Brexit – Sterling down US Dollar continues upward

In a recent blog article from Currencies4You, Brexit fears weighed heavily on the Pound last week, while the US Dollar went up again.

Currently 1 UK Pound = 1.39 dollars.

MAJOR CURRENCIES IN DETAIL:

GBP – With the date for the EU referendum now firmly set, Brexit concerns remain the main driver for Sterling. Boris Johnson and other prominent Tory leaders broke off with David Cameron’s campaign for the UK to stay in the EU. This was enough to spook currency markets and Sterling tumbled to its lowest levels against the US Dollar since the depth of the 2008 financial crisis.

USD – Stronger-than-expected economic data out of the US boosted the US Dollar against every other major world currency.

Durable goods orders in January fully unwound their December decline. Core capital goods orders rose by 3.9% on the month – this is a useful proxy for capital expenditures. The January rebound should allay any recession fears.

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Sterling climbs to a 2 month high against the US dollar

From our friends at Moneycorp…

moneycorp-1

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Dear Mr Cowie,

The British pound soared against the US dollar this morning following news that the UK economy has avoided a triple-dip recession. Gross domestic product grew by 0.3% during the first three months of 2013 according to the Office for National Statistics. This was far higher than most commentators had expected or could have hoped for, with the dominant services sector again playing a pivotal role in bolstering growth.

This is clearly an encouraging sign that the UK economy is healing, although with continual austerity measures planned for 2013 and beyond, growth prospects will remain muted.

Sterling’s climb higher against the dollar has been aided this week by weakening manufacturing data from the USA. Demand for American made durable goods, merchandise meant to last at least three years, fell by 5.7% in March from the previous month, giving rise to concerns that tomorrow’s US Commerce Department’s initial estimate of first quarter American GDP may deliver a worse than forecast growth result.

It’s certainly worth having a look at any US dollar requirements you might have coming up based on these movements.

If you have any concerns about your currency exposure throughout 2013 or would like to take advantage of the current levels on offer, please feel free to contact the Moneycorp Dealing Team on +44 (0)20 7589 3000.

Moneycorp Private Client Dealing Team
Tel: +44 (0)20 7589 3000

UK Pound Exchange Rate at 4 Month High Against the Dollar

Saw some more good news from today’s PROPERTY SECRETS about the UK/US Exchange Rate improving.

Sterling reaches four month high on US Dollar

The Pound is continuing to push up on the US Dollar, with another 1.28% gain over the past week taking it up to a rate of 1.621 on the US currency.

The Pound in particular may continue to perform well against the US currency if economic data continues to suggest that the UK economy is coming back out of recession, as data over the past week indicated. Recently, data showing that industrial output grew at its fastest pace in 25 years and that construction activity grew in July has helped to reignite the Pound’s performance.

Against the Euro however, the Pound is continuing to suffer. The Euro picked up heavily two weeks ago when the European Central Bank announced new measures to tackle the Euro-zone debt crisis – the framework of which was approved in Germany’s Constitutional Court last week giving the Euro even more upwards momentum. Sterling is therefore finding itself at around a three month low on the Euro – however this is great news if you have Euros to transfer back into Sterling from any property sales – now would be a good time to book the transfer in.

Going forward, events in the Euro zone and the US are likely to continue to cast the most influence over currency movements. However, some key events in the UK this week may also affect the Pound’s performance. UK inflation figures along with the retail and house price index on Tuesday will cast some influence, followed by the publication of the Bank of England minutes on Wednesday. If the minutes confirm that the outlook for the UK economy is getting brighter, and quantitative easing becoming less likely, the Pound may well receive another boost.

Could be a great time to invest in Florida property!

Let us know if we can assist.

Best!

Bill Cowie

President

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Exchange Rates For April

International Foreign Exchange –  Market Report for April

UK

GBP USD advanced to an overnight high of 1.5936 as market participants increased their appetite for risk. A reversal on recent downward trends could be imminent if sterling can break and close above 1.6065 this week.

On a trade-weighted index, the pound rose as high as 82.3, its strongest since mid-February 2011, before easing to 82.2. If it rises to 82.4, the index would have risen to its highest level since August 2010.

GBPEUR traded as low as 1.2099 yesterday but found strong support around 1.21 and this morning has already found a new high of 1.2152. This is now less than 0.2% away from a three-month high.

The UK Goods Trade deficit widened to £8.772bn in February from £7.883bn in January after analysts expected the deficit to narrow to £7.700bn.

WORLDWIDE

EURUSD advanced to a week high of 1.3156 as European Central Bank board member Benoit Coeure floated the idea of resuming the bond purchase program. He also suggested that the high sovereign borrowing costs for Spain do not reflect the fundamentals of its economy.

Yesterday, during the German bund auction, EURUSD fell to a low of 1.3090 before immediately rebounding to the day’s high of 1.3153.

The number of mortgage applications filed in the US last week fell 2.4% from the prior week even as interest rates slid across the board.

US import prices climbed by 1.3% from the month before. It was the largest monthly gain since April 2011.

