Will the pound weaken in May? Well, on observing the last seven years, we notice the old adage of “sell in May, go away”, ringing true for sterling on six out of those seven occasions. Our FX research teams have been busy analysing the data, to try and give our clients the most relevant facts to support their decision making.
The average move lower we have noted is around 2.4%, from the two-month period start of May to end of June. On a £100,000 transaction, that move lower at current interbank rates equates to €2700, remember this is just an average. Whilst the period does include the Brexit vote, the figures do not lie, and this is a great example of the inherent potential risks of not having an appropriate FX strategy in place.
Will this continue for the pound in May 2023? There is certainly the ingredients for a bumpy start as we have both the European Central Bank and the Bank of England interest rate decisions, which with both central banks predicted to raise interest rates, could throw up some volatility on GBPEUR rates as well other currencies connected to either of those.
In early April, sterling to Euro exchange rates re-tested 2023 highs of the year against the Euro and the multi-week highs against the US dollar. As we end the month, it has been less positive however, and we appear likely to end lower on those pairings than where we began.
To assist with the planning and execution of your transactions, we provide a comprehensive analysis of the latest FX forecasts, across a very broad range of different sources, to give a wider-range overview of where the FX markets are headed.
The next two weeks are offering plenty of risk events from a currency market perspective, with the potential to change the outlook on interest rates and therefore FX rates.
If you have any questions over any of the points outlined here, or wish to double check you have an appropriate FX risk strategy in place for your currency payments, please contact me directly using my contact details below, with a brief outline of your transaction.
A phone number is usually helpful too, as a call is the best way to not only explain everything, but also for you to ask me questions.
You can if you prefer call me on 020 4506 5672 (00 44 204 506 5672 from overseas).
I am Associate Director at one of the UK’s largest FX brokerages and with 14 years’ experience handling both corporate and private client FX transactions, will be most interested to assist you with any information and support you might be seeking.
Jonathan Watson
LinkedIn profile here https://www.linkedin.com/in/jonathan-watson-46591057/
