The pound has continued in its now familiar holding pattern, close to a two-year high against the euro but not quite breaking above it.
It has slipped further against the US dollar and is now around 1% weaker than last week.
The main influences on GBP/EUR remain interest rates, with the Bank of England’s potential first cut for more than four years just a week away.
For mortgage holders it can’t come too soon, but the effect on sterling could be serious if the Bank goes for a more aggressive cut than expected. So, to lock in today’s exchange rate for the year or so ahead, call your account manager on 020 7898 0541.
After last week’s mixed signals on inflation, retail sales and the economy, the markets will get another hint this morning with the Purchasing Managers’ Index (PMI). So far this morning, Germany’s PMI fall will have been met with disappointment in the German finance ministry, the BMF, with falls in both the services and manufacturing sectors. France showed a slightly improving picture overall. It will be interesting to see if the Paris Olympics provides a boost to the nation’s mood, as 2012 did to the UK (some of the UK anyway).
The UK is expecting better PMI readings than last month, which leaves the door open for a further weakening of the pound if that doesn’t happen.
If you are tempted to fix your currency plan this week so you can settle down and enjoy the Olympics in peace, do call your account manager today.
