The Pound slumped to a 5-year low against the Euro during yesterdays trading day, due mostly by a fall in business confidence and mortgage approvals. Is the Brexit impact beginning to soak into the UK economy?

Best time to sell Euros in almost 5 years

The Pound hit fresh lows against the Euro during yesterday’s trading session, with GBP/EUR sliding to its lowest levels since October 2011. The Pound has been under intense pressure since the Brexit vote, and has now fallen by as much as 12% against the single currency since the end of June. This news will be welcomed by any clients who are selling property overseas to repatriate their funds to the UK, as a €150,000 sell in to Sterling would gain you an extra £15,000 today compared to just before the Brexit vote. This represents the best time to sell Euros in almost 5 years and an opportunity certainly worth taking advantage of.

The Pound’s recent slump began on Friday after Boris Johnson called for article 50 to be invoked at the beginning of 2017 and was compounded yesterday by a drop in mortgage approvals and fall in business confidence in the financial services sector.

Data had started to show signs of improvement in recent weeks, with the services sector showing huge signs of improvement for August and helping the Pound spike back up towards 1.20, but yesterday’s figures highlighted the lowest number of mortgage approvals for 19 months. On the flip side, the total amount of consumer credit for August grew at the fastest pace for almost 10 years, showing that consumer confidence is still high and that many are taking advantage of the lower interest rates since the Bank of England’s recent base rate cut.

When should I buy Euros?

Looking further ahead towards the end of this week the next big data release for the UK economy is on Friday with GDP figures for Q2 of this year released. These figures will of course not take in to affect the Brexit vote, but businesses and individuals may have held off any large purchases or big decisions due to the uncertainty that was surrounding the vote and this could have had an impact on the economy. If that is the case then we could be in for further losses for the Pound. For those buying Euros in the near term, I certainly don’t feel as though the Pound has bottomed out just yet, with the possibility of 1.10 certainly not out of the question by the end of this year.

I also believe that we could be in for some further Sterling weakness when/if Article 50 is invoked which is something that Pound sellers should certainly bear in mind. I do however believe that as the elections in France and Germany approach, especially with the rise of the far right parties there, we could also see the Euro under pressure. We are entering in to what could be an extremely volatile period and therefore it is extremely important you keep in touch with your account manager here to ensure that you have all of your options covered. Many of our clients buying Euros in advance of a house purchase for example, have opted to book half of their Euros now to eliminate some of the risk.

With the Euro likely to make further gains against Sterling in the short term, those looking to buy Euros may wish to act sooner rather than later. Call our trading floor on 01494 725 353 if you wish to discuss a currency transfer.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.