The Pound has continued to fall all week, however today seems to have stabilised slightly. We have seen Pound/Euro fall to a 9 month low, and GBPUSD rates fall to a 1 year low . Today however Sterling has bounced back ever so slightly as you can see in our live graphs page.
Why has Pound/Euro been falling this week, and will it recover?
The reason Pound/Euro has been dropping is continued concerns over Brexit. As I touched on in my last post, with little economic data for the markets to digest, all focus has been on the lack of progress with Brexit. The increased chances of the UK leaving with no deal has increased uncertainty, causing investors to dump the Pound.
We’ve seen a slight recovery today. This could be due to rumours that the EU may finally allow the UK to remain in the single market without accepting free movement. However it’s also rumoured that the EU would seek concessions such as the UK having to accept adopting things like environmental and social protections. This would limit the UK’s ability to strike free trade deals elsewhere, which many would argue is the main benefit of Brexit. Certainly the EU will want to protect things like France’s agricultural and Germany’s Industrial dominance.
No Brexit progress expected soon
I’m not expecting any progress with Brexit negotiations for at least 4 to 6 weeks. In the meantime, there are 2 things that will affect Sterling exchange rates. As we saw last week, it was comments from Mark Carney the BoE governor, and Liam Fox the International Trade secretary that were the catalyst for the Pound dropping. Their comments of an increased chance of ‘No Deal’ are what caused Sterling to fall to lows this week. Any further comments could move rates either way depending on their tone.
Economic data tomorrow could help the Pound
We also have some important economic data from the UK tomorrow in the form of the latest growth figures (expected at +0.4%). We’ll also see Industrial and Manufacturing numbers, expected at 0.4% and 0.3% respectively. The numbers are released at 09:30am tomorrow morning. If they are better than forecast then it could help the Pound recover. If however they are disappointing, then the appeal of the Pound is likely to diminish further, which might mean the Pound resuming its downward trajectory.
Do you need to exchange currency?
If you need to convert currency, then simply watching the rates and hoping they will get better is not recommended. Hope is not a reliable economic tool. If you need to convert currency and are keen on getting the best exchange rates, then the first step should be to get in touch with one of our currency experts.
We can discuss your requirements, timescales and attitude to risk. You can find out more about what is moving the rate, and discuss your options to help protect you against the rate moving the wrong way. You can also get a free quote to see what exchange rate we can offer you.
Typically our rates are 2% to 3% better than banks offer. We have never had an issue beating rates from other brokers, so it’s certainly worth checking what we can offer to see how much you could save.