Somewhat surprisingly we saw some Sterling strength during yesterday’s trading, despite UK Manufacturing and Industrial data coming out a lot worse than expected, and the National Institute of Economic and Social Research (NIESR) revising their estimate of the UK economic growth for the three months to January down to 0.4%. We saw GBP/EUR rates rise from 1.28 at the start of the day up to 1.295 before settling back down at around 1.287.
The data released for the UK yesterday again showed that the UK may be in for a tough year, with low inflation levels, a record trade deficit and almost no chance of an interest rate hike in 2016. As such, there is almost no possibility of seeing the GBP/EUR rates of above 1.40 that we saw last year, and anybody looking to buy Euros should be very content if they are able to get above 1.30.
On the flip side, as we are currently experiencing 12 month lows in the GBP/EUR rate, those clients with Euros to sell in order to buy Sterling should be taking advantage of this situation, many of which we are seeing doing so.
Eurozone GDP figures are due to be released on Friday, and they are expected to show a fall compared to the previous quarter. Combine this with rumours and thoughts from various analysts that they predict that the European Central Bank (ECB) will cut the deposit rate even further this year and may need to extend its quantitative easing programme through the end of 2017, and we could see some Euro weakness tomorrow. This could provide those with Euros to buy a spike in the rate, which should in my opinion be utilised.
We have options available to you here that make taking advantage of rate spikes in your favour very easy. So, if you have a currency transaction to undertake please do not hesitate to get in touch with me at [email protected] and I can run through exactly how we may be able to help you, both in terms of timing your transfer and getting you the very best rate of exchange. Jonathan Worrall