Firstly, what better day than when our London office will be basking in 30°C to remind you of The Luxury Ski Show? Well, mountain homes are pretty wonderful in a heatwave too. It’s a “virtual” property and lifestyle exhibition that Smart are sponsoring on 2 October, and you can get your E-ticket here.
Sterling came under some pressure yesterday, at one point dropping to its lowest level for six weeks against the euro. Although it recovered a little, back to where we were last week, it’s undoubtedly a warning of possible future movement.
Europe has more than caught up with the UK on vaccines, is seeing a far lower rate of Covid-19 infections than the UK or US, and economic readings are broadly positive. Yesterday – and today so far – we’ve seen better-than-expected GDP and “economic sentiment” readings from the Eurozone, and far better non-farm payrolls data from France than we saw in the USA last week.
On the other hand, on the day when the government announces major tax rises – whether you’re a supporter or not – which could delay interest rate rises in the spring, a 0.5% fall in GBP/EUR might be thought not too disastrous.
It will be very interesting to see what the European Central Bank’s interest rate setters make of it all tomorrow.
For the UK, the new Bank of England Monetary Policy Committee member Catherine Mann has been making distinctly dovish sounds on inflation, explaining precisely why it won’t spiral out of control either here or in the US and hence why no rapid increases in interest rates are required.
If yesterday’s drop in sterling was worrying for you, or if this morning’s note makes you think of all the moving, unpredictable parts that make up an exchange rate, there is a way to avoid worrying about exchange rates. As soon as you commit to a purchase or move abroad, simply lock in your rate with a call to your trader on 020 8003 4915.
