The pound has bounced back slightly higher, or at least stopped the decline that had seen it weaken by 2% from its strongest point against the euro (and even more against the US dollar) in the past month.
The (small) rise will have been helped by positivity in the UK housing market, with the Halifax joining the Nationwide Building Society last week in finding strong growth in house prices – of 0.8% in July, taking it to 2.3% year on year. Optimism in the UK construction industry has also bounced back spectacularly, according to data released yesterday.
Even so, anyone who has been planning a large transaction in euros or dollars will be looking at today’s currency graphs with about as much pleasure as a Brit seeing Australia above us in the Olympic medal table.
Could it be worse? Could the pound weaken further? Sterling has been suffering from two main factors. The first is the brief global panic surrounding tech stocks, Japanese interest rates and the risk of recession in the US. When stock markets fall sharply they generally take sterling down with them.
The second was the interest rate cut from the Bank of England last week.
America’s recession worries were prompted by rising unemployment, and coming onto the horizon is some high-level UK data too, with unemployment and inflation next week. These results pose a strong risk of further volatility in the currency markets and potentially more sterling weakness.
So, to ensure that you can fulfil your currency plan this summer, seriously consider fixing your rate in case of further falls. You can do that with a call to your account manager on 020 7898 0541.
