It’s not been a good start to 2016 for the Pound, and in the last 24 hours we have seen Sterling drop significantly further against both the Euro and US Dollar, as the charts below show. GBP/EUR in particular has now dropped by an alarming 10 cents since last month to the lowest in 12 months.
Why is the Pound falling against the Euro and US Dollar?
Global concerns are now weighing heavily on Sterling. Last night Chinese shares fell 7% for the second time in a week. After 30 minutes trading was suspended to stop panic selling. This had a knock-on effect this morning on the FTSE and there is now a real global fear of another financial meltdown. Oil prices fell ever further, with the price of a Barrel now $33 which is the lowest in 13 years.
All of this means investors are dumping risky assets including Sterling, weakening the currency significantly, pushing exchange rates lower and lower.
Chancellor George Osborne has also warned of the effects to the UK from a slowing global economy, citing a ‘cocktail’ of economic risks to the UK economy such as tensions in the middle east, low commodity prices, the slowdown in China, and slow UK wage growth. All of this means the the current trend may continue, with exchange rates continuing to fall further and further.
What does all this mean for exchange rates?
Markets hate uncertainty, and this year is shaping up to potentially be as important as the global financial crisis of 2008 according to legendary investor George Soros. He has said that the events in China could cause a new financial meltdown, which would not bode well for the Pound.
To put things in perspective and illustrate how much of an impact exchange rates movements can have, all you need to do is look at the fact the purchasing a €300,000.00 property overseas costs £15,000.00 more today than this time last month. We could well see exchange rates continue to remain extremely volatile in the next few months, and as I outlined in a recent post, I expect the Pound to continue to fall against other currencies such as the Euro and US Dollar.
Do you need to exchange currency?
If you need to buy or sell a foreign currency, it’s imperative that you speak to a specialist currency broker like myself. I can not only source rates of exchange up to 5% better than banks and other brokers typically offer; I also offer a wide range of contracts in order to protect you against adverse exchange rate movements. You could save a significant amount of money by simply getting in touch for a free quotation and discussing the options you have available within your timeframe.
If you would like to get a quote, discuss which way the exchange rate may move, and talk about how I can help you make the most of your currency, click below to send me a free enquiry. Dont’ simply hope that the exchange rate will get better; hope is not a reliable economic tool.
Speak to an expert today, and limit your exposure to what is an extremely volatile time in the currency markets.