The Pound has been slipping away throughout trading today, and Brexit continues to be the main driver for Sterling. At the moment it’s all to do with talk of a transitional deal to ensure that if it takes more than 2 years to come to a deal with the EU, UK businesses won’t be adversely affected. Theresa May is due to make a statement to parliament at 3.30pm today about last week’s EU summit, which may or may not provide further details about this. Here’s how GBP/EUR has moved so far today:
Will Pound go up or down before the end of the year?
Things are starting to quieten down a little in the currency markets in the run up to Christmas. Trade will be much thinner, and this also means we may see larger moves in exchange rates than normal. It’s very important to remember that the Pound is very susceptible to political events, and I think that as we enter the new year, Sterling will start to fall back away again as uncertainty returns to investors minds.
We still have no idea what negotiations will bring next year, and I think that as we approach the holiday period, the Pound may well be sold off causing it to drop away from the recent highs of €1.20 that we’ve seen. For those that need to convert Pounds to Euros in the next 3 months, it’s certainly worth considering locking in the rate now while it’s much better than it has been. Last month the rate was as low as €1.10, and subsequently rose by 10 cents to peak at €1.20.
However, we have now seen this currency pair approach this level several times, however each and every time it gets to this key level, it hits resistance and drops back away again. Bear in mind that purchasing €350,000.00 today costs around £22,000.00 less than in November, and you can see that the rate is much more favourable. Many clients may be holding on hoping for €1.20 to become available as a trading level, but my personal view is it’s unlikely to happen any time soon. Given the huge gains we’ve seen recently, there is much more to lose than there is to gain. Holding out for an inch could result in losing a yard, so it’s certainly worth thinking about locking in a rate of exchange and taking advantage of the rate while it’s available. even if you don’t need your currency for up to 2 years, you can still reserve today’s rate by lodging a deposit of 10%, helping you to budget and protecting you against the rate falling.
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