Sterling/Euro fell further last week, at one point dropping as low as €1.0960. The pair has recovered slightly and now sits at around the €1.10 mark, a 10 month low and close to the lowest we’ve seen Pound/Euro since 2009.
It was a story of Euro strength that caused the rate to fall last week. Poor economic data from the states last week weakened the US Dollar, and when the dollar weakens the Euro often gains in strength, which is what we saw last week that caused GBP/EUR to fall that low.
What next for Pound/Euro rates?
Tomorrow will be key for what happens next for Pound/Euro. At 09:30am we will see the latest Retail Sales figures. Given the rain and poor weather of late, it’s likely these may come in low which could weaken Sterling further. We will also see the latest UK inflation numbers tomorrow. Inflation is expected to come in at about 2.7%. If it’s lower than this, expect the Pound to fall further. If however inflation has risen, then it will increase the chances of a interest rate hike that could help the Pound recover.
Even if we do see rates rise tomorrow however, any gains are likely to be limited. With a resurgent Euro and Brexit concerns keeping the Pound low, there isn’t much to suggest that rates are going higher any time soon. In fact Morgan Stanley are predicting that next year GBP/EUR will drop below parity which is not very encouraging.
Protecting against rates getting worse
If you need to buy Euros, for a property purchase abroad for example, then one way of protecting yourself against rates falling even further is with a ‘Foward Contract. This contract allows you to freeze the current exchange rate for up to 2 years, allowing you to budget and protecting against the rate getting worse. If you would like a free quote, or to find out more about the currency services we offer, complete the form below or click here.