Over the past three weeks the pound has strengthened in a series of decisive steps agains the US dollar, ending up nearly 5% higher than in mid-May. It’s been more choppy against the euro, but we are at least back to the average of the past year, avoiding the lows of last summer and the early lockdown period.
The big question is, where next?
This morning’s two big developments are the UK’s new quarantine rules starting, to almost complete opprobrium, and the fatality rate in the UK falling to its lowest rate since 23 March yesterday. The example of countries like Spain is that when rates fall, they fall fast, and flights have already started between low-infection countries in Europe.
The spending power of British people in countries like Spain, Italy, France, Cyprus and Greece is huge and their tourist businesses are desperate for British visitors to start flying in as soon as is felt safe. A month from now we could be looking at a near-normal world. or we could be looking at a second spike and back to lockdown.
The improvement in mood music from the Brexit talks also encouraged the pound. But 30 June – when a transition period extension must be asked for, or not – is fast approaching. This story could go either way, taking the pound with it.
So the only answer to the ‘big question’ above is, your guess is as good as mine.
Few of us have ever lived through a period of such uncertainty for the economy or for sterling.
We can at least guarantee your currency. A forward contract will lock in today’s rate for the year ahead, and you can focus on your own plans.
Do speak to your trader on 020 8108 5337.
