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.