There was little movement for sterling in the early part of this week, or indeed this year.
The relative stability in the pound-to-euro exchange rate (since the 3% drop after the last interest rate decision almost a month ago), is indicative of currency markets waiting for more data.
So in the absence of an interest rate decision this month we await the next few days of high-level data releases with trepidation. There is GDP on Friday, followed by inflation and employment early next week. Any of these could have an impact on exchange rates.
It is less than 80 days since Rishi Sunak became Prime Minister, and if the commentators are sharpening their pencils to be judging him on his first 100 days in office, I’m not sure what they’re going to find to say.
That’s not necessarily a criticism. We are big fans of stability at Smart Currency Exchange, especially when it comes to major financial commitments. The problem with the lack of movement in sterling over the past three weeks is that it offers no promise whatsoever of continuing. That’s why we recommend locking in your rate as soon as you are committed to a property purchase, sale, or transfer of wealth. That way you are in control, not the markets.
There are significant problems for the UK economy right now, not least of which is being in recession and with potentially more persistent inflation than other major economies, according to the chief economist of the Bank of England yesterday.
You cannot count on the exchange rate staying at this level. Two years ago at this point of the year the pound began strengthening, as it became evident that the UK had a better vaccine strategy than our competitors. The signs are that based on economy growth post-Covid, the opposite will happen this year and we could see a slow and steady decline as economic woes affect the UK more. To avoid that affecting your currency transactions, call your trader on 020 7898 0541.
