The pound kicks off the last week of a long January little changed since last Monday. The same problems that made January such a drag will continue into February, with a new set of strikes (train drivers and teachers) and double-digit inflation giving an impression of a country in recession, even if it isn’t, technically.
There isn’t a great deal of positivity around, and into that mix there are reports that at least one seasoned Wall Street fund manager is predicting a downturn in stocks – potentially bad news for sterling, which tends to follow the stock market.
It’s not all bad news, however, with Lloyds Bank Business Barometer showing a more positive mood among businesspeople.
I was at a French property exhibition at the weekend and was pleased to see the large number of eager couples and families of all ages looking to buy a home in France. What was evident is that people are working out how to get the paperwork they need, applying for visas, using the various “handholding services” and just getting on with it.
Post-Brexit procedures may now be “priced in”, but what about threats to the exchange rate? Sterling to the euro is still just holding onto its position above the five-year average, but I would advise those France buyers to talk to Smart Currency asap. It’s a busy and potentially pivotal week for central banks trying to put the inflation genie back in the bottle, and it is likely to be a volatile week.
We’ve just heard this morning that Spanish inflation has risen, much against expectations – leading to a small drop in the value of sterling. There is a huge amount of influential data about the eurozone economy coming over the next three days, and this could easily move GBP/EUR. Plus there are interest rate decisions from the Bank of England, European Central Bank and US Federal Reserve, all this week.
We will keep you informed of any sharp changes via rate alerts, but maybe talk to your trader with a call on 020 8108 5163 and consider locking in this rate today.
