As you’ve probably heard, inflation in the UK didn’t do what it was meant to last month, which was decline nicely towards the Bank of England target of 4% by the end of the year, and instead shot up again to 10.4% annually.
However, if you had rushed over to our live rates page expecting to see the pound bounding upwards in response, you’ll have been disappointed. There was a strengthening in sterling but it hasn’t been enough to recover the sharp losses from yesterday. Still, to take advantage of that rise, before the Bank of England’s interest rate decision tomorrow that could hit sterling further, call your trader today on 020 7898 0541.
There is a complex relationship between inflation, interest rates and exchange rates, and no-one can ever forecast what will happen, even if they could predict inflation, which obviously they cannot.
For anyone planning a major purchase overseas, or exposed to currency risk for example receiving pension or investment income abroad, at Smart Currency we appreciate that these are stressful times, made more stressful by the changes.
Currency movements over the past few months have been short, sharp and wholly unpredictable – that is why we always urge those with currency risk to speak to their trader and seriously consider locking in their rate.
Unless, that is, they can afford a potentially much more serious loss in the value of their pounds in the coming months.
Although we are seeing choppy changes day to day, with GBP/EUR movements of 1% over a trading day quite common, the much bigger risk is of a more calamitous 3% drop like we saw in early February, or September’s 5% drop. That can easily add tens of thousands of pounds to the cost of a property abroad that you are already committed to buying.
To avoid that risk, please call your trader on 020 7898 0541 and lock in you rate. Then that fear disappears immediately.
Finally, a very last call for Your Overseas Home on Saturday, the online property show that helps you buy abroad. It’s an event you do need to register for in advance (all free, mind you, 0% inflation here!), so why not do that now?
