote on our Freephone number: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or fill out our online quote form at: SmartCurrencyExchange.com/quote.aspx

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