Sterling reached its highest level since 15th December 2022 against the euro this morning and remains close to the year-long high it reached against the US dollar on Monday.
It all comes in a hectic week or two in the currency markets as we await the Bank of England’s interest rate decision tomorrow, and in the wake of the US and eurozone interest rate decisions last week. The newspapers are awash with speculation as to which way the nine-member panel of the Bank’s Monetary Policy Committee will vote, as we approach a pivot point in monetary policy.
The relationship between inflation, interest rates and exchange rates is complicated but what it all boils down to is that what those nine people decide tomorrow will affect how much you have to spend on a property abroad this summer. And if you’re already committed to a property or other purchase abroad, what it ultimately costs.
That is, unless you take a proactive approach and lock in your rate for the year ahead with a forward contract. You can discuss all your options with a brief chat to one of our traders – your personal account manager if you have already opened your account at Smart – on 020 7898 0541. I would seriously consider doing that today.
Certainly a property abroad might make a better investment than UK property right now. Yesterday’s Halifax House Price Index showed an unexpected fall, of 0.3% last month – much worse than expectations.
Other data to watch out for this week is US inflation today. The recent US bank collapses are a result of the US Federal Reserve’s fight with inflation, so it can have global implications. And then UK GDP on Friday, which could also affect your exchange rate.
