One week after the autumn Budget, the pound has at last been able to regain some sense of normality. Sterling weakened slightly across this week but ultimately evaded much of the more dramatic fallout predicted by some economic luminaries. The pound opens Wednesday about half a cent lower against the euro compared to where it ended Friday.
Here in Hammersmith, the lights are twinkling and the festive season is in full swing. Even the Bank of England seems to be in a giving mood. Currency markets are increasingly convinced that its last meeting of 2025 will result in a cut to interest rates to 3.75% – the lowest in almost three years.
Interest rate cuts are typically good news for businesses and homeowners, but not for the pound. With the chance of another cut rising by the minute, we recommend you secure today’s pound to euro rate by calling your account manager on 020 8003 4915.
Britain’s economy hasn’t quite got the doom and gloom memo. This week began with reports of a strong performance by the UK’s factories, closely followed by news that house prices increased by more than expected (1.8% vs 1.7% annualised) in November.
The financial community had still been calling for someone’s head after a bumpy Budget. That would ultimately be the unfortunate Office for Budget Responsibility (OBR) chief Richard Hughes, who stepped down after the early release blunder. OBR representatives made the trip to SW1 yesterday to appear before a parliamentary select committee, with senior figures taking the chance to try and smooth things over with the Treasury.
We’ll get some more housing data before the week is out, but currency markets will have half an eye on negotiations to end the war in Ukraine. Europe is scrambling to ensure it has a voice in the talks, although just how close to a deal the sides are remains unclear. The euro is likely to be affected in any event.
