The pound has been bobbling around, “searching for direction” as they tend to say, as if it was a lost chiffchaff flying north to Britain for the arrival of spring. The good news is that, for now, it’s just about holding its own as the global economy and currency markets try to make some sense out of the myriad issues and uncertainties that come from war, inflation, oil supplies and Covid’s resurgence in China.
This is definitely a week to have your trader on speed-dial, or 020 8003 4915, with the Bank of England’s interest rate decision tomorrow, the US Federal Reserve’s today, and, we pray, the possibility of progress in peace talks over Ukraine.
Looking at a graph of GBP/EUR over the past few years it’s easy to see the themes and phases that have driven its strength and weakness. The two years prior to Brexit when the Greek debt crisis pushed the euro lower, the years after the referendum when sterling was on the floor, followed by a rise as the question was settled with the election of Boris Johnson. Then the UK’s success with the vaccine that saw an early recovery from the Covid dip. And lastly, the threat of war with Russia that sent the pound to its best level for nearly six years.
So, the big question, what’s next? Looking at a 10-year graph for sterling vs the euro you tend to see long steady climbs followed by short, sharp falls.
There have been several occasions over the past few years where sterling has fallen by 5% or more just over the course of a month, whereas the decline in sterling over the past two weeks has only been around 2%.
The worry has to be that the pound is heading for another, steeper drop. Just at a critical time for those taking the opposite direction to most chiffchaffs for a retirement in the sun, or buying a property abroad after two long years when it was, let’s face it, problematic.
To avoid the risk and problems that would arise from the pound suddenly shifting lower, call your trader on 020 8003 4915 and discuss locking in today’s rate, still around 5% above the five -year average.
Just another reminder to get your e-pass to our show, Your Overseas Home, which is next Saturday 26 March.
