Foreign Exchange

The pig and the bull have been the two major influences on Foreign Exchange markets this week as equities have see-sawed between worries over a swine flu pandemic and growing optimism that we could be seeing the beginning of the end of the financial crisis. At present improved economic sentiment in the US, UK and eurozone is keeping the underlying trend in foreign exchange positive although frequent bouts of risk aversion continue to support the safe havens.

In the US this week, a -1.6% GDP contraction in the first quarter of 2009 put the US on target for a -6.1% annual contraction, well above the -4.7% forecast. This decline was largely driven by a 30% drop in exports, steep declines in consumer spending and represented the third consecutive quarter of contraction for the US economy. However despite the negative figures, an upturn in consumer confidence and home price figures earlier in the week actually boosted risk appetite for trading in Foreign Exchange on the basis of recovery prospects.

Foreign Exchange news from the UK this week has been relatively thin and sterling has continued with its steady upward trend to rise above 1.49 against the dollar. Bank lending is increasing in volume and the growing view that recession is reaching a mature phase is positive for the pound. House prices slid 0.4% in April, less dramatically than in previous months and the GFK consumer confidence survey reached its highest level since November.

The euro has also been testing the top end of ranges as economic sentiment improves in the eurozone. While GDP contractions across the region are expected to be large, with 6% forecast for Germany in 2009, Foreign Exchange markets are choosing to focus on growing positive sentiment. France, Germany and Italy all reported an improvement in consumer confidence with economic and industrial confidence in Germany rebounding from record lows.

The Australian dollar has also consolidated on rising foreign exchange market confidence, gaining on the US dollar and the pound. These gains however did not extend to the New Zealand dollar which dipped after the RBNZ reduced interest rates to an historic low of 2.5%.

Over the next week the development of swine flu is certain to impact on foreign exchange markets and whether or not the virus becomes a fully fledged pandemic will determine investor appetite for risk. This will affect foreign exchange rates, particularly the flow of funds from the safe havens to the higher yielding currencies and we are likely to see the pound and euro maintain support if the trend in equities remains positive.

Next week brings interest rate decisions from the Bank of England, ECB and the results of ’stress testing’ banks in the US. Both recent rate reviews have sparked a frenzy of Foreign Exchange trading and the same can be expected of this one. With much debate over the future of QE in the eurozone, the euro may come under pressure against foreign currencies in the run up to the decision. The results of stress tests are also to be made public in the US and though these may be negative, economists are predicting the degree of certainty and transparency they will bring to markets will be beneficial in the long term.

Although it feels like we have been saying the same thing for weeks now, foreign exchange markets still remain an uncertain place, subject to wider trends internationally and in particular, appetite for risk. Timing and information remain crucial when it comes to foreign exchange currency transfer. By letting your dealer know your requirements you could walk away with a great deal more from your investment.

Our foreign exchange services provide a professional, efficient and cost-effective method for foreign currency conversion. Our very personal service is suited to business users, needing to buy foreign exchange at the best currency exchange rates available, and for the private clients who wish to make a single money transfer, or regular payments such as overseas pension transfers. Call FX-Foreign  Exchange now on +44 (0) 1480.458400 .

Enjoy the Mayday break!

Foreign Exchange Catches a Cold

Yesterday’s Movements
Currency Pair Daily Movement
GBP/USD -0.2%
GBP/EUR +1.13%

The largest news on the markets is the outbreak of the deadly Swine Virus that is sweeping around the world from its origin in Mexico. This is having a devastating effect on the currency and stock markets as buyers are moving to currencies that are less likely to be affected. This in turn creates previously unexpected opportunities for both buyers and sellers to maximise currency exchanges. 

Our currency exchange services provide a professional, efficient and cost-effective method for currency conversion. Our very personal service is suited to business users, needing to buy forex at the best currency exchange rates available, and for the private clients who wish to make a single money transfer, or regular payments such as overseas pension transfers. Call FX-Foreign  Exchange now on +44 (0) 1480.458400 .

If you do not have an account with us simply click here to open a trading facility for either personal or business use. It carries no obligation or cost and gives you access to all the tools available to maximise any future currency exchange.

