Sterling has been weakening steadily against the US dollar and a bit more rapidly against the euro. However, it remains well above the average of 2023 against both, and is worth fixing with a forward contract if you want the security of having a budget abroad that you know you can work with.
So do give your trader a call on 020 7898 0541 to fix your rate. In turbulent times, as we may well be coming into once again, having your rate fixed so you know you can cover an upcoming transaction you are committed to, can be worth its weight in gold.
In general, the pound has a tendency to rise steadily and then crash down swiftly, mainly to do with its loss of status as a ‘safe-haven’ currency and dependence on service industries. Hence, events like the pandemic and war in Ukraine have a rapid negative effect on sterling as investors look for safer places to put their money asap.
So the slow, steady decline against the US dollar of seven or eight per cent since mid-July is a bit of a rarity. It seems to reach a new six-month low every day. The amazing thing is that GBP/USD is still, despite that fall, some 13% stronger than this time last year; a reminder of just what a catastrophic event for sterling the Truss/Kwarteng mini-Budget event was.
With the interest rate rising cycle coming to an end, the currency markets will be looking for new things to worry about, and they won’t have to look far. Donald Trump being 20 points ahead of Joe Biden in the opinion polls, for example, with an election just 13 months away, and the geopolitical implications of that. Some may also be worried about a potential change of government here (while others will welcome both). As the Liz Truss premiership proves, government matters and can have a big effect on the strength of a currency.
But in the meantime, there is plenty of short-term data to keep the markets interested and this week it will be a mass of reports including inflation from Germany and Spain, plus Gross Domestic Product (GDP) from the USA tomorrow, then UK GDP on Friday.
