Sterling dropped around half a percent against the euro and US dollar yesterday. The prompt was the rising belief among investors that the Bank of England is going to ease up slightly on its interest rate rises, with just an increase to 5.25% rather than 5.50%.
Of course, for most homeowners and people with credit card debts, this would be pretty good news – sometimes what damages your exchange rate is good for your pocket elsewhere. Maybe another reason to worry less about holding out for a fractionally better rate and focus more on the bigger picture.
For those with savings, the failure of banks to pass on higher rates is a growing scandal, and a reminder that the old high street banks don’t necessarily have customer service at the heart of their business model these days (even when they’re not closing the accounts of people they don’t like). You will struggle to get guidance on making large trades overseas, such as for a property, get no help with mitigating any risks, and if you need someone to talk to at a critical point in the buying process will usually find yourself on your own or floundering through a call centre.
Smart Currency’s traders are ready on the phone and work closely with estate agents and lawyers when required. Do call your trader on 020 7898 0541 to talk through your plans and see where we can help.
For those ready to make a trade, the rate today remains a good 2% to 3% above the five-year average. If the Bank is seen to be ending its interest rate rises, however, those big investors will move their money elsewhere and the pound is likely to sink.
So do consider locking in your rate with a forward contract.
