Foreign Exchange

GBP Foreign Exchange Rate Forecast Today 23rd April 2009

Budget
The Budget out yesterday was one of the worst on record for the Labour party. Alistair Darling claimed he is trying to save the public finances by announcing larger than expected borrowing of £175bn. He also announced that the UK economy is expected to shrink b y 3.5% - the worst since WW2 but said he expected it to pick up by the end of the year. David Cameron said however ‘Britain cannot afford another five years of Labour.’ Indeed, only fifteen minutes into the report Sterling dropped by over 1% against both Euro and US Dollar.

Public Borrowing
Public borrowing will also touch record levels as the Treasury tries to combat falling tax receipts, higher spending and the mounting cost of banking bail-outs. Further adding to the government’s woes is the problems of the Retail Price Index which on Tuesday hit the lowest rate since 1960 at -0.4%. Darling went on further to say he expects the UK economy to deflate to a low of minus 3% by September. With inflation on a downwards trend it allows the Bank of England to cut interest rates further if required, which could also have a negative impact on the value of Sterling.

Unemployment Report
Unemployment figures released yesterday morning prior to the Budget showed that the number of people searching for work has recently hit 2.1 million, the highest level since Labour took power in 1997. There are four points to the currency compass which affect exchange rates-two of the main parts being political and economic factors. So if we review the current state of both the economic and political climate in the UK things do not look good.

According to Darling ‘no country could insulate itself from the world downturn,’ yet the IMF predict borrowing from UK GDP will hit 12% both this year and next. GDP in the second highest country in Europe is currently France at 6.3%. The world leader is borrowing is the US, at around 13% of GDP but the IMF predicts that the UK in 2010 will be the biggest among the G20.
Therefore, many clients who have been looking for the ‘green shoots’ to send the Pound back to levels of this time last year may have to wait a lot longer for the Pound to recover.

Bank of England Minutes
The Bank of England yesterday announced that the vote was unanimous at 9-0 in favour of keeping interest rates on hold. Indeed, the vote in favour of freezing rates at their historic low of 0.5% was largely expected by economists. Howard Archer of Global Insight said ‘The
minutes suggest that the MPC is maintaining an open mind on whether or not its quantitative easing programme is sufficient or whether it will need to be extended or even reduced.’ My personal belief is that things could get a lot worse before they recover.

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 22nd April 2009

Sterling Strengthens but economists advise caution ahead of Today’s UK budget.

Many people seems to be cautious ahead of the UK budget where the government is expected to forecast the economy is shrinking at its fastest pace in sixty years with a 3-3.5% slowdown in the UK economy this year, far than the November forecast of 0.75-1.25 percent.

Chancellor, Alistair Darling, will make his Budget statement to the House of Commons at 12.30 pm today and this could bring with it one of the most volatile trading sessions we have seen for a long time. The budget can last up to five hours and as it only happens once a year it can be difficult to predict how sterling foreign exchange rates will react to the budget statement.

We also have the Bank of England  minutes out this morning which will give us an  indication as to their reasoning for the last interest rate decision and what their strategy may be to try and stabilise the UK economy.

Speaking  before parliament, the new Bank of England Monetary Policy Committee member Paul Fisher indicated further weakness in global economic demand could hold back UK growth.

“The major risks I am concerned about are that monetary accommodation does not have sufficient positive impact on demand that we miss the inflation target on the downside,”

He went on to imply the Bank of England will have to discuss seriously whether it needs to increase its quantitative easing programme.

If you are thinking to sell off or buy Sterling Today in the foreign exchange market, you would be well advised to stay in close contact with your broker throughout the day. Telephone  FX-Foreign Exchange on +44 (0) 1480.458400 for the latest market reports and trading foreign exchange rates.

At FX-Foreign Exchange we can  offer you forward contracts  for up to two years into the future to take the risk factor away from your foreign exchange purchase and this will give you peace of mind so you will know exactly how much your currency will achieve for you. Or if you are wanting to achieve a rate that is not quite there you can place a limit into a live market as your target level may be reached when the UK trading session is over as the American and Asian sessions are just opening and the currency markets are moving 24 hours a day.

UK DEFLATION

In other news Sterling showed little reaction to the inflation data out yesterday.

UK annual inflation measured by the Retail Prices Index went negative in March for the first time since 1960, to -0.4%, down from zero in February. RPI includes mortgage costs, which have fallen following the Bank of England’s reductions in interest rates.

