Sterling lost another cent to the euro last week after more disappointing growth figures showed the UK economy shrank for the second month on the spin. Just five weeks ago, the pound was nearly five cents stronger against the euro, which translates to thousands of pounds when you’re securing a mortgage overseas.
Things didn’t exactly get off to a great start for the pound this morning. Speaking to The Times, Bank of England governor Andrew Bailey said that, when it came to interest rates, “I really do believe the path is downward”. Happy news for homeowners but maybe less so for those looking to buy in Europe this summer. The pound weakened to a three-month low against the euro in early trading.
None of us can say if the trend of sterling weakness will continue or evaporate in the summer heat. We would therefore recommend you lock in today’s rate, a strategy that will keep your money safe, whatever happens. Call your account manager today on 020 8003 4915 to get started.
But what has caused this weakness for the pound? Well, the biggest problem is that the British economy isn’t growing fast enough to keep up with government spending. The pound has been shaken by the assumption that the government will have to raise taxes to balance the books come Autumn.
Over the weekend, US President Donald Trump took to social media to threaten the European Union with additional tariffs of 30%. Trump said these measures would take force at the start of August, but he does have form in changing his mind. The euro will be materially affected in any event.
After a busy period, sterling won’t have much time for a breather this week. On Thursday, June’s inflation data could go a long way to deciding the Bank of England’s next interest rate decision. You can pencil that into your diary for 7 August.
