Sterling swept upwards yesterday after crashing to its lowest level against the euro since the start of 2024 and against the US dollar since even further back.
The reason for the movement is senior Bank of England interest rate setters talking in public. Their comments are inducing big investors to buy and sell vast amounts of sterling in the hope of catching a bigger interest rate.
It’s not the most edifying of spectacles. Especially as it causes so much uncertainty and worry for people trying to do simple things like get a pension paid overseas, transfer an inheritance or send university fees. However, we can help anyone with those regular or one-off transactions, including fixing your rate for up to two years ahead with a forward contract.
If you did that today you would be getting a rate almost 3% stronger than last year and – who knows? – maybe 3% stronger than next month. It’s impossible to predict (whatever anyone tells you).
There was other good news yesterday that will have bolstered sterling, when the Purchasing Managers’ Index (PMI) showed that Britain’s service sector is doing well. The UK’s Services S&P Global PMI – a measure of business optimism – was stronger than France’s, Germany’s and the USA’s.
Still, on Wednesday the words of one central banker saw the pound drop by 1% and it only regained some of that when another one said essentially the opposite. We are just leaving the relatively calm waters of no change in interest rates to a summer where a lot of movement is expected, so you cannot rely on exchange rates being stable.
To lock in your rate, or just to talk through your options, please call your trader on 020 7898 0541.
