Many are predicting the pound will crash in the coming months. Some are talking of the pound dropping to 1.10 or even parity in the coming months, maybe weeks. Is this really possible?
On balance I think it is unlikely it will tumble in the way some commentators have predicted. More often than not when there is such strong sentiment in the public domain, the opposite happens. That is not to say the rates will go back the other way, just that it where market participants all expect one thing to happen, it may often not.
Markets often move ahead of the event and for that reason sterling has fallen in anticipation of the bad news. If however the news is not so bad we could easily see rates stabilise and potentially climb back up. Let us look at tomorrow for starters, the expectation is the pound will drop as a result of more QE. If however this doesn not happen it is likely the pound will strengthen and investors will look towards the next milestone.
This is GDP figures for April which will confirm if the UK was in a triple dip recession. The economic data we have had so far has according to one market commentator indicated the UK avoided a triple dip with 0.1% growth.
I think therefore a lot of this ‘sterling crash’ talk is hype. Do not be misled too much if you are buying the pound hoping rates will drop significantly. Quite simply it is the best time to buy GBP in many months and years and it is often the greedy who miss out.
Should you be considering a foreign exchange transaction in the future I can help with a commercial rate of exchange and information on what is driving the rate and when is a good time to trade [email protected].