Sterling has been strengthening this morning and starts the week slightly ahead of where it began last week against the euro. Over the month, the pound remains some 3% down against the US dollar but only a fraction down on the euro.
It’s been an interesting year. Around this time last August the pound went into a deep dive as first one prime minister and then another left Downing Street. Sterling languished for the whole autumn, winter and spring and only recovered at the very start of the summer. Is GBP/EUR in danger of sinking again?
Just in case, anyone committed to a property purchase in the eurozone can avoid the risk by locking in their rate with a forward contract, with a call to their trader on 020 8108 5163.
In the meantine the losses from last week remained relatively painless for those taking a summer holiday in the eurozone. Those retiring to the eurozone look like they may be fortunate on their pensions too. The “triple lock” means that the UK pension, including those paid in Europe, will rise next year by the higher of the May to July average earnings figure, or September’s inflation figure, either of which is expected to be over 7%. In the meantime actual inflation in Spain is down to 2.3%, in Portugal 3% and in France 4.3%, so they could be getting a real-terms cash boost.
However, this could be a week of change for the pound, with an interesting period for data starting with unemployment and earnings figures early tomorrow morning. The jobless number shot up to 1.37million last month, or 4%, which may be low by international standards but was the highest rate in the UK since 2021. A rise in unemployment is the cause and effect “hoped” for by the Bank of England. By raising interest rates it increases unemployment, which dampens demand and thereby inflation. But along the way it could hit the pound sharply too.
Then on Wednesday we’ll have the inflation figure. While the consensus among economists seems to be that this will continue to fall fast, the business press this weekend was suggesting there could be a kick in the tail. There could be a kick in the tail too, if the pound falls and the price of your overseas home shoots up.
So do have a chat with your trader and think seriously about locking in your rate for total peace of mind.
I hope that our currency notes are helpful and enlightening. If you know of someone with currency transactions coming up – perhaps a friend moving abroad or a family member buying a holiday home – why not recommend Smart Currency to them? This autumn we have a special prize draw for referrals with a £500 Airbnb gift card up for grabs, as well as the usual £50 bonus for you for and the person you refer who goes on to make a trade. More details of the referral prize here.
