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 in the past 30 days affecting a number of currencies rates when buying £200,000:
|Currency Pair||% Change||Difference on £200,000|
Today has been dubbed as Super Thursday as there is a huge amount of economic data due out today which could impact Sterling exchange rates against all major currencies. The main topic will be the latest Interest Rate Decision made by the Bank of England. On June 15th when the vote last took place the split was 5-3 and a large reason used was that UK inflation had previously hit 2.9% which is above the government’s target of 2%.
More recently inflation levels have fallen to 2.6% and therefore this is why I think there will be less appetite for a rate hike later today and I think this could cause the Pound to fall against all major currencies.
UK interest rates have remained at 0.25% for the eleventh month in a row and I cannot see any change today. Last time Ian McCafferty, Michael Saunders and Kristin Forbes voted for a rate hike but with Forbes having left at the end of June and being succeeded by Silvan Tenreyo we could see the split reducing to 6-2 if not less.
Indeed, as inflation fell in June as well as a reduction in the second quarter’s GDP figures recently this provides further support to keep rates unchanged for a long time to come.
The Quarterly Inflation Report is due out at the same time as the interest rate decision and this will be closely followed by the Bank of England governor Mark Carney’s speech.
Inflation is clearly a big issue at the moment and with wages having fallen according to recent reports it is becoming more and more difficult for the Bank of England even to think about raising interest rates.
Indeed, recently consumer debt in the form of credit card borrowing and car loans have been making headlines which is also another reason why the BoE will find it difficult to look at raising rates.
The issue of the Brexit uncertainty is also keeping the Pound under a lot of pressure and until we have some form of resolution which I think will be a long time away we could see the Pound struggle for quite some time.
Sterling vs the Euro is trading at its lowest level since autumn last year and with all the uncertainty at the moment and with the news from the Europe coming out better than expected in recent times this is causing the Pound to remain under pressure.
If 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 requirement, call our trading floor on 01494 725 353 or email me here.
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