The US economic recovery continues to gain momentum according to the Federal Reserve’s latest Beige Book released yesterday. The report said the economy grew in all twelve of its regions as manufacturing, employment and retail sales showed signs of strength despite higher fuel prices.

The US dollar still weakened against the majority of its peers though after Federal Reserve Vice Chairman Janet Yellen endorsed the central bank’s “highly accommodative” policy.

More Australian jobs were added in March than expected, with the unemployment rate kept steady, taking the heat out of calls for deep cuts to interest rates but not ruling out a May cut entirely.

The yen extended declines to a second day against all of its 16 major counterparts after Bank of Japan Governor Masaaki Shirakawa said he will continue pursuing monetary easing.

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UK Economy Update

Quick update from our colleagues at MONEYCORPS in the UK today:

UK Growth Alert

                                         Actual        Expected       Previous

GDP quarterly (Q1)       0.3%            0.3%           0.2%
GDP annual (Q1)             -0.2%          -0.2%         -3.1%

It always takes a while for the Office for National Statistics to piece together its picture of overall economic performance. That is why it undertakes the cumbersome assessment of Gross Domestic Product (GDP) only every quarter, not every month. Evidence of the task’s complexity was clear when the ONS had to postpone the release of the data because it could not reconcile the numbers.

Today’s figures eventually showed what investors had been expecting all along; the UK economy grew by 0.3% in the first three months of the year. But they also contained a surprise. Earlier estimates for the peak-to-trough decline in GDP had put the figure at -6.2%. Today’s revision updated that figure to -6.4%. There was also confirmation that, in volume terms, the 4.9% fall in calendar 2009 was a record annual drop.

Whilst this data represents just about the most backward-looking statistics in the book (in that they relate to a period that ended more than three months ago) they are the most up-to-date and accurate measure of overall economic performance that is available. Investors therefore set great store by them. They also tend to be optimistic that successive revisions will show an improving picture. In that respect, today’s numbers were a disappointment, prompting a knee-jerk sell-off for the pound.

Very quickly, however, reality kicked in and the pound set off higher. Other than that figure relating to the 2008-09 recession overall, the numbers were no worse than analysts had predicted and were better than the equivalent statistics for the euro zone (subject to revision). From here on in, the questions will centre on the impact of Chancellor Osborne’s austerity budget. Will it, as some fear, derail what is clearly a fragile recovery?

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Regards,

Bill Cowie
www.BritishHomesGroup.com

UK/US Currency Update April 2010

BRITISH HOMES GROUP

April 15, 2010

From our colleagues at Moneycorps:
 
“The Pound benefitted from strong data released last week, including better growth estimates, rising house prices, and strong manufacturing statistics. Recent Sterling volatility concerning a possible hung UK Parliament was somewhat alleviated with the announcement of Britain’s general election, to be held on the 6th of May.
 
Uncertainty over these elections will still likely bring volatility as government agencies lean toward either the Tory or the Labor Party views for addressing Britain’s budget crisis. The result of this debate, basically whether to continue or to halt government spending post-election, will determine the success of the economic recovery. Although Sterling has indeed broken the trading range seen over recent weeks, looming fears leading up to the election should keep pressure on the currency.
 
Yesterday’s better-than-expected trade balance figures out of the UK, a £6.3 billion February deficit against the forecasted £7.3 billion deficit, was a vast improvement to the £8 billion deficit reported the previous month. With the lowest UK deficit reported since August, Sterling moved above the 1.54 GBP/USD technical barrier.
 
With the most US jobs created in three years in the month of March, it is natural that consumers are becoming more comfortable spending. Yesterday’s announcement of a widened trade deficit in the United States revealed economic growth, with a push from Americans purchasing more foreign-made goods, the highest demand since 2008. Watch for US unemployment & housing data being released this week.”
 
Recent Trading Range: $1.48 – $1.55

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UK/US Currency Update March 2010

March 10, 2010 
 
CURRENCY UPDATE

This month’s Pound/Dollar update from our colleagues at Moneycorps:

How low can Sterling go?
 
February proved to be another uncomfortable month for Sterling as the US Dollar pushed the Pound below the key market level of $1.50. Both UK and US GDP figures for the 4th quarter of 2009 were revised up, 0.3% and 5.9% respectively – a clear indication of the rate of recovery in the US and the bumpy road ahead for the UK.
 
And so the Dollar remains in a strong position with traders buying on strong US fundamentals and buying even more aggressively as a safe haven play. Traders, frightened by continued concerns over Greek national debt, the possibility of the Spanish government following suit, and renewed concerns over Dubai World once again asking to delay its debt repayments, are moving into long Dollar positions. 
 
As the deadline fast approaches for Prime Minister Gordon Brown to call a general Election in the UK, opinion polls have taken center stage in setting traders’ sentiment about the Pound. Brown’s labor party closed the gap on the conservatives to just six points, suggesting the possibility of a hung parliament. With neither party having a clear majority, this would render the Prime Minster unable to effectively tackle Britain’s very serious deficits. The time between now and the election will be dangerous for the Pound, with only more downward pressure expected.
 
Recent Trading Range: $1.48 – $1.58

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