Sterling continues to live in interesting times, as the Chinese curse puts it. Against the US dollar it’s back down to levels that were certainly unforeseen by the vast majority of the financial institutions, as brought to you in our Quarterly Forecast (still available to download here), where the median prediction was $1.22. It is currently nearly 6% below that.
Against the euro, on the other hand, sterling is precisely on the median prediction for the end of September, but the overall prediction was that it would weaken through the next nine months.
So, where does that leave anyone following Johnson into early semi-retirement and looking to avoid losing significant amounts of money if sterling drops further against the euro?
The pound collapsed against the dollar the week to its lowest point for 35 years because the US Federal Reserve is rapidly raising interest rates. This week the European Central Bank may do the same.
While there will be plenty of speculation this week about future fiscal policy, and much analysing of the likely direction of Kwasi Kwarteng as Chancellor, the simple question to answer is whether you could continue your plans abroad if GBP/EUR dropped in the same way that GBP/USD has.
If you have any doubts about that, I would strongly suggest calling your trader asap on 020 8003 4915 and discussing your options for removing risk.
