This report looks at the cost of sending money overseas this week and the factors that could affect your currency transfer:

Pound Sterling continually under pressure

Pound Sterling exchange rates have been under continual pressure this week with a new range being established for GBPEUR traders between 1.30-1.32. Many clients are asking me why GBPEUR exchange rates have dropped so much when the UK economy is doing so much better than that of the Eurozone?

The simply reason is because the market has already priced in this information and is currently pricing in the latest changes in growth. In summary with wage inflation a worry, retail figures and manufacturing figures so low, growth in the UK is at risk. Investors are asking where the growth is coming from and without that demand falls and so does the Pound’s value.

GDP figures down but better than feared

Yesterday there was some respite for GBP sellers as UK GDP figures were released and even though they showed a fall, it was less than expected. This resulted in a positive day for the Pound. There was still further evidence however that the fall in oil prices is causing problems in the North Sea oil industry with a 1.4% fall in the mining sector in the UK. Moving forward the low oil prices remain a concern as it is widely speculated that the North Sea oil fields are only profitable when oil is over $60 a barrel. Oil is currently closer to $30 a barrel and these latest GDP figures are for the last quarter of 2015 not the current year where oil has remained low for some time and are widely expected to continue for some time.

Week ahead for GBPEUR exchange rates

As we end January GBPEUR exchange rates are close to the lowest levels against both the EURO and the US Dollar we have seen for years. Moving into February I expect these same pressures to remain on Sterling’s value with potentially more negative movement, I however don’t expect the same drop we have seen in the last 30 days to be seen again in February. Next week watch out for falls on Monday as Mortgage Approvals for December are expected to show nearly a 1% drop. Focus then moves onto the latest Interest Rate Decision by the Bank of England on Thursday of next week.

Thank you for reading my Pound Sterling forecast, if you have any questions about GBP exchange rates, or sending money abroad I would be more than happy to discuss them – you can email me at hse@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.