It’s the start of a week where the pound is about as strong against the euro as any Monday morning since August 2022.
To lock that near 18-month high in, call your account manager on 020 8108 5163.
The reason for the pound’s boost was the relative positivity – at least short-term – about the UK’s economy compared to the eurozone’s, as assessed by the markets last week after the Purchasing Managers’ Index (PMI) reports from business leaders around the world. On top of that was the assessment from European Central Bank (ECB) president Christine Lagarde on Thursday that “the disinflation process is at work”.
This is not to say that the UK economy is in great shape – it is still teetering on the edge of recession – just that the money markets see a better chance of interest rates remaining higher here for longer.
The ECB left interest rates on hold last week, and the Bank of England is almost guaranteed to do the same when it meets this coming Thursday.
The fact that banks doing nothing can have such a powerful effect on the currency tells you all you need to know about the shiftiness of the currency markets. Any hope of this exchange rate sticking around, or even improving, is a very unstable basis on which to place a large investment. The average prediction for GBP/EUR by the end of the month from our latest Quarterly Forecast – download it here – was some 3% weaker than today’s rate.
We can have no idea what will happen after Thursday’s interest rate decision, where voting pattern and comments from governor Andrew Bailey could easily move exchange rates, so if you like the look of the exchange rate today – close to an 18-month high – you have the chance to lock it in.
