Sterling has risen strongly this morning to fresh 7 year highs against the Euro. As you can see from the chart below, GBP/EUR rose from 1.3450 to 1.3560:
Robust UK Employment figures boost Sterling
The reason for the rise was 2 fold. Firstly we saw some very robust UK employment figures that were much better than forecast. Average earnings were higher than expected, and the number of people out of work in the UK fell by 97,000 to 1.86 million in the three months to December. Because the figures beat expectations, it boosted Sterling and caused the rate to rise.
Bank of England unanimous to keep rates at 0.5%
Today the BoE minutes showed that all 9 members voted to hold rates at their currency level of 0.5. However although all nine members of the MPC voted to keep interest rates on hold, two members said the decision was "finely balanced", adding: "Given the outlook for inflation beyond the short term, there could well be a case for an increase in Bank Rate later in the year." This also pushed the Pound higher, and combined with the jobs data, Sterling has risen against most other major currencies this morning including the Euro.
Will the Pound stay above €1.35 or drop back again?
In recent weeks, we have seen GBP/EUR reach these levels several times, however each and every time it has always slipped back below this level within a day or two. The same could happen again, or this could be the time the gains are sustained and the rates stay above this level. It’s impossible to know what will happen.
If you need to buy Euros however, you don’t want to lose out on the best rates since 2008. You could consider placing a ‘Stop Loss’ order which means if the rate does drop back, your currency is secured at a pre-agreed level. If the rate keeps rising however, you can still take advantage of any gains.
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