The pound reaches the last week in the month slightly up on euro compared to the start of the month and some 4.5% up on last year. However, sterling is 3% down on the US dollar compared to last month.
The dollar’s strength seems to be largely based on what might happen from a Trump presidency re inflation and interest rates (see last Friday’s currency note). It’s a salutary warning of what can happen when political and economic news combine.
Speaking of which… this week is the first Labour budget since early 2010 – a long time in anyone’s book. We’ve seen some pivotal budgets since then for exchange rates. Indeed, the first Conservative budget after that, in June 2010 with George Osborne as chancellor, was well received immediately after and GBP/EUR climbed 1.5% to hit 1.22. However, within four months it was down to 1.12.
For those mid-property purchase in the eurozone, the effect of a near-10% drop in their exchange rate between agreeing to buy a property and actually paying was often devastating. Some would need to find tens of thousands of pounds more than they expected at the last minute or lose their property.
It’s entirely possible that nothing of the sort will happen after Thursday’s budget, but it’s a risk easily avoided with a forward contract. This fixes your exchange rate for the duration of the property purchase and can also work with a Regular Payment Plan to level out what you’re paying in bills over a year or two. Call your account manager on 020 8108 5163 to discuss how useful that would be to you.
Other than that, this week the eurozone must navigate a busy schedule that sees the German Gfk consumer confidence study on Tuesday along with GDP and inflation figures in its largest economies across Wednesday and Thursday.
Things are hectic across the Atlantic too. The JOLTs jobs report and third quarter GDP figures feature on Tuesday and Wednesday before the Core PCE price index and unemployment numbers close out the week.
