As many economists predicted, the transition period after the Brexit vote in June last year would be a tough period for any clients purchasing a foreign currency, and a window of opportunity for clients purchasing the pound. They were not wrong. Over the last year the pound has fallen to multi year lows against a basket of major currencies including the Euro and US dollar.
The major concern I have is that inflation has been outpacing wage growth, which means every day goods and services are becoming more expensive but the general public are struggling to pay for the increase. This in turn means consumer spending is falling, and this consequently has led to a slowdown in the UK economy.
The Bank of England could intervene by raising interest rates, however Governor Mark Carney has hinted this won’t be the case anytime soon.
Looking further ahead I expect the pound to remain under pressure and potentially fall further until progression is made with the Brexit negotiations. However it appears that the negotiations are not going to plan as the EU is taking a tough stance and wants the divorce settlement and EU citizens rights sorted before any trade deal is discussed.
I’m optimistic and believe in the upcoming 12 months, the UK and EU negotiators will stop puffing out their chests and come to an agreement, however for people purchasing a foreign currency short term (next 3 months) the chances of the pound strengthening is unlikely.
It’s a quiet week for UK economic data releases however the important release to look out for is GDP numbers Thursday morning. No change is expected (0.3%) therefore the release shouldn’t cause major fluctuations for sterling exchange rates.
If you are buying or selling the pound it is essential that you analyse the other currency you will be converting as forecasts change for different currency pairs. For example the pound has consistently lost value against the Euro over the last 3 months where as the pound made in roads against the US dollar within the same time frame.
The currency company I work enables me to achieve better rates than the high street banks whilst providing clients with economic data which helps them to time their currency transfer. If you are purchasing a property abroad / have sold a property abroad and would like to repatriate your currency, a business owner and needs to buy and sell currency for stock or just have a one off currency requirement feel free to email me on firstname.lastname@example.org.
Due to the markets being closed over the weekend I will not return to my desk until Monday morning, at that point I will respond with my forecast for the currency pair you are converting alongside the process of using our company.
Have a great weekend and I look forward to saving you as much money as possible in the future!