No Christmas Cheer for Pound

The Pound sank to another historic low against the Euro today, buying just €1.0210 on commercial markets.

Weak house price data and unemployment figures showed that there is no sign of any improvement for the British economy. Instead of cashing in equity from property values, Brits are now focussing on paying back their mortgages, instead of spending on cars, overseas property and other big items, figures from the Bank of England showed.

For exchange rates, more bad news for UK PLC means investor confidence in the Pound is at its lowest for years. If you're sending money to America, a Pound buys just $1.4670 and if you're emigrating to Australia, each Pound gets only $2.10, compared to $2.40 a few weeks ago.

Even at the best exchange rates available through specialist foreign exchange companies, buyers of Euros are doing well to get much more than €1 for £1.

Trading is thin between Christmas and new year, so volatility is more pronounced than usual, so make sure you contact Currency Index to keep in touch with the latest news.

Exchange Rates at Christmas

Exchange Rates at Christmas can be particularly volatile, due to low volumes of trading in the market. Therefore any movements can be pronounced - which means there can be opportunities to buy.

So, if you have Euros to buy, dollars to sell, or any other currency transaction to complete in the next few weeks, it's worth your while informing your currency broker of what you are looking for. They will be able to keep an eye on the market and, if you like, alert you to any opportunities for a bargain.

This has been one of the most volatile and unpredictable years ever for exchange rates - so don't miss out on any potential opportunities between now and January.

Currency Index is open every working day from now to the new year.

Interest Rates and Euro Exchange Rates

With press speculation that Sterling – Euro exchange rates might reach parity (£1 = €1), what is driving sterling down against the single currency at the moment?

One of the main drivers is interest rates. The Bank of England have cut rates from 5.75% last December, to 2% now. This means that international investors (pension funds, hedge funds and other investments) get a lower rate of return on sterling-denominated assets, so they move their money elsewhere.

This, in turn, means that there is less demand for Pounds. The simple rule of supply and demand applies, and the price of the Pound drops. Therefore, the price of other currencies relatively, increases.

As the Bank of England is likely to cut interest rates again in January, there is little stimulus to bring funds into the UK – specially in the current economic climate with all the other problems our economy is facing. Therefore, the selloff continues, and the Pound continues to fall.

In Europe, interest rates have also come down – but not as much. From 3.75% in the Spring, recent cuts now leave the single currency at 2.5%. Further, ECB President Jean-Claude Trichet said this week that there is little room for further cuts (analysts expect another 0.25% trim in January) which means that returns on Euro assets are seen as significantly higher than in the UK.

The Euro is quickly becoming a “safe haven” currency in these difficult times. Massive movements into Euro-held assets are driving up the price of a Euro – and it’s a relentless acceleration in the single currency’s value.

Euros are currently around 15% more expensive than just 2 months ago.

If you are sending money overseas in the coming weeks and months, this is not comfortable reading. Of course, things can change very quickly, and if the Eurozone finds itself in more economic trouble than we currently know about, then its currency could weaken and the best exchange rates could improve. But the risk is that the run will continue.

In addition, shopping around for the best Euro rates can save you money against your bank. Tom Arnold, Sales Director at Currency Index Ltd, said “now more than ever, buyers of overseas property are checking what deals are available on their currency purchases. Using a specialist broker such as ourselves can make a huge difference to the amount paid for a place in the sun or retirement property abrad”.

Specialist companies can also offer services like advance booking of exchange rates. Any volatility over Christmas would therefore not affect orders placed in advance, to give some peace of mind.

Whatever happens, we are in unchartered territory on the money markets, and buyers or sellers of any foreign currency should beware of assuming that things will move in their favour. Indecision, as the saying goes, can be much more expensive than a poor decision.

Euro rate below 1.10 as unemployment soars

Today's unemployment figure showed the worst jobless total since 1997, up to 1.86million.

The Pound dropped accordingly, now buying less than €1.10 for the first time in history.

