Tuesday, 11 April 2017

Has Sterling now peaked against the Euro?

I mentioned in yesterday's post that today could move the Pound higher if UK inflation numbers were higher than forecast, and that's what we've just seen.

A short while ago we saw the PPI come in at 3.6%, and it has sent the Pound a little higher. However CPI and RPI was a touch below forecast, so gains for Sterling have been limited. House price data was also slightly lower, so while the Pound has risen slightly it's not by much and GBP/EUR remains in the low €1.17's. 

Will Pound/Euro rates move higher or have we hit the peak?


I think this reduces the chances of an interest rate hike in the UK any time in the next few months and therefore there's not much that I can see that will move the Pound higher in the short to medium term.

GBP/EUR rates have reached these level 5 or 6 times in the last 3 months and each and every time we've seen it drop back away again. We've been hovering around these levels  for a week or two and the Pound doesn't seem to be able to get any higher. Is this the peak for the time being?

It won't be long before we start to see the opening salvos fired in the Brexit negotiations, and there is a big risk that markets won't like the uncertainty and tit for tat that we're likely to see in the early stages. If you need to buy foreign currency and want to be protected against the rate dropping back away then there are 2 ways of doing so:

  • Stop Loss Order - This is a tool whereby you can instruct us to secure your currency if the rate drops below a pre-agreed level. This protects you against a sudden drop and gives you a worst case scenario should the rate plummet. If rates climb however you are still free to take advantage of any gains. This is useful if you have time on your side and you think the rate may climb. 
  • Forward Contract - This is a tool that allows you to freeze the current exchange rate for up to 2 years. This is a good option for those that are risk averse and need to budget for buying goods from overseas, or buying a property in the Eurozone or elsewhere. It removes your exposure to the currency markets and means you know exactly what you will be paying for the currency you need. 

These are just some of the ways in which we can help our clients manage their foreign exchange exposure. We also offer exceptional rates of exchange that are very close to the mid-market level, in addition to expert knowledge to help you with the timing of your trade.

If you think you would benefit from our services and would like to find out more about how we can help you or simply get a quote to compare with your bank or existing broker, get in touch for free today.