Bank of England rate hike in doubt and the prospect for the Pound

Pound to Euro Under Brexit Spotlight

Only two weeks ago the rate to buy Euros with Pounds had hit its best level since May 2017 touching 1.16 on the Interbank level.

However, since then the Pound has dropped by almost 3% or the difference of £2,600 on a currency transfer of EUR100,000 highlighting the importance of keeping a close eye on the foreign exchange markets.

In mid-April UK average earnings finally outpaced inflation and unemployment levels hit close to record lows in almost 40 years! However, since then we have seen a concerning amount of economic data which now means that next Thursday’s potential rate hike is now in serious doubt.

UK GDP data last week showed a fall to just 0.1% quarter on quarter which was the slowest pace of growth since 2012 highlighting problems in the UK economy.

Some have suggested that it was the ‘beast of the east’ that caused the slowdown. There is clearly evidence to support this claim but it did not have too much of an effect so this can potentially be discounted.

However, what is clear is that we also saw a slowdown for Services PMI as well as construction data so an interest rate hike on Thursday is now becoming less and less likely.

There are still some who think a rate hike will come and I’m inclined to agree but I think Thursday will not be the day when the Bank of England hike rates owing to the  quarter growth of 0.1% and this could cause the Pound fall vs the Euro and the US Dollar.

Therefore, if you’re in the process of converting Sterling into another currency then I would be inclined to act prior to Thursday’s interest rate decision.

Having worked in the currency industry for 15 years I am confident that with my experience I am able to help you with the timing of your transfer as well as offer you bank beating exchange rates. A small percentage of difference can be rather large depending on the size of your transfer so feel free to email me directly with your personal requirement and I look forward to hearing from you.

Tom Holian teh@currencies.co.uk