It’s hard to know where to start on a day when the pound is facing a bona fide crisis. However, for euro buyers, GBP/EUR is only slightly below the post-referendum average, at its lowest only since late 2020. That is due to Europe itself having problems. It could still go lower as the new far-right prime minister of Italy will no doubt try to allay fears over her leadership.
Against the US dollar, this morning the pound dropped to its lowest level since decimalisation in 1971. Although it has bounced back a little since, that’s no real cause for optimism, simply a function of the levels of trade in the Asian markets which opened first.
This is really a day for contacting your trader on 020 8108 5163 and discussing your exposure to risk.
With sterling remaing under pressure, this morning’s short-term improvement could easily be reversed and the downward trajectory continue.
At Smart our ethos is always that leaving yourself exposed to currency risk is unwise. You may feel you’ve lost out on last week’s better rate, but failing to lock in a rate today remains a huge gamble, and the dice are loaded against you. Sterling has been at parity with the euro before, in 2008, and could easily be again. Why gamble on that? Speaking to clients, the sensible course of acton always seems to be to focus on the exciting parts of buying abroad – planning your purchase and whole new life.
Meanwhile, for sterling buyers, why pass up this unexpected gift? You can fix the rate with a forward contract.
It’s also worth mentioning that if you know anyone who might be suffering hardship due to the collapsing pound, please refer them to us, (our £2,000 referral bonus still has a few days to run).
Where next is anybody’s guess, but whatever the direction of sterling, our traders are here to discuss your plans and see how to help you.
