The UK coastline wasn’t the only thing that took a battering yesterday as the GBP/EUR rate also took a dramatic tumble yesterday, falling by over a cent and a half from 1.292 to 1.275 before pulling back up to just over 1.28.
UK trade figures were released and they were the main catalyst for this plunge towards a 12 month low for the GBP/EUR rate. It showed that the UK had a record trade deficit for goods of £125bn for 2015, reflecting a fall in both exports and imports. The fall in exports for the year is likely a result of the strength of the pound last year, making it more expensive for foreign businesses to buy UK goods. Whilst the fall in imports is likely a result of the significantly lower oil prices we have seen.
With the Office of National Statistics highlighting that these figures would have an impact on its economic growth forecast for later on in the year, it seems probable that the UK’s road to economic recovery may be a little longer. As a result, confidence of investors in the pound takes a hit, and we see Sterling’s value weaken.
This is positive news for those clients with Euros to sell, as you will receive more Sterling as a result. However, it is not such good news for those with Euros to buy, as your purchase has just become that more expensive.
With the referendum looming as to whether the UK will leave the European Union, it is highly probable that we will see increased volatility the closer we get to the event, and this is not likely be in favour of the Pound. Thus trading sooner rather than later may be wise, especially if it can be timed well to take advantage of any spikes in your favour.
If you do have Euros to buy in the near future, getting in touch with your broker is paramount, whereby they will be able to provide expert advice as to when best time your transfer, along with getting you a bank beating rate of exchange. If you don’t currently have a broker, get in touch with me at [email protected] and we can get you setup with your own personal currency broker. Jonathan Worrall