We have had a busy few weeks so far in terms of economic data being released and this has obviously had a knock on effect for the currency market.
As the UK economy has faced a turbulent few weeks so has Sterling! We have seen 10-month highs against the US dollar breaching the 1.7 mark on top of encouraging movement to the high 1.18’s against the Euro. This has been helped over the past month with some better than expected housing and retail data. However, the pound has fallen back after recent data releases such as the rise in unemployment. These peaks and troughs point to the foreign exchange markets staying volatile for the foreseeable future.
The biggest piece of news received was on Thursday 6th August as the Bank of England announced the introduction of a further £50bln in quantitative easing. This overshadowed the fact that interest rates were kept at an all time low of 0.5%. The extra injection meant the total spend for quantitative easing has risen to £175bln, £25bln more than the initial £150bln put aside by the Chancellor (http://uk.reuters.com/article/idUKLNE57502120090806) . The increase in quantitative easing was due to the fact that the UK recession “appears to have been deeper than previously thought” according to the Bank of England.
The increase in quantitative easing has harmed the pound significantly, especially against the US dollar. Since the announcement the pound has lost more than 5 cents against its American counterpart, down to 1.6440 (12/05/09). The pound has stayed weak after unemployment rose by 220,000 people to its worst levels since 1995. Unemployment now stands at 2.44 million and is expected to rise further in the coming months. This is a good remainder that we still have clouds hanging over our economy and its future growth. This sentiment is echoed by Bank of England Governor Mervyn King who stated that any recovery in 2010 will be “fragile” when the inflation report was released on Wednesday 12th August (http://news.bbc.co.uk/1/hi/business/8196465.stm) .
Here at Escape Currency we have a team of traders who know the markets inside out. We make sure any client, whether they are buying property or paying a supplier overseas is fully aware of market movements and how it affects them. Our aim is to save our clients money and we will continue to do so even during these difficult times.
Thursday 13 August 2009
Monday 10 August 2009
Regular Payments explained...
For the people who don't have large payments to make overseas anymore but still need to make regular transfers for mortgage payments etc. there is an easy solution. A Regular Overseas Payment Scheme (ROPS) can be put in place so bills are paid without having to worry over the transfer of money.
The main aim of a ROPS contract is to save both time and money for our clients. Once a standing order has been set up people can forget about it and relax in the knowledge that they will still be getting a better rate of exchange!
The contracts can be set up on either a 6 or 12 month term and are paid out either monthly, bi-monthly or quarterly on the 6th of each chosen month. The money is due with us by the 5th and the size of transfer can range from £250 to £3,000 depending on what bills have to be paid. There are two options with the contract as you can either fix a rate of exchange at the start or leave it on a variable scheme. The variable means that you achieve the rate as it stands on the 6th of each month. The only fee we do require is an advance of £5 for each transfer you expect to make to go along with the first payment, this just covers the cost to send the money out each month.
I hope this helps answer any questions on the Regular Payments scheme we run, if not get in touch on ++44(0)1296 339811 or drop me an email; dominic@escapecurrency.com
The main aim of a ROPS contract is to save both time and money for our clients. Once a standing order has been set up people can forget about it and relax in the knowledge that they will still be getting a better rate of exchange!
The contracts can be set up on either a 6 or 12 month term and are paid out either monthly, bi-monthly or quarterly on the 6th of each chosen month. The money is due with us by the 5th and the size of transfer can range from £250 to £3,000 depending on what bills have to be paid. There are two options with the contract as you can either fix a rate of exchange at the start or leave it on a variable scheme. The variable means that you achieve the rate as it stands on the 6th of each month. The only fee we do require is an advance of £5 for each transfer you expect to make to go along with the first payment, this just covers the cost to send the money out each month.
I hope this helps answer any questions on the Regular Payments scheme we run, if not get in touch on ++44(0)1296 339811 or drop me an email; dominic@escapecurrency.com
Tuesday 4 August 2009
How forward contracts work....
Forward contracts are a really good way of protecting yourself against currency fluctuations and taking advantage of good rates of exchange before you actually complete on a property for example.
A rate of exchange can be booked for anything from 8 days to 18 months in advance. This also makes it a useful tool for business planning as you can budget accordingly once you have a rate of exchange booked. A prime example of this is one of our clients who is based in Europe but has to pay their suppliers in Sterling. They have booked a rate for selling Euros for 12 months. Not only have they budgeted for those 12 months but they have also saved thousands as the rate of exchange has continued to go against them over the length of the contract.
Also, a forward contract can have an option put in it where the client can draw on the funds early between two specific dates. This provides the client with a large amount of flexibility so they can draw on the funds as and when they need them. This is ideal for the client who isn't sure of the date when they complete on a property or for the business who wants to book a rate now but still make payments from the contract to suppliers earlier than the maturity date. With an option the full balance doesn't actually have to be settled until the end date of the contract.
There are some restrictions on the forward contracts though as the total value needs to be over £20k or the equivalent in a foreign currency. In addition for Escape to fix a forward contract a deposit of 10% is required. This would need to arrive with us within 3 working days of us setting up the deal. The balance is then due by the maturity date or earlier if the contract has an option.
