The Pound rose yesterday to an 11-month high against the Euro, the best rates to buy Euros since May 2017. €100,000 bought at the highs yesterday would have cost £7,000 less than the 2017 lows. Against the US Dollar, Australian Dollar and New Zealand Dollar, we are also at some of the best rates to buy since the EU Referendum in June 2016.
The below table shows the market movements for a number of Sterling currency pairings in the last month:
|Currency Pair||% Change||Difference on £200,000|
The move on the Euro was partly down to comments from the European Central Bank which indicated their economic stimulus may last longer than expected. This has provided an extra boost for the Pound as the UK and the Bank of England now appear further ahead in their monetary cycle, with the Bank of England expected to raise interest rates next month.
Today there is little data of significance for the UK although Trade Balance figures from the Eurozone at 10 am could influence the next direction on the GBPEUR trend.
With Sterling hitting fresh highs and plenty to discuss around Brexit and the progress for the UK economy, now seems like a very good time to be making plans around your Sterling currency exchange.
For now, those clients looking to the future aiming to trade at the top of the market should carefully consider the options we can provide to help maximise the excellent positions on offer. A Limit order can guarantee a higher rate of exchange whilst a forward contract guarantees a rate for future payment, up to one year in advance.
The UK cabinet have agreed to back Theresa May in some form of military action over Syria’s proposed use of chemical weapons. A longer term escalation of such conflict could destabilise the pound depending on the final outcomes. The UK economy is fragile and with Brexit still requiring so much of the Government’s attention, becoming embroiled in overseas conflict is not likely to help matters.
Another view is that this operation could galvanise Mrs May’s leadership and relations with the US and European partners, reminding the world the UK is a global player and help strengthen the UK’s hand in this current tumultuous period for Great Britain.
Despite the increased confidence over sterling there are still many challenges ahead with a final deal on Brexit yet to be resolved, a deal on the Irish border is still not finalised and whilst the transitional deal has brought some calm, there is still lots to do.
The next key tests for the pound will be next week with UK Inflation and also Unemployment data to monitor. These releases will be keenly examined by the market to provide hints as to what the Bank of England might do in May. With the Bank of England closely linking rising Inflation and wage growth to whether they raise or not, markets will be analysing the data to try and second guess the future, which is likely to lead to volatility on sterling exchange rates.
Clients holding the Pound hoping significant improvements will need to see the data outperforming the already high expectations that are being set, any signs Inflation is falling or wage growth rising, would see the Pound sold and weaker in my opinion.
Get in touch today on +44 1494 725353 to discuss your options and the many interesting events which will shape your future exchange rate. Alternatively, if you would like to set a rate alert click here.
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