The Euro has also been strengthened (become more expensive) by ECB President Trichet's comments on Monday that interest rates in the Eurozone are unlikely to fall as much as those in the UK. This makes the Euro a better bet for investors, and increased demand makes the single currency more expensive. The best Euro exchange rate is now at a new all time low.

Transferring money overseas has therefore become more expensive again today, particularly in the Eurozone. Make sure you speak to a specialist currency company if you need to make any payments to foreign soil in the coming weeks and months.

Simplyzigzag.com Partners with Currency Index Ltd

- Currency service for Simplyzigzag clients to save money on overseas purchases

- Dedicated account manager for personal service

Simplyzigzag.com has partnered with leading foreign exchange specialists, Currency Index Ltd, to offer preferential exchange rates for all their clients. Compared to the high street banks, Currency Index can save clients up to 4%, which can easily translate into thousands of pounds difference on the price paid for an overseas property.

This is achieved by Currency Index’s high turnover, which allows them to buy at market-leading exchange rates, passing savings on directly to their customers. In addition, there are no commission charges and overseas transfers are usually free too.

Simon Eastman, Senior Broker at Currency Index, said “It is a pleasure to deal for all Simplyzigzag’s clients and be a part of their buying process. We strive to make the process of buying currency and sending money overseas as stress-free and cost effective as possible”.

About Currency Index Ltd
Currency Index is part of the PropertyIndex.com group, and specialises in currency transactions at commercial rates, for UK buyers and sellers of overseas property. By multi-sourcing large volumes of currency from various sources, Currency Index are usually able to offer the best exchange rates in the marketplace, with no need to charge any additional commission or hidden charges.
Enquiries: Simon Eastman; 0845 371 1444, +44 207 903 5444. http://www.currencyindex.co.uk/, simon.eastman@currencyindex.co.uk

About Simplyzigzag.com
Simplyzigzag.com is a flat fee online estate agency. Launched to the public in June 2008, Simplyzigzag.com is dedicated to providing a better way of selling your home, at a lower cost, without the experience of being charged a large commission. Since its inception it has over 400 properties in the UK, Europe and the Middle East. One of the few international websites with no hidden costs aimed at developers, investors and private sellers.

Inflation falls - but not as much as expected

Inflation data out this morning showed a drop to 4.1% in November - not as low as many analysts had predicted.

The Pound rose slightly on the news, because the Bank of England will be less inclined to cut interest rates if inflation is running higher than anticipated.

That means the best exchange rates available this morning are slightly up on yesterday, for those of you needing to send money abroad.

Money transfers to Canada, for example, are buying a cent more per Pound than first thing this morning.

Dollar Exchange Rate Improves

The best US Dollar exchange rate has improved around 4c today, on the back of speculation from the States that US interest rates may be cut again tomorrow evening.

With little cause for cheer for the beleagured Pound, if you are sending money to America it may be worth discussing your requirements with your currency broker - spikes like this tend to be short lived at the moment and trading levels of above 1.50 are now available again from some sources.

Will the Pound reach £1 = €1?

Newspaper reports over the weekend show airport Bureaux de Change offering Euro exchange rates below €1 for £1.

Of course, airports are usually the worst place to buy your currency, and reputable currency companies will currently offer you up to 10% more than this for overseas money transfers above £5,000.

But is the commercial rate heading down to parity too?

The Government has alreay said it will not intervene to prop up the Pound, and although there is not a full scale "run" on the currency yet, perhaps we are not too far off.

With worsening unemployment, falling interest rates, economic crises everywhere you look, and consumer confidence falling at record levels, the head of Barclays has even suggested we are only at the very beginning of the problems - not near the end.

The most important thing if you need to exchange foreign currency in relatively large amounts, is to make sure you speak to an experienced foreign currency broker and don't just assume that exchange rates will improve - it could be an expensive mistake.

Euro rate hits new low

Sterling fell to new lows against the Euro yesterday, the worst rate for buying Euros since the single currency was launched in 2002.

For anyone buying property in the Eurozone, this is worrying news. The trap that a lot of people might fall into is to assume that "things can only get better". Tony Blair said that in 1997, and look where it has got us!