Euro News
Due to its size the Euro zone was hit hard yesterday by the news of the deadly Swine Virus as investors try to move to safer currencies. The opportunity for buyers of the Euro was strengthened even more in the closing hours of yesterday following the European Monetary Fund’s speech. In that Ewald Nowotny, a council member at the ECB indicated that they would be willing to expand its range of policy tools if necessary to ease the flow of credit through the economy. Meaning they could start quantitative easing and continue to lower the ECB interest rate. A complete swift in what had been previously stated, this meant that we saw continual strength in the pound against the Euro yesterday, closing 1.13% higher than it started at the beginning of the day.

This is a welcome recovery after the dramatic loss in confidence last week of the pound as the UK Gross domestic product contracted by 1.9 per cent for the first quarter of 2009, the biggest contraction since 1979. This gives buyers a surprising opportunity to buy foreign currency, (EUROs) as it now stands only 2.5 cents away from the high of 2009.

USD Continues to Win
Sterling  continued to lose strength against the dollar for the second day in a row, this after the former U.K. Treasury adviser Roger Bootle said Britain may be heading for a 1930s-type depression as house prices slump. U.K. house prices dropped for a 19th month in April, by a further 0.3 percent Hometrack Ltd. said in their report. This takes the decline in the past 12 months to 10.1 percent. In another report released yesterday by the British Bankers Association it was announced that 2,000 or 7% fewer loans were approved for house purchases in March from the previous month.

This gives short term opportunity for clients that are looking to sell USD currencies, as well as giving buyers of USD perhaps an insight into the potential future weakness in our position against the greenback. This follows the Chancellor of the Exchequer Alistair Darling who said in his budget report to Parliament last week that the economy will contract 3.5 percent this year and expand 1.25 percent in 2010, while the budget deficit reaches 12.4 percent of gross domestic product, the highest among the G20 nations.

In Other News - Mexico Peso Loses
Mexico’s Peso drops a staggering 5% due to both the outbreak of the deadly Swine Virus and an earth quake that reached 6.0 on the richter scale, showing that currency rates can change very quickly. So if you do have a requirement and are currently holding out for a better rate be sure to re evaluate your decision as at any time the markets could move against you.

Upcoming Financial Releases
With so much uncertainty, eyes will be fixed on up and coming economic reports including US Consumer confidence for April being released at 15:00 BST. This informs us of the level of confidence the US public has in the economy, a high level will give the greenback strength and a poorer than expected figure will give buyers an opportunity as the currency will be weakened.
Other reports this week include:
Wed 29th April 00:01BST UK GFK consumer Confidence for April
Wed 29th April 18.15BST United States FED interest rate decision (Currently at 0.25%)
Wed 29th April 18.15BST United States The Federal Open Market Committee meeting minutes
Wed 29th April 22:00BST New Zealand Reserve Bank of New Zealand Interest Rate decision

Sterling fades as a result of an unimpressive Budget

Currency High / Low Change Effect on £150k Purchase over the week
GBP v EUR 2.5 % £3750
GBP v USD 2.0 % £3000
GBP v CAD 2.4 % £3600
As shown above, through making the most of the high point on the week’s trading, a considerable amount of money could be saved. Your account manager can advise you of any movement in the markets, and through opening a trading facility with FX-Foreign Exchange you can be on hand to make a quick movement and capitalise on these ‘spikes’.
Important Upcoming Data Releases
Today - UK Nationwide housing prices data (MoM and YoY)
29th April - UK GFK Consumer Confidence
29th April - US Fed interest rate decision, GDP and Mortgage applications data released

GBP v EUR
Sterling saw substantial losses over the course of the last week. Early week gains against the single currency quickly disappeared and Sterling lost further ground on Wednesday when Chancellor Alistair Darling unveiled his 2009 Budget. We saw further losses on the back of GDP growth figures being negative for the third consecutive quarter as shown below.

The possibility of Sterling losing further ground on the single currency is a very real one, and with the Chancellor putting his hand in our pockets even more over the coming months, can you afford to take the risk of potentially losing further funds on your currency transfer?

At FX-Foreign Exchange we are able to hold the rates on a forward contract for anywhere up to 2 years for a small deposit, thus giving you the security that you know exactly how much any currency transfer will cost you now or in the future. For business clients, any savings made on a currency transfer can be translated into increased profits, which in such times of economic hardship is a very attractive proposal.

GBP v USD
Sterling had much the same story as above against the greenback last week, although with US new home sales data released on Friday being worse than expected, -0.6% as opposed to a predicted 0.9% increase, the pound did not lose quite as much ground as it did against most other currencies.

