The pound moved up close to its strongest position for close to a year against the euro last week, before falling away a little. However, it remains well above the five year average and 3 to 4% stronger than in the spring. Why not lock that in with a forward contract?
There have been complaints in both the US and UK that prices for highly volatile items like petrol for motorists shoot up like a rocket when the oil price rises but fall like a feather when oil prices drop. Indeed the “rockets and feathers” principle was mentioned last week in complaints about savings rates from banks, as well as fuel prices, by an MP.
The opposite seems to happen with sterling. If you look at the graphs GBP/EUR tends to waft gently upwards like a balloon when things are looking good, but drop like a stone when bad news arrives, more so than other major currencies such as the euro and US dollar. Of course there are the obvious examples, such as the Brexit referendum, 2017 election, start of Covid-19 and 2022 mini-Budget, but the same trend happens in a minor way very often.
Could it happen this week? Sterling has been on a slow, gentle incline upwards in the past three months and it is hard to see where it might get the impetus to keep on rising. Whereas there are things coming down the track that put it at risk. That includes, this week, the unemployment and earnings data tomorrow, and GDP on Thursday.
So to lock in today’s rate, do call your trader today on 020 8108 5163.
