The pound had a torrid day against the US dollar yesterday, falling to its lowest since the first week of lockdown in 2020.
The bigger picture is that GBP/USD is close to the lowest it’s been for a generation and could go lower. All this, even after five interest rate hikes from the Bank of England.
The issue goes beyond any current difficulties over Boris Johnson’s leadership, the Northern Ireland protocols or even inflation, to longer term worries about the British economy and growth.
Gas supplies are also a worry for the UK economy, with a strike by Norwegian workers potentially cutting off supplies. At least here the burden is shared by the euro, since gas supplies to mainland Europe are also threatened.
Indeed GBP/EUR recovered yesterday to its strongest for three weeks.
Amidst all this turmoil, the risk to Boris Johnson’s premiership arising from two high-level ministerial resignations does not appear to have been as influential as it might have been.
This morning the deputy governor of the Bank of England told Radio 4 that they would do “whatever is necessary” to bring inflation back to 2%. Sir Jon Cunliffe said the monetary policy committee would “act and act forcefully” to prevent high inflation becoming the new normal.
If you are worried that a sinking pound will scupper your plans to buy a property abroad, or that your pension or other income when transferred to euros will be too little to live on, there are remedies we can put in place to prevent that happening.
However, as anyone buying a US property this week would tell you, once the exchange rate has sunk it is too late. For upcoming euro transactions the time to act is now, while GBP/EUR is still riding high.
Call your trader on 020 8003 4915 to discuss your options.
