Mark Carney’s comments: Bank of England measures
The Bank of England governor Mark Carney spoke yesterday about the most recent inflation report. His rhetoric was similar to that of their recent meeting earlier this month. It appears as though Carney is more in favour of Quantitative Easing rather than an interest rate cut and this gave the pound a boost.
He also suggested that he would not necessarily change interest rates if the UK heads towards a no deal Brexit. However, he did suggest that they would be prepared. Carney has always spoken about the dangers of Brexit and his stance has remained the same since the referendum.
If the Bank of England do cut interest rates or introduce further Quantitative Easing this could result in sterling weakness against the euro. As this could happen in the future this could cause issues for the pound.
Leadership election and the impact on Pound vs Euro
Turning the focus back towards the political landscape and there is a lot of uncertainty surrounding the UK at the moment. This is causing problems for sterling exchange rates against the euro. It appears as though Boris is the leading contender and he is confident that the UK will leave the European Union by the end of October.
I do not believe he will be able to make this happen as time is running out. If he wins the leadership election he will become the new Prime Minister on 23rd July. This then leaves a week before August which sees Europe almost shut down during this period. Then it’s just two months to go before the Brexit deadline. Therefore, I cannot see the UK getting a plan organised during this short period of time.
During this uncertain period of the leadership election I think we will see sterling continue to struggle. Therefore, if you’re planning to buy a property abroad in the weeks ahead it may be worth buying a forward contract which allows you to fix an exchange rate for a future date.
If you would like a free quote when buying or selling euros, then contact me directly for a free quote and I look forward to hearing from you.