Thursday, 18 December 2014

Pound/Euro rises to €1.2750 on strong UK Retail Sales

Thursday 18th December 2014 
The Pound has had a good day today, particularly against the Euro. This morning we saw figures that showed UK retail sales rose at their fastest annual rate in more than 10 years last month. We were expected the number to show +4.5%, and it actually came in at 6.9%. This is partly due to the effects of Black Friday. 



Retail Sales are a good overall barometer of economic health, and so strengthens a currency when the numbers are better than expected. This caused Pound/Euro to rise from €1.26 yesterday, to €1.2752 at the time of writing. The other reason for the strong performance for GBP/EUR today is seasonal end of year demand for Sterling, and further speculation that the European Central Bank will have to conduct easing measures to prop up the EU economy. 

It should be noted that this trend has repeated itself several times in recent months, with the Pound/Euro rate getting to these sort of levels, before dropping back to the €1.26 mark again. For this reason, those that need to buy Euros in the next 3 months should consider fixing the current rate with a Forward contract. This works by lodging 10% of what you want to convert, and you can lock in the current rates for up to 2 years. This protects against the rate dropping, and allows you to budget effectively for what you need to buy with your currency, be it a property abroad, a car import, or goods and services from the Eurozone. 

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