Pound drops from new highs after Bank of England minutes

Wednesday 23rd July 2014 
Since my last post on Monday, the Pound/Euro rate had been slowly creeping up until today, due to weakness in the Euro. In fact this morning rates touched a new high of €1.27, but as has been the case of late the gains were not to last… 

Bank of England minutes causes Pound to fall 

This morning at 09:30am the Bank of England released its recent minutes showing what was discussed and how they voted when interest rates were recently kept on hold. As you can see from the chart below, GBP/EUR edged up to €1.27 just before the announcement. This was because there might have been some of the 9 member committee that had voted for rates to rise. 

As it happened, all 9 members voted to keep rates on hold, signalling that rates are likely to remain at 0.5% for some time to come. Even though unemployment is dropping and the economy is growing, I think rates will not go up anytime soon until wage growth catches up. If they raise rates too quickly it could destabilise the recovery. You can read a detailed report on what happened today here on the BBC website.

Will Pound go up or down against Euro?

For the reasons outlined above, I can’t see the Pound gaining much more strength in the short term, so those that are looking for the best exchange rates should consider fixing now while it’s so favourable. By holding out hoping for more gains, you will probably find there is more to lose than there is to gain. 

For those converting currency back to Sterling, get in touch for a free consultation on your options. The Pound will get stronger eventually as we get closer to a rate rise, but there are ways to protect against the market moving against you such as Forward contracts, Stop and Limit orders. 

To find out more about the excellent exchange rates I offer, the contract types available, or simply to have a chat about which way the currency markets are going then click below to send me a free enquiry today. 

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