Sterling starts the week looking strong, back at close to its highest since the referendum in 2016 against the euro, but having slipped a couple of percentage points against the US dollar over the past two weeks.
Its unusual to see the GBP/EUR graph diverging so markedly from GBP/USD, and reflects the collapse in the euro against the US dollar by 2-3% in just two weeks.
Was this predicted in the Quarterly Forecast we published just last week, and what does it forecast for the next two months? Download it here to find out.
Outside of war, politics and pestilence, interest rates come a close 4th when it comes to influencing the exchange rates.
That’s why this week could be pivotal, with the Bank of England announcing its interest rates on Thursday at midday. Right now, most of the betting is on a rise in the base rate to 0.5%. The last two interest rate decisions, however, have taken the markets by surprise, so anything could happen.
To avoid that impacting your own plans this year, do talk to your trader on 020 8108 5163 about locking in your rate with a forward contract.
Before Thursday, there is a lot of important data coming down the line that will give a better indication of the health of the European economy, including GDP later this morning, then inflation and unemployment through Tuesday and Wednesday.
We also have the dangerous situation in East-West relations in Ukraine, which has not been resolved. If the gas supplies to European industry and homes are affected by a war in Ukraine – and the sanctions that would undoubtedly follow – all bets are off on where the pound will go.
All that and Sue Gray too, potentially leading to a new Prime MInister by Easter.
This is, therefore, undoubtedly a good week to consider seriously your currency plans. Minimise your risk by calling 020 8108 5163 and talking through your plans with an experienced currency trader.