The main tip if you need to send money overseas, is to make sure you speak to an experienced currency broker about your transaction. Don't bury your head in the sand, because it could get much worse - some analysts are now predicting a rate of 1:1 against the Euro if the UK economy continues to decline.

Amongst the bad news, don't forget that using a specialist FX broker can still save you significant amounts of money compared to using your bank.

Currency and Exchange Rate News – December 8th

The Pound improved over the weekend and on Monday morning, most notably against the US Dollar after very weak jobless data out of the States on Friday.

Exchange rates which are pegged to the Dollar have also improved, for example the best transfer rate to Dubai in Dirhams.

The Pound gained a couple of cents against the Dollar, and a similar amount against the Euro, making sending money overseas slightly cheaper for those of you buying overseas property.

The rally was halted, however, by UK PPI data out this morning. The Producer Price Index, which shows factory costs, fell in November as the cost of oil and other base products has come down in recent weeks. The figures, which showed a 0.7% drop in production costs, are likely to reinforce the view that inflation in the UK is not a problem, and therefore that UK interest rate cuts are sustainable.

Lower interest rates usually mean a weaker Pound (which is one of the main reasons for the Pound’s current weakness), so sterling fell back when the figures were announced.

If you need to buy or sell foreign currency, make sure you are in touch with a specialist FX company who can help you save time and money.

UK Interest Rates down 1% - exchange rate reaction

UK Interest rates have been cut a further 1% today, leaving the base rate at just 2%, its lowest since 1951.

Reaction on the foreign exchange markets has been negligible, although this morning Euro exchange rates fell to their lowest since the single currency was launched nearly 10 years ago.

Against the US Dollar, best exchange rates were also down, before a very slight rally for the Pound.

Eurozone interest rates are announced shortly, and we will wait to see the reaction (if any) and implications for Brits needing to send money overseas.

Five Reasons the Pound could fall further

We speak to many clients who want to hold out for the best exchange rates, before making their transfer to pay for overseas property. But a close look at the economic conditions might make them think – would it be better to buy currency now?

1. Severe Recession. The OECD are predicting the downturn to be “the most severe since the early 1980s”, and has forecast the UK as the worst affected country in the developed world.
2. Interest Rates. The Bank of England is widely expected to cut interest rates again on Thursday – and lower interest rates typically mean a weaker Pound.
3. Manufacturing in decline. British manufacturing in November shrank at the fastest rate since figures began 16 years ago.
4. UK Job Market. A survey out today shows the UK job market weakened significantly in November. The drop in jobs available was the fastest in the survey’s 11-year history.
5. World outlook. The United Nations says the world faces its worst downturn since the Great Depression of the 1930s.

All of these indicate that a weaker Pound is likely – but if you are buying a property overseas, you can secure a “forward contract” to guarantee your exchange rate for up to 2 years ahead.

Don’t forget, whatever your currency requirements, you should be in touch with a currency broker who can help you through these volatile times. Currency Index specialise in currency transactions for overseas property buyers.

Sterling exchange rates plummet again

Sterling recorded its biggest loss against the Dollar since 1992 yesterday - falling over 5% in one day.

Volatility on the equity markets, along with poor UK sentiment and speculation about interest rate cuts later this week, led to a terrible day for the Pound, although markets have been steady this morning.

If you need to transfer money overseas, these are worrying times. The US Dollar tends to gain value in times of worry, as investors buy other assets denominated in USD, pushing up the price of the currency.

Elsewhere, the best Australian dollar rates are down below 2.30 again, from nearly 2.40 a week or so ago. This means somebody emigrating with £200,000 of assets now has AU$20,000 less when they arrive down under, than if they had bought currency a week ago.

Euro exchange rates dipped down into the 1.16s this morning before levelling out again around 1.1750.

The Pound also hit a 13-year low against the Japanese Yen.

With interest rates likely to fall in the UK on Thursday, it seem unlikely that there will be much Christmas cheer for anybody buying overseas property and buying foreign currency to fund the purchase.

