Sterling Forecast – will the pound remain weak?

GBP EUR Looks to Employment Figures for Support

As many readers will be aware the GBP has lost value against a host of major currencies in the last 18 months.  So while this is great news for anyone holding a foreign currency and looking to buy back in to sterling, for anyone who needs to buy foregin currency this is really bad news.  Unfortunately it does not appear that there is any respite in the near future as the forecast is for the GBP to continue to remain weak over the next few months in the lead up to the election.

The main reasons for this are:

  • Continued poor performance in the UK economy – decreasing demand for the pound
  • The UK is a service driven country and reduced demand for our services is reducing demand for sterling
  • The Bank of England may carry out further Quantitative easing
  • Interest rates are likely to remain low for an extended period in the UK
  • Uncertainty surrounding a hung parliment and how the national debt problem may be dealt with

Could the pound recover after the election?

In my opinion the short answer is yes.  There are many reasons behind this, but I believe the key issue is that uncertainty is really holding the pound back.  Because the markets dont’ know who will be in government, or if we may see a hung Parliament, they are nervous.  Add to this the fact that we don’t know how the new Government will deal with the national debt and budget deficit problems and the markets are twice as nervous.

All this uncertainty and nervousness is really holding the pound back which does make a very good investment at present in my opinion.  Once the new government is in power and the uncertainty is removed I would not be at all surprised if we see sterling move up in to the 1.20‘s against the Euro and push back into the 1.60‘s against the USD.

Whether you are buying or selling GBP an experienced currency broker will be able to save you money on your currency transfer.

If you are buying a property abroad, have business transactions to carry out or need to get money overseas for any other reason and want the best exchange rates, just fill in the contact form and I will be in touch with you shortly.