The Pound has fallen sharply today after various information released by the Bank of England’s ‘Super Thursday’. As you can see from the chart below Pound/Euro rates have fallen from €1.42 to €1.40. In today’s post I’ll explain why this has happened.
Why has the Pound/Euro rate fallen so much?
In yesterday’s post I outlined why ‘Super Thursday’ was going to be such an important event and I cited 3 things to look out for:
- The minutes to the meeting – this showed that it was again only 1 member voted for a rate rise. There was speculation a few other members might vote, but this was not the case and the Pound weakened.
- The inflation report – This showed “the outlook for global growth has weakened since August”. It blamed emerging market economies for that weakness, saying growth in those regions had “slowed markedly”. This also means UK growth forecasts are now lower, weakening Sterling.
- Mark Carney’s Speech – He said that the weakness of the global economy, particularly emerging markets, has made the Bank of England cautious about the outlook for inflation. In turn, this means that it is now likely the latter part of next year before interest rates would rise.
Summary for those looking to buy Euros at the best rates
All in all, this was a very dovish outlook from the central bank, and the currency markets have reacted accordingly and the Sterling exchange rates have dropped. Those that read my report yesterday and placed ‘Stop Loss’ orders in advance of today’s announcement will have limited their losses. Those that simply watched and hoped rates would remain supported will now face getting a much lower exchange rate than was necessary.
If you have a currency transaction to perform, then I am happy to discuss your requirements and explain what may move the exchange rate. I can also provide you a quote to compare with your bank or existing broker. I can source exceptional rates of exchange and you may be surprised how much you can save by getting a slightly better exchange rate.