As hard as it sounds, buyers may just be better off biting the bullet and securing exchange rates now. Don't forget that using a specialist forex broker, you can save money against your bank and make the best of a bad situation.

Pound Falls on UK Mortgage Approvals

The Pound has fallen sharply this morning, leading to worse exchange rates for those of you buying property overseas.

Bank of England figures, out this morning, show that UK mortgage approvals are still falling - despite aggressive interest rate cuts and government encouragement for more lending in the sector.

Only 32,000 mortgages were approved in October, down 1,000 on September's figure. Approvals have slumped by 74% in the last year.

For overseas money transfers, for example if you are buying a holiday property, this is further bad news for already poor exchange rates. It means that interest rates are likely to be cut even further to help stimulate the UK economy - and lower interest rates mean less demand for the Pound, which falls in value.

Although the European Central Bank (ECB) are also likely to cut interest rates on Thursday, the developing picture is that the UK economy is in a worse state than most of Europe - and therefore I would not be surprised if we currently have the best exchange rates available for some time to come.

If you need to buy or sell any currency, make sure you contact a specialist foreign exchange company, who will help you through these volatile times.

UK Consumer Confidence on the rise

UK consumer confidence has risen slightly in November, especially in the "personal financial situation" and "major purchases" sections of the Consumer Confidence Barometer, which will have a positive effect on the pound.

Meanwhile, Eurostat, the EU's statistics office has, announced unemployment in the Eurozone went up to 7.7% during October and also inflation in the eurozone fell to 2.1% in November. The steep fall in inflation and the rise in the jobless rate could spark the European Central Bank to cut interest rates sharply. After last month’s reduction of 0.5% ECB president Jean-Claude Trichet announced that further cuts could not be ruled out, and experts have predicted the interest rate could be cut by up to 1% when announced on Thursday.

Speculation on further interest rate cuts has been good news for Euro exchange rates, which have at last improved slightly after sterling’s recent dramatic decline. For those of you buying property overseas, and therefore needing to make transfers of money to France, Spain or elsewhere in Europe, this could provide an opportunity to secure your currency at better levels. Keep in touch with a foreign currency exchange broker to make the most of these volatile markets.

House prices down again - but pace slows

UK house prices fell by just 0.4% in November, according to figures out today from Nationwide. Usually, better than expected house price news means exchange rates for the Pound get better - but Nationwide warned the poor economy would continue to put pressure on the market - and therefore on sterling too..

Property Sellers cash in on Euro Rates

Sellers of overseas property cash in

Specialist foreign exchange brokers Currency Index have reported an increase in UK owners of overseas property selling up and cashing in on record Euro exchange rates.

The Euro is currently 18% more valuable against the Pound than this time last year – up from 71p to over 84p. Brits who bought property in Europe in January 2007 bought at 66p and have seen a 26% increase in the value of the Euro.

On a £200,000 purchase, the changing exchange rate has effectively increased the property value by over £50,000 in a 2-year period.

Price falls in Spain have hit the headlines in recent months, however Brits selling up and moving home have plenty to cheer by securing a record price for selling Euros, even if they have lost out on the Euro sale price of their property.

Chris Hall, Payments Manager at Currency Index, reports a 37% increase in transactions from Euros to Sterling in the last 3 months.

“Clients are achieving fantastic currency rates when transferring money back to the UK, especially when they can gain even more by using a currency broker to get commercial exchange rates”, says Hall.

Barclays Capital are projecting some recovery for the Pound in the new year, so it may be wise for people selling overseas property to secure rates while we are at all-time record levels against the Euro. For the latest news, keep in touch with an FX company who will be able to keep you updated.

Spain Falling Into Recession?

The Bank of Spain this week announced that Spain is likely to slip into recession by the end of the year - and the entire Eurozone entered into recession officially last week.

What does this mean for Euro exchange rates? In theory, it should be good news if you're sending money to Spain or any Eurozone country. But there are two sides to the coin - and whichever economy fares worse, the UK or Europe, might expect their currency to lose most value.

