For only the second time in the last 10 months GBPEUR mid market levels have breached the 1.15 level, providing a fantastic opportunity for euro buyers. Euro buyers should take into consideration it was only 4 weeks ago and GBPEUR was trading at 1.1150. To put this into monetary value a £200,000 transfer now achieves clients an additional €7,000 compared to 4 weeks ago.
The reason for the shift in sentiment all comes down to the UK securing a deal with the EU in regards to the transition, the Bank of England hinting that an interest rate hike is likely in May and average earnings numbers are not sitting close to UK inflation.
Over the last 10 months any time GBPEUR has got close to 1.15 exchange rates have dropped like a stone and that normally occurs due to Brexit negotiations. Unfortunately for euro buyers the all important trade discussions are about to start and I would be extremely surprised if these negotiations go well at the start. Therefore I expect the pound to fall off when commentary is released from either the UK but more importantly the EU.
This week there are some key data released to look out for if you are planning on either buying euros or selling euros to buy pounds. They are UK manufacturing numbers Wednesday at 9.30am, Mario Draghi’s speech at midday on Wednesday and Mark Carney’s speech Thursday afternoon.
Personally I expect the speeches to have the most impact this week. It will interesting to see if Draghi hints towards tapering the QE program further and if Carney hints towards an interest rate hike in May. Personally I expect this could be a good week for the pound. Nevertheless I would be extremely tempted to buy euros now as trading levels are at the highest they have been in 10 months!
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