Getting the best exchange rate can be achieved by understanding what is driving rates and the service of a specialist currency broker. Below are movements for the last month affecting a Pound Sterling rates when buying £200,000:
|Currency Pair||% Change||Difference on £200,000|
The Pound received a boost against the Euro yesterday as the European Central Bank announced that Interest Rates would be kept on hold, and that their bond buying programme would be cut in half to €30bn per month from €60bn.
Bond buying is also known as Quantitative Easing, and is essentially printing money in order to boost the economy. Although the news of tapering the programme is seen as positive, they also announced that they would be extending this stimulus until at least September 2018, which was a surprise to the markets and the Pound benefited as a result.
The UK economy has been performing relatively well of late, with positive GDP figures being released in the UK on Wednesday, showing growth in the economy by 0.4%. However, all is not positive in the UK as yesterday CBI (the Confederation of British Industry) released their retail sales figures for September which were way below expectation, falling at the fastest pace since March 2009.
It is expected that the Bank of England will raise interest rates by 0.25% for the first time in a decade on Thursday, something which Governor Mark Carney has suggested towards on numerous occasions. Economist’s polls have recently predicted an 84% chance of a rate hike next week, however with such a mixed outlook of the UK economy, combined with ongoing Brexit uncertainty, is now the time for the Bank of England to raise rates? I am of the opinion that the markets have factored in to the market the possibility of a hike, therefore if they do not raise rates, we could see significant Sterling weakness, potentially bringing GBP/EUR rates back down under 1.10.
Aside from Brexit discussions, there are a number of key data releases for the UK next week which could affect Sterling exchange rates, and also the BoE’s rate decision. Tuesday sees the release of Inflation Report hearings, Wednesday we have Manufacturing data released, all leading to Thursday with the Interest Rate decision at 12pm, followed by the Quarterly Inflation report and minutes from the Bank of England. With such a volatile week ahead for Sterling exchange rates, putting a plan in place with your Account Manager could help you to trade as soon as any spikes occur.
Thank you for reading my Sterling report, if you have any questions about an upcoming transfers I would be more than happy to discuss them – you can contact me with any queries on 01494 725 353 or email me here.
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