As exchange rates are all relative, if you need to buy Euros you'll be hoping that the UK economy performs better in the coming weeks and months, while the extent fallout from the economic crisis becomes clear.

There is a worry that the UK is less well prepared than the rest of the world for the downturn, having spent heavily during the 'boom' years. If this is your worry, then booking exchange rates in advance now would be a safe option.

However, if you think that the inflexibility of the Euro economy is going to harm EU countries more, then you might be optimistic for the Pound to get relatively stronger and give better rates of exchange.

Unfortunately, there's no way of knowing what will happen, and markets are made of dividing opinions. Time will tell, but keep in touch with your forex broker who will keep you informed of developments..

Retail Sales down 0.1%

Some cheer this morning for the UK economy - retail sales 'only' dropped by 0.1% in October. This was against analysts forecasts of a 0.8% drop, so was much better than expected.

Despite this, the Pound has not shown much of a recovery in terms of the Euro exchange rate or US Dollar exchange rates this morning. Why? Some scaremongering in the press, perhaps - the BBC reported "Retail sales shrink" as their headline, even though the figure is much better than expected. Retail sales are still up on a year ago!

In other words, even good news is bad news at the moment, and the beleagured Pound does not seem to be able to gain any strength. The only gain of note has been the AUD (great news if you are transferring money to Australia) - but that was overnight and before the figures were released this morning.

To make sure you get a good deal on your currency, whatever the market is doing, use a specialist foreign currency broker to help you through the process..

Minutes Released by Bank of England

The Bank of England's MPC meeting minutes were released this morning - showing a 9-0 vote in favour of the shock 1.5% interest rate cut earlier in November.

Worryingly, for those of you buying foreign currency, they even considered a bigger cut.

Interest rate cuts are generally bad news for the currency concerned - so further rate cuts in the UK could see Sterling fall even further.

If you need to transfer money overseas, particularly if getting the best Euro exchange rate is your priority, make sure you speak to a specialist foreign currency broker rather than leave your transaction to chance.

Inflation falls at record rate - Pound vulnerable to further losses

Inflation figures out today showed UK prices in October grew 4.5%, down from September's record levels of 5.2%.

Falling inflation will make the Bank of England more likely to cut interest rates, which could lead to an even weaker Pound and therefore worse exchange rates for those of you needing to send money abroad.

Initial reaction on the FX markets has been guarded, so consider securing your exchange rate before the next Bank of England interest rate decision in just over 2 weeks.

Don't forget that commercial foreign exchange brokers can normally achieve better rates than you would get from your bank.

Sterling at all-time low against Euro

What next for overseas property buyers?

Sterling slumped to a fresh all-time low against the Euro in early November, further to the Bank of England’s shock 1.5% interest rate cut and a raft of negative economic news in the UK.

For buyers of property in France, Spain or elsewhere in the Eurozone, that means spending more for the same amount of Euros than before.

Exchanging currency for a €200,000 property would have cost around £141,000 a year ago, wheras now a UK buyer would need to fork out over £165,000.

Why the change in currency value? Quite simply, the UK economy heading into recession means that investors are less likely to hold assets in sterling, which means less demand for the Pound and therefore falling value. Add to this falling interest rates, lower inflation for producers and consumers, falling house prices and a stuttering economy, and it’s easy to see why sterling has taken such a beating in recent months.

There is some good news though. Eurozone property prices have also been tumbling, so negotiating a good price should be much easier than a year ago. There are less buyers around and properties are harder to sell, so make sure you get yourself a good deal.

Also, with global interest rates falling, if you are using an overseas mortgage to buy your place in the sun, financing may well be cheaper.

Finally, don’t forget that you can fix and guarantee your exchange rate up to 2 years ahead by using a specialist broker like Currency Index. As the Bank of England itself expects tough economic conditions through 2009, it’s hard to see the Pound recovering, and there may be worse times ahead. By fixing your exchange rate for a purchase or completion next year, you can safeguard against falling exchange rates and make sure your dream overseas purchase doesn’t become a nightmare.

