Sterling has maintained its new-found strength against the euro this morning, so why not call your trader on 020 8003 4915 and lock in the rate with a forward contract, or make a trade today, with a spot contract?
There is an interesting split for sterling, having strengthened in the past week against the Swiss franc, euro, Norwegian krone and Swedish krona, while weakening against the US, Australian, New Zealand and Canadian dollars.
You’ll have noticed that it’s the European currencies weakening, as calls have risen to impose increased sanctions and an oil and gas embargo on Russia after the war atrocities have come to light, ahead of their own desire for affordable power supplies.
Hence the rise in the pound is more a function of the euro’s weakness than any inherent strength, and subject to change at any moment.
You may remember the pound falling last month following the rise in interest rates to 0.75%, which is opposite to what you would expect. The reason was that the Bank of England’s deputy governor for financial stability, Sir Jon Cunliffe, was the lone voice and vote against raising rates on the nine-person panel. The markets were worried that his dovish opinions might spread, so it was interesting to hear him outline his reasons on Monday. He suggests that the war in Ukraine could eventually lead to inflation below the target 2%, especially if interest rate rises kill off demand in the economy. He also suggests that the oil crisis of the 1970s came on top of endemic inflation, whereas this time around it is the primary cause of the inflation. Hence, he says, there is not yet a “psychology of persistently higher inflation.”
Whether right or wrong, when economists start relying on psychological insights it might be smart to consider protecting your own interests (and savings). So if you have any foreign currency exposure over the next year, do talk to your trader.
Lastly, Your Overseas Home have some interesting webinars tomorrow, covering such vital matters as inheritance tax in Spain, which I can tell you from personal experience is something you really need to get right from the start. You can sign up here.
