After hitting a 2 month high to buy Euros with Pounds the GBPEUR exchange rate began to fall earlier this afternoon after Bank of England governor Mark Carney’s speech in Washington.
The Pound fell by over 0.5% vs the Euro after he said that although the time is coming for an interest rate hike the hikes would be both ‘limited and gradual.’
One of the key concerns for the British economy and the Bank of England is rising inflation and with the figures showing a 5 year high last week this is in part one the reasons for the Pound’s gains vs both the Euro and the US Dollar.
With inflation rising the typical way to combat this is to increase interest rates but with average earnings not keeping up with inflation I think an interest rate hike could cause problems for UK economic growth. Therefore, I suspect that the MPC used ‘jawboning’ which is a term used to suggest something may happen without actually doing anything.
The next set of economic data to affect Sterling exchange rates could be on Wednesday with the release of the latest UK Retail Sales figures at 930am.
We end the week with Theresa May talking on Friday in Florence about her Brexit plans so expect volatility for the Pound towards the end of the week.
If you have a currency exchange to carry out in the coming days, weeks or months then you are more than welcome to speak with me directly as I will be more than happy to help you both with trying to time a transaction and getting you the top market rate when you do come to buy your currency.
A small improvement in a rate of exchange can make a huge difference so for the sake of taking two minutes to email me you may find you save yourself hundreds if not thousands of Pounds. You can email me (Tom Holian) on [email protected] and I will endeavour to get back to you as soon as I can.