May is an interesting month for currencies. April tends to be positive for sterling – coinciding with the end of the financial year – but then can begin a steady slide towards the summer. That’s been mixed up in recent years, by things like elections and Brexit sometimes exacerbating the trend and sometimes stymying it.
May can go either way, as poets and folklore have noted. Rough winds do shake the darling buds of May, and you should “ne’er cast a clout ’til May be out”, so don’t donate your winter coat to the charity shop just yet.
The currency markets have their own folklore too, and tend to say “sell pounds in May”. There is no doubt now that the coronavirus crisis is calming down in southern Europe – albeit with the risks of secondary spikes – but there are too many variables to be able to make any assumptions.
Ordinarily we could look to economic and political news for guidance. It’s difficult to see how such things as the Purchasing Managers’ Index can help us much right now though. All bets are off as countries relax their lockdowns and wait to see what happens next; not only with the virus but also with their economies.
The future of Europe’s economy and cohesiveness, Brexit talks and the continuing crisis in Chinese-US relations could all have great impacts over the next month.
So where does that leave anyone with a currency transaction in the next six or 12 months? The most sensible answer, as ever, is to plan for what you want to do and speak to us about ensuring you have the funds to do it when the time comes.
The move from April to May is traditionally a good time to lock your pounds in with a forward contract. That’s where your trader – available today as ever on 020 8108 5337 – can help.
The pound is still at a higher rate than for most of the past three years, but that may well not last long.
