After what was a very positive month for Sterling in September, with gains of up to 6% during last month against the Euro the Pound has started to struggle. Since the start of October the Pound has fallen 1.8% versus the single currency, the difference of £3,100 on a currency transfer of €200,000.

In the table below you can find high to low GBP/EUR exchange rate movement when exchanging £200,000 Pounds to Euros during the last 30 days:

Currency Pair% ChangeDifference on £200,000
GBPEUR4.2%€9,650
GBPUSD2.1%$5,450
GBPAUD2.6%AUD $8,840

This highlights the importance of being kept up to date with what is happening at the markets by using an experienced currency broker. At Foreign Currency Direct our dealers have an average of 8 years experience which is unrivalled in the industry.

There are a number of economic data releases due tomorrow morning which are likely to cause a lot of movement for the Pound against all major currencies. Tomorrow brings with it Manufacturing & Industrial production data as well as the latest set of UK Trade Balance data.

These figures will be eagerly anticipated as the Pound did make some gains against a number of difference currencies during September. It was also deemed as the best performing global currency last month so we could see a slowdown in demand for British exports last month and therefore this could be reflected in a lower than expected Trade Balance.

Reports of a splintered Tory government

British politics causes problems for Sterling

Following on from a very lacklustre speech last week there have been calls among some Tories for a new leadership election. Former Tory Party Chairman Grant Shapps has suggested that there are about 30 MPs who are in agreement. Since the snap general election when the Tories lost their majority and had to form a coalition with the DUP there has been a lot of speculation about the leadership.

Meanwhile many others have been publicly defending Theresa May but we are now 6 months into the term and the uncertainty and lack of support is causing jitters for the Pound. A total of 48 MPs would be needed to trigger a leadership contest.

Since the general election Sterling versus the Euro has fallen by 7% and if political infighting continues then I think this will be reflected in Sterling exchange rates.

Will the UK Raise Interest Rates?

One of the main responsibilities of the Bank of England is to control inflation and at the moment the current rate is 2.9%. The target is 2% and monetary policy is used to control inflation as well as aiming to sustain growth and employment.

With rumours of a rate hike on November 2nd I personally doubt that this will take place. Clearly rising inflation is a problem in the UK but with average earnings falling behind this is causing the cost of living to go up.

An additional rate hike would cause mortgages and rent to go up and therefore could be detrimental to economic growth as it will reduce the amount of consumer spending. Interestingly enough the latest NIESR GDP estimate is due and although not the official data this is usually very accurate. The previous quarter was 0.4% so anything different is likely to cause volatility.

If you are in the process of buying a house on the continent and concerned about what may happen to the value of the Pound it may be worth looking at buying a forward contract which allows you to secure a rate for a future date for a small deposit. Contact your account manager for further information.

For more information on how future data releases could affect your currency transfer call our team on 01494 725 353 or email me at teh@currencies.co.uk.

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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.