Sterling took another dive over the course of yesterday against all major currencies – a clear sign that the influences are all from the GBP side of the equation – followed by a small recovery this morning.
To avoid the risk of your budget collapsing in these dangerous times for sterling, please call your trader on 020 8003 4915. As so many of Smart’s clients head off on viewing trips to make offers on property abroad, doing so without the safety net of a forward contract is a serious gamble.
It’s an interesting week for currencies, with economics, politics and even war and peace all playing a part in the fate of sterling.
Later today the US Federal Reserve will decide US interest rates, and the dollar has been supported strongly by hawkish (i.e. in support of rising interest rates) comments from its rate setters. Tomorrow the Bank of England gets its turn.
Yesterday was the 25th anniversary of the Bank of England being put in charge of controlling inflation via interest rates, and never in that time has it faced a choice as important as tomorrow’s. In May 1997 inflation was 3% and interest rates were around 7%. Now inflation is at 7% and interest rates are on 0.75%. Hence interest rates could easily be hiked significantly. Indeed any equivocation on the need for a sharp rise – as happened at the last meeting – could damage the pound yet further.
Not that most long-term UK home-owners have much reason to complain. In May 1997 the average British home cost £58,498. Today the average is £296,000. With inflation at its highest for 30 years, you have to say that property looks like a sensible investment.
For those looking to use some – or all – of that money to buy a property abroad or move abroad, the fate of the pound hangs in the balance right now. We also have the local elections tomorrow which adds an interesting political dimension to the currency markets too.
So, to lock in today’s rate, call your trader on 020 8003 4915.
