Some wag in a Zoom meeting yesterday made a joke about catching a criminal syphoning petrol into his car. The drop in the price of American oil to a point whereby producers are having to pay for someone to take it – and similarly deep drops in oil prices elsewhere – helped to weaken the GBP/EUR by around 1% yesterday.
The feeling is that while stock markets can be propped up by stimulus measures such as quantitative easing, the oil price is more indicative of the real state of the global economy. Impressive as it was at the beginning of the crisis to see governments decisively pumping money into their economies to prevent good businesses going bust, a month or two on and the chickens may be coming home to roost.
On the whole though, when new economic records are being broken thick and fast, from the fastest rise in jobless claims ever in the US to the sharpest drop in monthly GDP, and many more, the surprise is that sterling is still trading at above its average for the past three years.
That’s possibly a reflection that no-one knows who will come out of this looking better – or at least less bad – the US, Eurozone, UK or anyone else. What will historians make of it all? Will this all be a footnote or a pivotal moment in global affairs? I’d be interested in your thoughts.
More pressing, for those with a currency transaction in the offing, where will the pound be by summer? Every quarter we produce our Quarterly Forecast where we amalgamate all the leading banks’ currency predictions for the three, six and 12 months ahead.
The predictions in themselves are only educated guesses at best. Please don’t base any important decisions on them! But we also analyse the factors that will determine the euros, dollars, yen, Swiss francs etc that you’ll get for your pounds, and that should be more useful for you. Download the forecast by clicking here.
Even better, you can speak to your trader about the report and get more bespoke guidance on when and how to organise your trade. Speak to your trader on 020 8108 5337.
I won’t be breaking any state secrets if I say that some analysts predict sterling at well below €1 by the summer. If you miss out on locking in today’s rate – a good 8% above March’s low point – you may regret it. You can lock it in with a forward contract today.
