The Pound fell further on Friday, continuing its recent downward trend. The cause was worse than expected Services data. Services form a huge part of the UK economy, and a slowdown in this sector shows that Brexit may be starting to take its toll.
Another reason for the fall is a stronger Euro and US Dollar. The Euro has gained strength as polls show that Emmanuel Macron is now ahead of Marine Le Pen in the French election polls, and this has strengthened the single currency and made it more expensive. Once French and Dutch elections are out of the way and assuming far right candidates do not win power, it’s likely that the Euro will get stronger still. Couple that with the fact that Article 50 is on the way, and there is good reason to believe that GBP/EUR will fall further.
Sterling/Dollar has also been dropping of late, and again much of this is down to a stronger US Dollar. It’s likely that the Federal Reserve will raise interest rates soon, and this is starting to get priced into the currency markets. Higher interest rates strengthen a currency due to the higher return on offer, and make it more expensive to purchase.
Need to exchange currency?
We are entering a highly volatile period in the currency markets, with both political and economic risks starting to take centre stage. I think we will see some large movements in exchange rates in the coming weeks. If you need to exchange currency then there are several ways you can remove your exposure to the currency markets, and ensure you don’t get caught out if rates drop significantly. We offer not only exceptional exchange rates, we also provide various types of contracts to help budget for things like buying property overseas. To find out how we can help you, send us a free enquiry today by clicking here or completing the form below.