Today the Bank of England are set to release their latest interest rate decision, quarterly inflation report followed by a speech by Governor Mark Carney. Only 2-3 weeks ago many forecasters were suggesting it was extremely likely a hike would occur today, however with a recent flurry of disappointing economic data releases (Retail Sales, inflation and GDP) the chances of a rate hike of diminished.
Before an event speculators second guess the decision and therefore buy and sell the pound which impacts the value of the currency. With the pound overall losing value over the last 2 weeks, even though the pound has started well this week, I believe speculators have sold off the pound in anticipation that a hike wont occur. Therefore the decision itself could be a disappointment leaving the markets fairly flat, however Governor Mark Carney’s speech is something all clients converting pounds should keep a close eye on.
For people that are buying or selling a large amount of pounds for the first time, possibly for a property purchase abroad, it’s important to understand that the Governor of the Bank of England’s stance has the potential to have a major influence on exchange rates. My personal opinion is that this event wont be positive for the pound. I believe the Governor will keep his cards close to his chest and continue to state Brexit developments will impact monetary policy, therefore a hike is likely for this year but wont give any timescales.
If you are buying a foreign currency short term, the currency company I work for has been operating for 18 years and offers fantastic exchange rates. If you would like a free quote feel free to email me on firstname.lastname@example.org. If you would like to go ahead there after, it will take you 5 minutes to register and I should be able to buy currency on your behalf shortly after.
For clients selling a foreign currency to buy the pound, it’s important to analyse the other currency that you are trading. For example, if I had US dollars, there is a strong argument to see how far the dollar will strengthen before trading, where as if I had Australian dollars, the commodity based currency is struggling due to global events therefore I would actually sell sooner rather than later.