This week the pound has plummeted across the board against all of the major currencies due to Deputy Governor of the Bank of England Ben Broadbent’s comments. Mr Broadbent told the Press and Journal Newspaper that economic growth had only been ‘ok’ and it was ‘tricky at the moment to make a decision’ in regards to interest rates.
In recent weeks other members of the monetary policy committee had eluded to a potential rate hike in the future as inflation has risen to 2.9, 0.9% above the Bank of England’s target. Now that it looks like an interest rate hike is very unlikely, investment has left the pound, which has decreased the demand and therefore the value.
This morning UK unemployment numbers coupled with average earnings are set to be released at 9.30am. Unemployment levels are at record lows and I wouldn’t be surprised to see a further fall to 4.5% from 4.6%. However average earnings have been a problem for the UK and therefore I don’t expect this release to provide support and stop the pound from falling further.
For clients that are purchasing a foreign currency short term, it’s important to analyse the second currency you are converting however with the pound continue to struggle due to the impact Brexit is having, converting your currency sooner rather than later seems wise. The currency company I work for offers a forward contract, which allows clients to book a rate now and pay later for it. This is used when clients do not have all of their sterling available at present.
For clients that are purchasing sterling my personal opinion would be to see how far the pound continue to fall for the remainder of the week, even though it is very tempting to trade immediately due to the falls. However I would certainly get myself in the position to trade and potentially use a limit order / stop loss contract which allows you to choose your desired rate however if the pound starts to rise you can pick your worse case scenario to protect your position.
My area of expertise is property purchases and sales. Therefore if you need to purchase a foreign currency or you are about to complete on a sale abroad, today is the day to get in touch to discuss your options and to get an understanding of how we can save you as much money as possible [email protected].
** If you are already using a brokerage and would like to know if you are receiving the best rates possible email me with the exact figures and I will reply with our live price. This will take you minutes and in the past I have saved clients thousands! **