Australian Dollar sent on rollercoaster ride

Australia has long been one of the top destinations for Brits looking to move abroad. If you are looking at sending money to Australia to fund a property purchase, you’ll have seen massive movements in exchange rate changing the cost during the recent turbulent times.

The “Aussie” plummeted in value against the Pound, making overseas property cheaper, in October before regaining some value in December. The differences are staggering – a property costing $300,000 would set you back nearly £143,000 in September, but only £118,000 just 6 weeks later.

GBP – AUD last 3 months

Against the US dollar, the Aussie depreciated by a massive 37% in the same timescale.

The reason for this volatility? In the global credit meltdown, investors have moved money around the globe in search of higher returns. Traditionally, Australian interest rates have been higher than most western economies, and “carry trades” have been popular where investors borrow in one currency to invest in another with higher interest rates. Demand for that currency increases, and the price goes up.

Recently however, these positions have been reversed as Australian interest rates have fallen and investors have needed to sell dollars to place money elsewhere. As dollars were sold off, demand for the Aussie fell, and the price therefore dropped significantly.

That’s what presented buyers of Australian property with the opportunity for a bargain.

Of course, the most important thing to check if you need to transfer money to Australia is that you obtain a competitive exchange rate. Typically, the high street banks do not offer very good deals on large amounts and significant savings can be made by using a specialist foreign exchange broker like Currency Index.

Foreign currency brokers can help you through the whole money transfer process and tell you what’s happening in the market, to help you decide when to make your purchase. In addition, rates can be secured and guaranteed up to 2 years ahead, so you can buy your Australian dollars well before you need them without having all the funds available, to take advantage of a preferential rate.

In volatile times, emigrating doesn’t need to be any more stressful – make sure you get a good deal on your foreign exchange and try to secure your rate when the time is right.

Market Commentary - 04/11/08

Market Commentary – 04/11/08 – Simon Eastman – Senior Broker

The past few days trading have been dictated by speculation over UK interest rates. Due to the current economic climate and fears of a deep recession, markets have been calling for an interest rate cut when the Bank of England meets this Thursday.

Gordon Brown requested drastic action by the governor Mervyn King to help bolster the flagging economy and the markets has widely expected another 50 point cut in rates, from 4.5 percent to 4 percent.

Yesterday exchange rates were affected very little by the purchasing managers index figures which showed the UK manufacturing sector contracted for the sixth consecutive month as demand for products both here and from abroad tipped the sector into recession (Recession is signified by two consecutive quarters of negative growth).

During afternoon trading the tables turned as the pound took a battering across the board. The cause, market speculation of a 1 percent cut in interest rates rather than just a 50 point cut. The pound dropped 1.5 percent against the euro and at one point was down 3 percent against the US dollar, 3.5 percent against the Canadian dollar and over 3 percent against the Australian and New Zealand dollars.

Although some analysts in the market are not putting the pounds weakness down to the chance of a cut but more to the lack of lack of decisive action by the central bank in helping the economy.

"There's been a lot of apprehension ahead of the BoE meeting, and in our view with good reason," said Robert Minikin, senior FX strategist at Standard Chartered. "It's the sluggishness of the policy that's been affecting sterling. The problem is not whether they move 50 or 100 basis points; the problem is that they should have been easing aggressively, probably since early 2008," he added.

So with the US cutting their interest rates last week by 50 points, the Reserve Bank of Australia cutting rates by 75 points today, the markets now await Thursday for interest rate decisions by the Bank of England and European Central Bank. Cuts should help to boost the economy but whether more will be needed will become apparent in the coming weeks.

If you are in the process of buying a property abroad these uncertain volatile currency markets could unravel your plans so speak with a Currency Index broker today to discuss the options available to you, like a forward contract, used for eliminating the market risk.

If you have any question relating to the content of the above article or for some friendly guidance on your upcoming currency purchase please contact Simon Eastman, Senior FX Broker at Currency Index on 020 7903 5444 or email simon.eastman@currencyindex.co.uk.