The pound has hit the end of a long month in a strong position, very close to its best against a basket of currencies since the Brexit referendum eight years ago.
It’s been a month bookended by a general election and the start of the interest rate cutting cycle – with the first cut for several years expected tomorrow from the Bank of England.
For anyone with a large transaction, perhaps with a property purchase in the process of completion, this will have been a nervy month unless they fixed their rate with a forward contract.
While they are currently getting 1.75% more pounds for their euros since last summer, they will know that things can change quickly. In the summer of 2022 GBP/EUR lost 4% between the start and end of August (and another 5% by the end of September).
That can translate into tens of thousands of pounds for a property purchase. Wherever you are in the process of buying, you can still secure your euros or dollars at today’s rate for the year ahead with a forward contract. Just give your account manager a call on 020 7898 0541.
So, what else is coming up apart from the interest rate decision tomorrow?
We have had a mass of economic data over the past couple of days and that continues today with eurozone and Italian inflation shortly. Then there is a US interest rate decision this afternoon.
That could influence the Bank of England decision, particularly the press conference afterwards with the chairman of the US Federal Reserve. Moreover, if the stock markets move in reaction to the Fed’s interest rate decision that will also affect the pound, which tends to move with stock markets.
So, without locking in today’s strong rate for GBP, a large currency transaction continues to look risky. You can manage that risk with a call to your account manager.
