Brexit Position Improves, Pound Strengthens

As we enter the New Year the UK has begun to refocus on continuing Brexit talks. The pound has strengthened to a 3 year high against the US Dollar with the market rate sitting at 1.372 this morning this is due to a more positive attitude towards Brexit talks developing with some EU members suggesting a deal that keeps the UK much closer to the European Union than was previously expected. However we have not seen the same sort of gains against the Euro due to a number of developments. On Thursday the European Central Bank finally announced an end to their stimulus plan, this is widely seen as good news as it shows the Eurozone’s economy has recovered well enough to require less propping up. In conjunction with this and the associated positive European economic data released last week the single currency also reached a 3 year high against the US Dollar.

 

The good news for the Euro hasn’t stopped there though, Germany’s coalition government under Angela Merkel have moved on to formal negotiations as talks have gone well. This has added to the current Euro strength as political uncertainty has been reduced.

Looking further ahead the Bank of England’s new Governor Ben Broadbent has suggested an interest rate raise is on the cards in the near future. This has lent further support to the Pounds position and helped recover some of the value it has lost since the referendum.

 

While there is still a lot of uncertainty about Brexit the increased positive attitude from the UK and the EU will boost confidence in the Pound and we could see further gains against the Euro and especially the US dollar in the coming weeks. While the EU has seen a raft of positive data I believe the larger market moving news has now been announced and the pound has more to gain than the Euro.

 

With all this we thought we would help assuage the January blues by giving you the improved rate regardless of the amount of currency you buy until next Friday. So just use the following code to take advantage of this gift when placing your order on the website till the 19th – Coupon Code: JANLIFT

 

To discuss any travel money requirements or for anything raised in this blog please email me at the following address. Matt.sinclair@currencydeals4u.co.uk

Pound wobbles as Brexit talks resume today

The Pound fell from 1.133 against the Euro this morning to just under 1.13 as this blog went live. The drop was due in part to the cabinet reshuffle taking place yesterday with the MP for Witham Priti Patel resigning her post as International Development Secretary over unsanctioned government meetings while she was on holiday in Israel recently. The other side of the coin is the Brexit talks resume again today and so far that has had a harmful effect on the Pound as uncertainty continues about how and if a deal will be reached when the UK leaves the EU.

There has been little data of note since the interest rate rose last week so political sentiment is likely to have the biggest effect on the markets as the week comes to a close. However tomorrow sees manufacturing data from September released and consensus is a drop in activity is to be expected so expect a coinciding drop in the value of the Pound.

The situation in Saudi Arabia remains volatile as Crown Prince Mohammed Bin Salman consolidates his power after a string of high-profile arrests attributed to a crackdown on corruption. This coupled with growing tensions between Iran and Saudi Arabia over Iran’s alleged support of Houthis rebels in Yemen including the supply of a ballistic missile that was launched against the capital of Saudi Arabia Riyadh earlier this week continues to escalate quickly. The Markets will be watching events unfold closely in the coming days.

In other news President Trump issued a stark warning once again to North Korea to “not underestimate us” as he tours Asia this week. Rhetoric like this tends to cause movement for the US Dollar as the markets try to predict Trump’s next move, something that has proven difficult to do in the past.

As a whole I believe Brexit talks will now be the main focus as we head towards Christmas and I believe unless real progress can be achieved before then the Pound will continue to suffer.

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Pound remains toxic as Brexit talks stall…

The Pound has hit major roadblocks once again after recovering from the 8 month lows it faced a few months ago. The main reason for this will be clear to everyone by now as it continues to dominate the media.

Brexit. The Pounds short to mid-term future is being governed by the progress of the Brexit negotiations or lack of as seems to be the case at the moment. PM Theresa May has hinted that plans are under way for the outcome of a “No deal scenario” where essential we crash out on the 29th of March 2019 without a formal agreement in place with the EU to prepare Trade, Immigration etc. This has shaken investor confidence in the UK economy as big business trickles away overseas. This is not a favourable outcome as the chaos caused by scrambling for trade deals and securing borders etc would surely weaken the Pound further. As it stands presently both sides seem to be deadlocked and any meaningful agreements on Trade, Exit bills or immigration look unlikely before Christmas if at all.

