At the end of last week sterling fell sharply from recent highs against the euro, and to the lowest level against the US dollar since the spring.
However, against the euro at least the pound remains in a strong position overall, close to 5% stronger than last Christmas.
To lock in that rate, or at least discuss your options, why not call your account manager? They are working until 6pm today and from 9am to 5pm tomorrow on 020 8108 5163.
The obvious cause of the pound’s drop against the euro was a lower-than-expected result for retail sales in the UK. They rose by just 0.2% in November, when 0.5% had been expected. It was at least a bounce back from the 0.7% drop in the previous month.
The pound was also dragged down by the FTSE, which had its biggest one-week drop of the year following fears over a US government shut down. That risk fell away after the US Senate approved a stop-gap funding measure to avert it.
The other main events of last week were the interest rate decisions from the Bank of England (BoE) and the US Federal Reserve. The latter cut by 0.25% while the BoE kept rates at 4.75%. Prior to that decision GBP/EUR had climbed to an eight-year high, but the vote by three members of the panel to cut rates sent it spiralling downwards afterwards.
Inflation was revealed to have climbed to 2.6%, the second rise in successive months, but less than the market had predicted. In the US, on the other hand, the Core PCE index measure fell to its lowest in six months.
So, what of this week? We have just heard that Gross Domestic Product (GDP) in the UK was even lower than the 0.1% for the quarter previously reported – there was zero growth.
None of this suggests that the immediate future for sterling is especially rosy, so do consider calling your account manager.
