Nothing could console a bleary-eyed England this morning after Sunday’s loss to Spain in the Euro 2024 final, but the pound’s barnstorming performance last week offers a small morsel of comfort.
Last Friday, the pound reached its highest level over the euro in almost two years. Sterling is up by 0.6% from a month ago and is almost 3% higher than it was last Christmas.
As is often the case, GDP data was a big factor in the volatility. The UK economy expanded by 0.4% in May, a huge boost after growth scored ‘nil points’ in April — mostly the result of a rotten spell of weather-dampening economic activity.
Can sterling stay so strong for long? Wednesday’s inflation report certainly represents a threat. After inflation came down to the Bank of England’s 2% target in May, any further decline could see sterling fall sharply as markets price in faster interest rate cuts.
You need only to look to the US for an example of this. After headline inflation fell more than expected last week, the US dollar fell sharply against its European rivals.
While the threat of elections in Europe has receded, attention is swiftly turning to the US election and upcoming economic events. Currency markets don’t exactly take the summer off, so if you’re preparing for a well-earned break soon, it would be worth considering your budget before you pack those flip-flops and spare bottles of suncream.
Should you have any questions or any currency requirements, please do not hesitate to contact your account manager on 020 8108 5163.
