Since the Bank of England cut interest rates last week, the pound has been making small but steady gains against both the dollar and the euro.
The pound is up more than 1.6% against the dollar and 0.6% against the euro.
In the case of the dollar, it continues a trend we’ve been seeing all year. Exchanging pounds for dollars today will get you 10% more for your money than it would have back in January.
However, that could all change. US data released yesterday revealed inflation was flat in July. Pair that with last week’s downgraded jobs data, and there is now huge pressure on the Fed to cut interest rates.
It’s hard to say what a significant interest rate cut would do for US investment and what it would mean for dollar’s decline. That 10% GBP/USD increase could evaporate.
To secure certainty for your budget, lock in today’s GBP/EUR rate with a call to your account manager on 020 8003 4915.
In contrast to the pound’s gains against the dollar, sterling has been slipping against the euro throughout the year. Swapping pounds for euros today will get you 5% less than it would have back in December.
This August bump is a nice reprieve for anyone looking to make a purchase in Europe, but it’s hard to say if it’s likely to continue. We have seen too many economists’ predictions proven wrong in 2025 – the year of uncertainty.
All we can say with confidence is that Germans aren’t happy with the direction of the euro. A new survey of German economic sentiment published yesterday shows plunging confidence in the market. The EU’s trade agreement is to blame, as is Trump’s threatened tariffs on the pharmaceutical industries.
However, only time will tell how this plays out in the euro’s value against the pound and dollar.