The IMF (International Monetary Fund) released their growth forecasts this week, while the world forecast is up from 3.2% to 3.7% the UK has not done so well having been downgraded from 1.9% to 1.7% this has further weakened the Pound with the current Market rate sitting at 1.1094 GBPEURO at the time of this articles release. The Bank of England’s governor Mark Carney has indicated that an interest rate hike could be likely in November. With unemployment at its lowest levels since the 70’s but the average wage declining and inflation soaring if this is just speculation and a rate hike doesn’t materialize in November we could see further losses for the Pound. However if The BOE does decide to raise interest rates the market will likely rally around the Pound making for some attractive opportunities for buying currency.

Though the UK does seem to be under fire at present there are issues overseas that could make the Pound worthy of investors. The Catalonian Independence referendum continues to stay tense. With Catalonia’s president, Carles Puigdemont seemingly defiant on taking Catalonia out of Spain but then drawing back by offering to negotiate with Madrid before taking any further action it is difficult to predict how this will play out but will surely have the other EU member countries nervous. If Catalonia were to succeed in gaining independence then this could reignite debate in other countries with secessionist problems in the European have including the UK, Belgium and Italy. A fragmented EU would not be positive for the EU and would see the single currency weakening.

During these unpredictable times we at CurrencyDeals4U would like to offer our clients the best service and deals we possibly can. So till the 20th October if you use the following code when reserving your currency on our website under £500 you will still receive the improved rate regardless of the amount! We hope this will make your money go further and look forward to dealing with you soon.

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For any questions on any of the issues raised in this article or information on obtaining your holiday money please contact me at accounts@currencydeals4u.co.uk.

Matthew Sinclair

Currencydeals4u

UK Economy continues to perform poorly..

Over the last few weeks the Pound has continued to decline against almost all major currencies and doesn’t appear to be climbing back up any time soon. A host of poor economic data including this mornings worse than expected trade balance figures and minimal industrial production figures have contributed to keeping the pound firmly down around 1.105 (GBPEURO mid market level).

With analysts beginning to comment that the UK housing market is starting to stagnate and foreign investment is beginning to slow, the outlook for the Pound is looking decidedly negative. Brexit negotiations will continue to be the major factor in the weeks and months ahead and news on progress will likely cause swings as information is released.

Across the pond rising tensions with North Korea and Russia are damaging the dollars strength with GBP to US dollar hovering around 1.30 at the time of writing this blog. However strong productivity and improving employment may help to repair some of this damage though if military action is taken against North Korea some major swings are likely.

The European economy continues to grow steadily in stark contrast to the UK’s faltering data. The positive data is accompanied by a more stable political environment to boot. France’s government unveiled its reform agenda, which focuses on rekindling finances and boosting growth, as politics are finally in the rear view mirror following a long election cycle. Greece is moving closer to financial independence after returning to financial markets and following the EU Commission’s recommendation for the Union to end the country’s Excessive Deficit Program. This continued Euro strength is likely to also add pressure to the Pound and keep it firmly down.

If you are traveling in the next few months current levels are likely to be the best consumers are likely to get and the time to strike may be now. If you have any questions or need advice on a particular currency exchange please feel free to email me at accounts@currencydeals4u.co.uk.

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Inflation hearings pushed back again.

This morning the latest inflation hearings have been pushed back till next Tuesday. Speculation is that interest rates should be raised soon due to climbing inflation levels. Rates were cut last summer due to fears the economy was going to slow dramatically due to Brexit. However this hasn’t materialized to the extent expected ergo the speculation that interest rates should be raised again.

The Pound has struggled recently to make any headway against the Euro due to the recent political instability surrounding Theresa May’s minority government coupled with ongoing problems with Brexit negotiations. Compromise is the watch word in these talks and Mrs May’s original hard line stance is no longer viable. Issues such as freedom of movement are nowhere near as clear cut as the Tories originally wanted.

Key to the foreseeable future of the Pound’s strength will be the trade negotiations and this looks set to be full of compromise if a deal is ever to be reached.

The Pounds short to mid-term future is full of uncertainty. The markets do not react well to uncertainty. Those hoping for the GBP to return to the 1.40 levels against the Euro are clutching at straws, I believe that current levels may improve slightly as the better than expected growth props the pound up slightly. However any gains will be fleeting as eyes turn back to the Brexit negotiations which are set to dominate the economy for the next 2 years.

On another note the situation with Qatar continues to be unresolved and as such we will not be trading Qatari Riyals until a resolution has been achieved.

