Despite inflation hitting 3% as outlined in my earlier post, Mark Carney was a little dovish in his comments to the treasury select committee earlier. While he did say that the case was probably there for a rate hike in the coming months, the Pound has moved lower following his words. It’s often the case that when Mark Carney speaks the Pound falls, and this is what has happened again. I think that markets had priced in a rate hike for November, but it’s now looking more likely that a move up in rates won’t come until December. He re-iterated the usual case about sluggish wage growth.
So with little prospect of interest rates going up next month, coupled with a deadlock in Brexit negotiations, if nothing changes on these 2 fronts then it’s likely the Pound will continue to fall against other currencies. Today, GBP/EUR has dropped from €1.1300 to €1.1225. Those who need to buy Euros in the next 3 months should not be too disappointed however, as just last month the pair was in the €1.07’s.
If you would like to protect yourself against the rate dropping any further, then you can freeze the current rate using a ‘Forward Contract’ by lodging 10% of the total you want to convert. This guarantees the current rate and allows you to budget, while protecting you against any adverse movement in the rate of exchange. Click here to find out more or get a quote.