It’s been a good week for the pound despite the UK government’s chaotic cabinet reshuffle over the weekend. Sterling gained more than 0.65% on the euro and a chunky 1.2% on the dollar, meaning your pounds will go that bit further overseas.
However, these gains may be temporary, as they are explained by stumbles in the euro and the dollar rather than great strides in the pound.
In fact, with Chancellor Rachel Reeves last week announcing a particularly late autumn budget coming on November 26, we are in for months of rumour and uncertainty.
There are growing calls from bodies like the Confederation of British Industry for Reeves to break from her fiscal rules and raise individuals’ income tax, VAT and national insurance.
Until we know what taxes the Chancellor will raise, the pound will be particularly prone to spikes and drops.
To secure certainty for your budget, lock in today’s GBP/EUR rate with a call to your account manager on 020 8003 4915.
The stumbles abroad that allowed the pound to make gains were the usual culprits: politics and data.
French Prime Minister François Bayrou resigned after losing a confidence vote he called to push through a deficit-tackling budget. Following his resignation the cost of French debt increased, with its rate surpassing Italy’s for the first time.
With no clear way of reducing France’s money problems and President Macron now on the search for his fifth Prime Minister in two years, the euro took a tumble.
Meanwhile, in the US, the picture of the jobs market continues to get bleaker. After three months of data showing drops in the number of open jobs, newly revised numbers for last year’s labour market showed there were more than 900,000 fewer available positions than previously thought. This suggests the market is in a bad place and has been for more than a year.
This dismal picture for US employment is stacking the pressure on the Federal Reserve to cut interest rates when they meet next week.
There is no telling what the pound, euro and dollar will do in the coming week. The UK is months away from its new budget, the French government’s collapse is putting strain on all EU members and the US awaits a highly fraught interest rate decision.
It’s a good time to secure your budget.
