GeorgeMartell

UK

• The week starts well for the pound as it pushes to new highs against the euro as the Greek debt saga continues to cause huge concern.
• GBP/USD breaks 1.545 IB as the pound is seen as a relative safe haven.
• The pound pushes back over a 7 year high versus the euro as markets are nervous the Greeks will miss their deadline to be granted a bailout extension.
• The pound is buoyed by Bank of England forecast of a possible interest rate rise by early 2016 due to the possibility of rising inflation and wage growth.
• The pound reaches highest level against the euro since late 2007 as investor confidence and risk appetite over Greek and euro it rock bottom.

The week ahead:

If manufacturing PMI, mortgage approvals and nationwide house price figures all come in better than forecast, the pound could be be in an unstoppable mood today. Tuesdays and Wednesday construction and services PMI numbers are likely see little or no improvement from the previous month.
Thursday’s Bank of England interest rate decision is unlikely to move markets as both QE and rates are likely to be left on hold, so expect much of the pound’s strength to come from its safe haven appeal and further confidence given by comments from the Bank of England surrounding the timings of an interest rate rise.

Europe

• The single currency fell early in the week as German business climate data came in under forecasts along with German IFO current assessment and expectations data.
• German 4th quarter GDP levels held up as previous, allowing slight euro strength.
• Eurozone officials agree to the reforms of the bailout and the euro strengthens slightly.
• Markets are still very nervous as the German parliament is expected to be the toughest to agree to the bailout reforms.
• Positive German Unemployment data does little to aid the euro as time is running out for stricken Greece.
• The week ends with the German parliament agreeing to the reforms and Greece are handed a four month bailout extension. The euro fails to strength on this news.
• The Greek PM rules out a third bailout, as concerns grow as to how Greece will service its debt obligations in the future.

The week ahead:

The single currency is again looking at a turbulent this week if the raft of data today falls short of the mark. With EZ manufacturing PMI, consumer price index and unemployment rate numbers all hanging on a knife edge, any drop below the previous months figure will cause the euro to plummet.
With this combining with a likely drop in services PMI and retail sales figures on Wednesday, the euro is could be sold off across the board. Perhaps Thursday’s press conference from the European Central Bank governor Draghi can offer some words of confidence to a currency in desperate need of a confidence boost.


USA

• The week starts with mixed data as the Chicago fed index figures came in positively whilst housing data came out negatively.
• The dollar falls again as existing home sales in the US cooled considerably missing expectations and marked a new nine month low.
• Janet Yellen gives testimony that markets should have patience as to an interest rate rise. Levels in labour market and inflation are not quite right to see a rate rise soon.
• US homes sales fell from the previous month and US mortgage approvals fell for a third week- GBP/USD rises to highest in 2015.
• Dollar weakness further as US growth is revised down to 2.2%- market unconcerned as consumer spending is strong and unemployment is coming down- rates likely to go up late summer or autumn.

The week ahead:

Another mixed bag of data is likely again this week for the greenback, starting with a potential fall in ISM manufacturing data today, but a rise on Tuesday from the ADP nonfarm employment change. ISM non-manufacturing prices are also set to miss the mark, so hopes are that Janet Yellen comments at the start of the day can guide the dollar to more stable days trading.
Fridays fall in both non-farm pay roll figures and unemployment rate will do little to aid an interest rate in the next few months, so expected the dollar to give away more than it gains this week.

Have a great week!!

Garbatellamike

George,

thanks for sharing that -most informative.

Do you know when Draghi's QE program is starting? Fairly soon I seem to recall. What effect do you think this QE will have on €:£ exchange rates?

GeorgeMartell

Garbatellamike,

The QE starts this month but I don't think you will see much effect on the rates. The significant point was the announcement and now that has happened, the markets have already priced it into the markets so its unlikely to move too much more on the back of QE.

Obviously, the Euro is extremely weak at the moment and with rates continuing to push towards the 1.40 mark, it seems more of a question of when this will happen.

Garbatellamike

George - I will be moving some € to £ between now and end of the summer/early autumn and will send you an email over the detail idc.

thanks for the quick and helpful response

GeorgeMartell

Garbatellamike,

It's OK. That's why I am here. You can find my details in my signature so feel free to contact me on there.

If you do go straight to our website - quote British Expats for free transfer fees.

Have a great day!

Garbatellamike

thanks George I'll be in touch