The pound has remained becalmed – “range-bound” to use the economic jargon – for the past two weeks, at a point around 1.5% weaker than in the summer. On the other hand, it is still close to 1.5% stronger than last winter and early spring.
So it is (a) not so bad a rate and (b) entirely possible that it could sink further if/when bad economic news arrives, or if the global situation worsens and the flight to the dollar continues.
Looking at our latest Quarterly Forecast (available to download here), I can see that some major banks predict GBP/EUR as low as €1.08 by March next year.
While those predictions are based on guesstimates as to where the economy and interest rates will be by then, there is plenty of hard and fast data for the markets to analyse this week. That starts with inflation, Gross Domestic Product (GDP) and consumer confidence readings today and tomorrow, both generally across the eurozone and specifically in its largest economies – France, Spain, Italy and Germany.
It is also an interest rate decision week, both in the USA and UK, on Wednesday and Thursday respectively.
If you are committing to a major transaction overseas, therefore, it really does make sense to speak to your trader, on 020 8108 5163, and seriously consider locking in your exchange rate.