If you’re traveling short term, current levels may look appealing in the next couple of months. If you have any questions on a particular currency requirement please feel free to contact me at accounts@currencydeals4u.co.uk.

CUSTOMER NOTICE REGARDING QATAR

With immediate effect we have suspended trading on Qatari Riyal until the current situation has been resolved.

This is due to six countries including the United Arab Emirates cutting links with Qatar due to allegations of state sponsoring of ISIS and affiliated militant groups.

For more information please see the following BBC news link

BBC News Qatar

Any orders placed on the website for Qatar will not be honored at this time.

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General Election controlling the rates…

The Pound has declined against the Euro over the last week or so due to strong European Data. This coupled with the General election looming has kept the Pound down around 1.14 market level. Mario Draghi has side stepped any suggestion of quantitative easing being reduced in the short term and even this hasn’t slowed the Euro’s resurgence.

Indeed it seems that the Pound will continue to have a rough ride over the next few weeks if March’s economic date and continuing rising inflation is anything to go by. Rates currently held may be quite attractive when looking back in June. Those waiting for a sudden spike in the Pound to Euro value may have already missed the boat in the short term. With European data continuing to improve and the European Central Bank hinting at curtailing there current asset purchase program I feel the Euro currently has a more positive outlook than the Pound at least in the short term.

The truly tragic events in Manchester had little effect on the markets, this is sadly because of the frequency of these attacks the markets tend to be less reactive to them these days.

A recent YouGov pole are now suggests the conservatives may fail to obtain a majority and a hung parliament is likely to further dampen any strength in the pound. With just 8 days to go before the general election I think it is unlikely we will see any significant improvement in the pounds position.

If the Conservatives win the election with a majority in parliament I expect the Pound to rally back and present some very good euro buying levels directly after the election on June 8th. However a hung parliament or a labour victory (as this could throw current Brexit plans out the window) will do little to help the Pound sterling. As is much the case with currency market conditions the upcoming levels will be relying on politics once more rather than economic data. The upcoming TV debates are likely to highlight this fact and we may see a few wobbles as these are held.

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Euro wobbles on French Election result

The Euro strengthened marginally on Emmanuel Macron’s victory in the French Presidential elections against National Front member Marine Le Pen. The reason I believe that the Euro did not gain ground was that the markets had already priced in Macron’s win, the polls had him out in front for nearly the entirety of the lengthy election process. As of the time of writing this the Euro had already lost the gains it had made against the pound and was in fact weaker than close of markets on Friday.

The threat from the far right hasn’t been removed from France by a long way however. President Macron still has to contend with the Parliamentary elections, on a house divided so strongly from one political extreme to the other he will find it challenging to create a government that will enable him to move forward collectively on his polocies.

This picture of political instability and populist movements is painted across much of Europe and indeed the world in general. You need only to refer to Brexit, President Trump, Turkey as well as the far right nearly gaining control in France to see that the world is a chaotic place at the moment.

The markets do not like chaos and uncertainty. This is a golden rule of the currency markets and makes it increasingly hard to predict where a currency pairing is likely to move in the mid to long term in the current climate.

UK data has been fairly positive of late defying a lot of Brexit pundits predictions of near disaster for the Pound Sterling. There isn’t a huge amount of data release this week but Thursday sees the Bank of England’s interest rate decision, inflation report and monetary policy meeting. I think it is unlikely we will see any change of note though on Thursday as the Pound has strengthened recently and we are yet to even begin Brexit negotiations fully. It will be interesting to see if the BOE outlines any plans going forward or comments on the negotiations themselves. I expect a slight rise in the Pound if things remain how they are for now.

Currently rates are favorable against the Pound, particularly against the New Zealand Dollar which is substantially higher than it was a few months ago. I do not think this will be a long term gain as New Zealand’s trade deficit is narrowing and the prognosis is a surplus to be achieved within the year. Spikes like this should be taken advantage of as the UK’s own future outlook is looking considerably rocky because of Brexit.

If you have any questions about anything raised in this blog please feel free to email me at help@currencydeals4u.co.uk or use the contact form on our website www.currencydeals4u.co.uk

We aim to provide a high quality customer focused service and provide high street beating rates of exchange whether your buying or selling. If you have a particular currency requirement again feel free to email us at help@currencydeals4u.co.uk we will be more than happy to help you.

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