I hope this explains a bit more about forward contracts but if anyone has any questions just let me know on twitter or send me an email; dominic@escapecurrency.com
A rate of exchange can be booked for anything from 8 days to 18 months in advance. This also makes it a useful tool for business planning as you can budget accordingly once you have a rate of exchange booked. A prime example of this is one of our clients who is based in Europe but has to pay their suppliers in Sterling. They have booked a rate for selling Euros for 12 months. Not only have they budgeted for those 12 months but they have also saved thousands as the rate of exchange has continued to go against them over the length of the contract.
Also, a forward contract can have an option put in it where the client can draw on the funds early between two specific dates. This provides the client with a large amount of flexibility so they can draw on the funds as and when they need them. This is ideal for the client who isn't sure of the date when they complete on a property or for the business who wants to book a rate now but still make payments from the contract to suppliers earlier than the maturity date. With an option the full balance doesn't actually have to be settled until the end date of the contract.
There are some restrictions on the forward contracts though as the total value needs to be over £20k or the equivalent in a foreign currency. In addition for Escape to fix a forward contract a deposit of 10% is required. This would need to arrive with us within 3 working days of us setting up the deal. The balance is then due by the maturity date or earlier if the contract has an option.
I hope this explains a bit more about forward contracts but if anyone has any questions just let me know on twitter or send me an email; dominic@escapecurrency.com
Thursday 25 June 2009
Mid-Week Chaos!!!!
This week has been a very volatile time in the markets even more than normal...
The Federal Reserve kept its base rate at an all time low yesterday http://www.guardian.co.uk/business/2009/jun/24/us-federal-reserve-interest-rates . Before this decision was made the USD was losing value hand over fist against a basket of currencies. The main reasoning behind this was seen to be investors who didn't expect a rate hike selling out of their positions with GBP/USD pushing close to 1.66 and USD/EUR pushing past 1.41. As the day wore on the early gains were erased as the market started to calm to 1.6467. The dollar has gained again this morning down to lows of 1.6323 against the £ and 1.3933 against the €.
The fact that rates are showing 200 points swings across a day highlights the situation we find ourselves in. Without a crystal ball it is hard to definitively talk about future prices of the currency pairings. At the brokerage where I work we dont advise our clients but we do ply them with as much info as possible to make those life changing decisions that bit easier. (www.escapecurrency.com)
The Federal Reserve kept its base rate at an all time low yesterday http://www.guardian.co.uk/business/2009/jun/24/us-federal-reserve-interest-rates . Before this decision was made the USD was losing value hand over fist against a basket of currencies. The main reasoning behind this was seen to be investors who didn't expect a rate hike selling out of their positions with GBP/USD pushing close to 1.66 and USD/EUR pushing past 1.41. As the day wore on the early gains were erased as the market started to calm to 1.6467. The dollar has gained again this morning down to lows of 1.6323 against the £ and 1.3933 against the €.
The fact that rates are showing 200 points swings across a day highlights the situation we find ourselves in. Without a crystal ball it is hard to definitively talk about future prices of the currency pairings. At the brokerage where I work we dont advise our clients but we do ply them with as much info as possible to make those life changing decisions that bit easier. (www.escapecurrency.com)
Wednesday 17 June 2009
MId-Week Update...
Sterling has fallen down from recent highs after statistics show that unemployment in the UK has risen to highest level since November 1996; http://news.bbc.co.uk/1/hi/business/8104546.stm . This was less than expected but it has still harmed the pound with it falling down to lows of 1.1715 against the EUR. This fall has been compounded by news of exports possibly stabilising within the Eurozone; http://uk.reuters.com/article/businessNews/idUKTRE55G2V020090617 . The release of this news in conjunction has caused GBP's fall leaving people taking profit on those EUR's they bought over the last couple of days
The markets remain volatile especially in the pairing of GBP/USD as the prices are moving by 30-40 points across a half an hour. This stormy climate looks set to continue as uncertainty remains over the dollar's position as the world's reserve currency. Lots of clients at the brokerage I work for (www.escapecurrency.com) are taking advantage of this with forward contracts to make a nice little profit in this economic downturn.....
The markets remain volatile especially in the pairing of GBP/USD as the prices are moving by 30-40 points across a half an hour. This stormy climate looks set to continue as uncertainty remains over the dollar's position as the world's reserve currency. Lots of clients at the brokerage I work for (www.escapecurrency.com) are taking advantage of this with forward contracts to make a nice little profit in this economic downturn.....
Monday 15 June 2009
FX today...
The UK is starting to have that stream of positive data which has been predicted for a while now.....
The UK economy is starting to stabilise with growth expected next year at a predicted level of 0.7% according to the CBI. Even though this might not seem much it's a massive improvement on the recent doom and gloom which we have been engulfed by over the past few months. The UK has received another boost after it was said to be in the best position economically compared to its European counterparts according to leading economist Paul Krugman.
This positivity has started to flood into the currency markets with Sterling making gains across the board. However, the most important thing abouts these rises is that they have been sustained! GBP/EUR is 1.1801 and rising and GBP/USD is gaining more ground at 1.6375+
The UK economy is starting to stabilise with growth expected next year at a predicted level of 0.7% according to the CBI. Even though this might not seem much it's a massive improvement on the recent doom and gloom which we have been engulfed by over the past few months. The UK has received another boost after it was said to be in the best position economically compared to its European counterparts according to leading economist Paul Krugman.
This positivity has started to flood into the currency markets with Sterling making gains across the board. However, the most important thing abouts these rises is that they have been sustained! GBP/EUR is 1.1801 and rising and GBP/USD is gaining more ground at 1.6375+
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