It’s been a strong but steady week for the pound so far, holding onto the gains it made against the euro last Wednesday and about 3% above where it has spent most of 2023.
A quick note, first, that we are holding a webinar on Thursday afternoon, that anyone with a trade upcoming will find incredibly useful, especially, but not exclusively, for a property abroad. You can see more details and sign up here.
Sterling’s strength continues to be based on the promise of higher interest rates in the UK, with inflation remaining stubbornly high here while apparently falling faster in the eurozone, as well as the US and other major economies. If you look at a chart of the G20 economies with the highest inflation, the UK is closer to Turkey and Argentina than the likes of Spain and France.
Sadly for home owners, that doesn’t include house price inflation, which according to the Halifax this morning remains stalled at 0% last month, with a 1% drop over the year. On the plus side, construction PMI (a measure of confidence amongst construction business leaders) was revealed yesterday to be much higher in the UK than in major European economies, and growing.
Next week is a big one for data and it would be sensible, if you are committed to a major transaction abroad, or are likely to be, to lock in today’s exceptionally strong rate.
As reported this morning, the bank JP Morgan are predicting a crash in the value of sterling this summer, and they are not alone. Their argument is that, although it hasn’t kicked in yet, constant interest rate rises from the Bank of England are going to slow the economy, taking the pound down with it.
So to lock in today’s rate, please call your trader on 020 7898 0541.
