The pound hit a new four-week high against the euro on Friday but has slipped to its lowest point against the US dollar since mid-November.
It’s all a reminder that while interest rates and domestic economic data will influence sterling – and pushed GBP/EUR upwards last week – the big picture and global crises are all-important.
Hence the attack against Israel from Iran over the weekend, and the concern that it could spread the war more generally, has led to a “risk off” situation where investors seek safer assets, most notably the US dollar, sending GBP/USD into a tailspin.
However, the pound starts the week almost 5% stronger than this time last year against the euro. A rate worth fixing for the year ahead? Why not call your account manager on 020 8108 5163 and talk through your plans?
This is just one of several actual or potential conflicts in the world right now, any of which could blow up and have a devastating effect on global business, just as the war in Ukraine caused the greatest inflation spike since the 1970s. Suppose you were committed to buying a property abroad just as Russia makes a breakthrough in Ukraine? Or were transferring investment income just as the Middle East situation took a turn for the much worse? You could find yourself having to find thousands more very fast.
This week is also awash with high-level UK macro-economic data. Tomorrow is unemployment and earnings and on Wednesday is inflation.
To be totally safe in knowing you will have the wherewithal to complete on an overseas purchase or commitment, lock in your exchange rate today.