The Consumer Prices Index fell in March to 2.9% after February’s unexpected rise to 3.2%, the Office for National Statistics said. The official CPI figure is still well above the government’s target of 2%.

EURO DATA

Germany’s ZEW economic sentiment index posted its first positive reading since July 2007, pointing to a possible pick-up in the nation’s economy in the second half of 2009.

The ZEW index, which measures the confidence in the financial markets, rose by 16.5 points from minus 3.5 points in March to 13 points in April. ZEW president Wolfgang Franz stated

“It is even becoming more likely that the economy will slowly recover in the second half of this year”

This may not be the best of news for anyone with a Euro requirement so with the extremely rare spikes arising in the market place at present you should open an account if you do not already have one so you can capitalise when a good buying opportunity does arise. please feel free to apply for an account here. It is totally free to set up and bares no obligation on your part.

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 .

Sterling Forecast for April 21 2009

CBI Predicts Slow Recovery
A pattern usually seen with Sterling this year yesterday’s trading saw many of the gains made over the course of last week lost again losing 0.80% against the Euro and a whopping 1.67% against the Dollar.
The majority of the losses appear to be down to a report released by the CBI (Confederation of British Industries) predicting that we should see growth in the economy again in Spring of 2010 but any recovery will be ‘”slow and fragile.”
The predictions released by the CBI predicted that the U.K economy would shrink by approximately 3.9% over the course of 2009 but start to turn around over the course of 2010 eventually growing by 0.2% in the second quarter. A report also released by Earnst and Young although sounding slightly better still echoed a large contraction throughout this year with the U.K shrinking by 3.5%
It is widely expected that Alistair Darling himself will predict economic contraction for the U.K in 2009 at 3% during the budget - much higher than his last forecast in November which sat between 0.75% - 1.25%.
These reports have come from highly respected sources and once again do not spell out a good short term future for Sterling, so should you have an upcoming currency requirement that is fairly imminent, or indeed in the future it may be wise to contact your account manager here at FX-Foreign Exchange to discuss the options available to you, to ensure the cost of your purchase does not run over budget due to adverse market movements.
Here at FX-Foreign Exchange we have a variety of tools to protect both private and commercial clients against adverse market movements, including limit orders and forward contracts. If you aren’t sure as to what these tools do and how they work then please do feel free to pick up the phone and call one of our dedicated and friendly traders on +44 (0) 1480 458400 or click here to make an enquiry online and we will call you back.

Budget 2009
As most regular readers may be aware tomorrow brings the release of the budget by chancellor
Alistair Darling. This should almost certainly lead to market volatility during its announcement as it should give key indications as to the plan of action to conquer the recession we have found ourselves in.
Should the budget release be seen as positive for the U.K then we could see positive movements for the Pound and likewise should Mr Darlings comments indicate that we are in for a rough ride then Sterling could well lose further ground against a basket of major currencies.
If you have a requirement - whether it be to buy or sell foreign currency then it is imperative that you are in a position to move off of the back of a phone call. Our traders are there to keep you up to date with market movements and by having a active trading facility it puts you in the position to book out a rate should the markets move in your favour.
For example: If you had $100,000 to exchange into Sterling yesterday you could have achieved nearly £1000 more for your money by trading at the optimum point of the day…. certainly makes you realise that this is real money you are dealing with and tomorrow could throw up some fantastic opportunities so please do make sure you are available should we need to get in touch.
Today’s data
With the budget looming tomorrow it is easy to forget that we still have another day of data releases due out today which may cause just as much volatility on the markets and create just as many great opportunities to secure your rate, today’s releases are outlined below:
09:30 U.K Consumer Price Index - Month on Month and Year on Year
09:30 Retail Price Index - Month on Month and Year on Year
These are key inflation releases and will give a good indication as to how inflation has been affected by the recent slowdown alongside the decision to proceed with quantitative easing.
10:00 German ZEW Survey - Economic Sentiment
This measures the share of investors that are optimistic against the share of analysts that are pessimistic. An optimistic view will be viewed as positive for the Euro and pessimistic negative.
14:00 BOC interest rate decision
The Bank Of Canada release their monthly interest rate decision. As regular readers will know an interest rate cut generally has a negative effect and a hike a positive. The expectation is for the BOC to keep rates on hold at 0.5%. A release different to this should cause volatility.

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 us at FX-Foreign Exchange on Tel +44  (0) 1480 458400 for a personal consultation with a broker.

