The Pound Sterling report below will discuss the factors that are likely to affect exchange rates if you are buying abroad or making a currency transfer.

Currency Pair% ChangeDifference on £200,000
GBP/EUR2.51%€5,620
GBP/USD3.46%$8,720
GBP/CAD4.01%$13,120

The table above shows the difference you would have received when buying £200,000 at the high compared to the low in the last 30 days. To see current interbank rates visit our live currency rates page.

The GBP/EUR exchange rate fell as low as 1.1234

Yesterday morning the UK released their latest Unemployment and Average Earnings data. Both figures exceeded expectations with unemployment falling to the lowest level since 1975 (4.5%) and average earnings rose to 2%. Off the back of the news the Pound rose in value against all of the major currencies and in particular continued to rise against the Euro throughout the day by over 0.7%.

However despite the numbers showing more people throughout the UK are in employment the problem the Bank of England have is that inflation has continued to outpace wage growth which is having a detrimental impact on citizens within the UK. I am of the opinion that the Bank of England will drive Sterling exchange rates in the foreseeable future, therefore the question now is how will the Bank of England plan to proceed?

Will the Bank of England strengthen or devalue the Pound?

For clients that are purchasing currency for the first time it is important to understand uncertainty does not help the currency’s value. In recent weeks the Bank of England have been giving mixed messages in regards to future interest rate decisions.

At the beginning of the month 3 of the 8 voting members from the Bank of England’s monetary policy committee voted in favour of raising rates which was a surprise and provided a boost for the Pound. However days later the Governor of the Bank of England Mark Carney talked down the chances of a rate hike.

Since the Governor talked down the interest rate decision Andy Haldane a member of the MPC and the Governor himself have made comments about needing to re-evaluate the interest rate as inflation is continuing to rise. But in the latest development Monday evening Deputy Governor Ben Broadbent told a newspaper in Aberdeen that growth had only been ‘ok’ and it was ‘tricky at the moment to make a decision’ in regards to interest rates, which caused the Pound to plummet in value.

My point is that at the moment the Bank of England are not giving clear direction and I believe this is because they are unsure of how Brexit talks will impact the Pound in the months to come.

The MPC members will not want to make rash decisions and suffer the consequences thereafter, therefore I believe they will look through the inflationary pressures until the turn of the year. Therefore for clients purchasing a foreign currency I wouldn’t be relying on the Bank of England to provide a major boost.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me directly at drl@currencies.co.uk.

News

Read more articles
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.