Sterling has enjoyed a boost at the start of the week, which further accelerated this morning, leaving it nearly 1% up against the euro compared to this time last week.
It’s slightly more patchy against other major currencies but the overall picture is very positive as the currency markets approach the exciting prospect of an election day and a Bank of England interest rate decision tomorrow.
The big question in the local elections will be the direction of Scottish independence. That will be of huge importance for the UK economy in the long term, but due to Covid restrictions on counting we won’t get the thrill of an exit poll or overnight vote count. Results will come in over the weekend instead, so don’t expect any currency movements on that just yet.
For currency markets the interest rate decision tomorrow lunchtime will be of more importance, even with no change likely. Analysts will be digging around in the weeds of the Monetary Policy Committee’s meeting to find any future clues to future rate movements.
The Chancellor of the Exchequer Rishi Sunak said last night in a speech that British people have tucked away £140bn over the past year (over £5,000 per household) and businesses £100bn, so the signs are there for a speedy economic recovery.
That’s certainly true for many potential overseas buyers. According to the France Property Guides’ annual survey, conducted three weeks ago, overseas house hunters have slightly higher budgets across the board than in previous years.
Of course, changes in the value of the pound during a property purchase can easily raise the price of a property by more than £5,000, so do seriously consider how you will protect your budget should the pound weaken towards the summer, as seems entirely plausible. You can do that with a forward contract.
Europe’s vaccine programme has ramped up, with around 25% now vaccinated, and looking at the graphs we can clearly see that some European countries are on a similar post-second-wave trajectory to the UK. Sterling’s marginal advantage could, therefore, be on the way out.
Do call your trader on 020 8003 4915 to lock in your rate.