Foreign Exchange Forecast for March 15 2009

The latest market report is shown below. There may be some supplementary information and links towards the end of the report.
If you have any questions on the content of this or any other report, you are welcome to email the author directly or contact your FX-Foreign Exchange representative to discuss the implications for your own transactions.
Exchange Rates

£/USD + 0.5% £/NZD + 1.4%
£/€ + 1% £/AUD + 0.8%
£/CAD - 0.4% £/ZAR + 0.75%
Sterling
Sterling continued its good run against a basket of major currencies on the day bringing buying levels against the Euro to the best levels in 6 weeks and against the greenback to a 9 week high. Should you be sending money overseas in the near future it is imperative you keep in contact with one of our experienced currency brokers particularly as market conditions are so volatile and can dramatically affect the cost of your money transfer - In the current climate sterling spikes have been few and far between call FX-Foreign Exchange today and open an account so you can secure your currency in one quick phone call or discuss the various options at our disposal as one of the UK’s largest FOREX Brokers, including the use of a Forward Contract, whereby for a small deposit we can secure your rates for up to 2 years in advance guaranteeing the price of your conversion.
Mortgage Lending on the up
On a fairly quiet day data wise sterling seemed to find support following a surprise increase in mortgage lending for the month of March according to the Council of Mortgage Lenders (CML). The number of mortgages handed out by lenders rose slightly in February but activity in the market remains weak. Loans for house purchases in February in the UK rose to 24,300, up by 4% compared with January.
But the group warned that activity in the market remained at a “very low level historically”.
And first-time buyers had to find a record typical deposit of 25%.
“We are not convinced that underlying trends have shifted sufficiently to change our forecasts for mortgage market activity in 2009, but there are some positive signs for later in the year,” said CML director general Michael Coogan. “Some large banks are making more funding available through enhanced lending commitments, which is helpful but will not satisfy consumer borrowing demand on its own.”
While the figures, which followed earlier data on mortgage approvals, suggested some lift for the housing market, it remains in stark contrast with recent years. The number of mortgages completed was running at about one-third of the average February total of 76,000 loans for house purchase between 2002 and 2007 and the CML also reported a 20% decline in the number of remortgaging deals, down from 44,000 in January to 35,000 in February. With the UK placing such a large influence on the property market data such as this inevitably will give sterling some short term support; however the question is will this continue? Contact one of our currency brokers to discuss the implications for your next currency conversion.
Bank Shares Rally
Lloyds Banking Group and Barclays rose more than 10% before falling back in afternoon trading following stronger than expected quarterly gains announced by Goldman Sachs yesterday. These results were very different from the previous quarter’s results when the bank announced its first loss since going public in 1999. However, despite its strong performance, the bank said trading conditions continued to be tough.
“We continue to be cautious about the near-term outlook for our businesses,” said chief financial officer David Viniar. The financial system still faces “extremely difficult macroeconomic conditions,” he added.
These positive results led to a boost in investor confidence that the worst maybe over for financial firms, however some analysts were quick to disagree.
“The Goldman figures are remarkably good, but bank results are mercurial and you have to pick through them carefully,” said Justin Urquhart Stewart at Seven Investment Management.
He believes the results from Goldman Sachs and Wells Fargo will not set the tone for upcoming results in general.
“It’s not going to be pretty reading on the corporate results front this quarter,” he said.
Data Releases
With a quiet week for data yesterday’s major release came from across the pond with US Retail Sales coming in below the expected level for the month of March and falling for the first time in two months. Following the release the USD lost ground to the tune of 0.3% against sterling and again, in my opinion, bringing about some good buying levels for the greenback.
The Commerce Department said total retail sales dropped 1.1 percent after rising 0.3 percent in February. March sales were weighed down by declining purchases for big-ticket items like motor vehicles and electronic goods.
“This throws some cold water on the idea that we’re carving out a bottom. As long as you have initial jobless claims running around 650,000 and getting revised higher week after week, I don’t see a recovery,” Jacob Oubina a currency strategist at Forex.com, Bedminster, New Jersey.
Figures like these will not be interpreted well around the world with the US being the largest economy negative data releases can have impact on the world’s economy. After a couple of positive months the US retailer appears to be holding back on their spending, should we see a similar pattern emerge within Europe and world I would expect a large deviation from the current exchange rates - with this in mind why not contact FX-Foreign Exchange to discuss the various tools at our disposal to safeguard your currency requirement and keep up to date through the use of our daily market report. Call now +44 (0) 1480.458400.