On Wednesday we see the US Fed release their interest rate decision at 7.15pm BST, this is after earlier releases of the US GDP results for the first quarter and the MBA (Mortgage Bankers Association) mortgage applications data released. With the Fed interest rate currently at 0.25%, any changes to this could see us witness large levels of volatility in the markets. If the Fed decides to increase the rate, we could quite easily see the Dollar strengthen against the pound. If you have an upcoming currency requirement for USD please contact a broker at fx-foreignexchange.com to discuss the best options for you and save money.

The Rich List
Yesterday The Sunday Times published its annual rich list, with it showing the biggest annual fall since it was first complied 21 years ago. Between the 100 richest people in the UK, £92 billion has been lost in the last year, including a staggering £16.8 billion solely lost by steel mogul Lakshmi Mittal, he still tops the rich list at £10.8 billion however.

Our currency exchange services provide a professional, efficient and cost-effective method for currency conversion. Our very personal service is suited to business users, needing to buy forex at the best currency exchange rates available, and for the private clients who wish to make a single money transfer, or regular payments such as overseas pension transfers. Call FX-Foreign  Exchange now on +44 (0) 1480.458400 .

GBP Foreign Exchange Rate Forecast Today 24th April 2009

Thursday’s Foreign Exchange movements:

GBP / EUR +0.48%
GBP / USD +0.98%
GBP / AUD +0.20%
GBP / NZD +0.33%

Sterling’s dramatic fall in Budget Wednesday were repeated yesterday morning, however the pound did stabilise against the majors towards the end of the day and begun to claw back some of the previous 36 hours losses.
GBP/EUR

After losing nearly 3 cents against the Euro throughout this week’s trading, the pound managed to recover part of these losses yesterday.  It is widely believed the adverse reaction to Alistair Darlings budget on Wednesday was the main cause of the fall, many calling it an overreaction.

Another contributing factor will have been the announcement from Germany’s leading economic think tank, claiming that the German economy will shrink by as much 6% throughout 2009, and that the unemployment rate will reach 10.8% next year. This would make Germany the fastest contracting economy in the world next to Japan.
“Through 2009 we anticipate a loss of more than 1 million jobs… and in the autumn unemployment will be well over the 4 million mark,” the think tanks said.

As Germany is one the largest economies within the Euro-zone, news such as this can have a detrimental effect on its currency and Foreign Exchange throughout the Union.

GBP/USD

As with the Euro and most other major currencies, the pound also made a small recovery after the previous losses. This recovery was aided further against the greenback following a US data release yesterday afternoon.
The number of US workers filing new claims for jobless benefits rose by a slightly more than forecast 27,000. Initial claims for state unemployment benefits increased to 640,000 from a previous 613,000. Considering analysts were expecting just a 17,000 increase, this lead to a weaker dollar in the afternoons trading.
In such volatile markets it is imperative as ever to ensure that you are in a good position to act quickly on any favourable spikes, in order to maximise your currency transfer. 
Forecasts for Todays trading

Following a particularly turbulent week for the pound, today’s trading will offer a few more hurdles to jump before the weekend sets in. This morning sees two significant data releases for the UK economy at 9:30am.
The first of these is UK GDP which will confirm exactly how deep the UK recession really is. Alistair Darling admitted on Wednesday that the UK is likely to contract by 3.5% this year, some 0.6% less than the prediction by the IMF (International Monetary Fund). The forecast for this morning’s year on year figure is for a contraction of 3.8%, and if this is confirmed there is every chance that the pound’s value could suffer further.

At the same time we will also see the release of the UK Retail Sales data. This indicator of consumer spending is shown as a percentage increase or decrease from the previous month or year. Analysts forecasts are rather more optimistic for this month with expectation of over 1% increase from previous. Again if these optimistic forecasts are not met, we could see further volatility in Sterling exchange rates.

If you have an immediate requirement for foreign currency, and do not wish to take the risk of the effect this data may have on your purchase, ensure you make early contact with your account manager. If you have any foreign currency to convert back into Sterling then ensure your account manager is informed so that we can help you to take advantage of any favourable spikes that today may offer.

Our currency exchange services provide a professional, efficient and cost-effective method for currency conversion. Our very personal service is suited to business users, needing to buy forex at the best currency exchange rates available, and for the private clients who wish to make a single money transfer, or regular payments such as overseas pension transfers. Call FX-Foreign  Exchange now on +44 (0) 1480.458400 .