The Pound begun the week in a volatile fashion yesterday, and traded in over a 1-cent range against the Euro after testing the 1.1650 handle once again.
We have now seen the GBP/EUR exchange rate test trading levels around 1.1650 at least 4-times in the last 3 months with yesterday being the latest example of this pattern. Yesterday morning during the earlier hours of trading GBP rebounded from the 1.1650 once again demonstrating that there is resistance at this level, so if you’re planning on making a transfer involving GBP/EUR, it’s worth keeping an eye out for this particular rate.
Sterling has also climbed recently against the US Dollar, which is based on a combination of Sterling strength coupled with US Dollar weakness.
As risk sentiment globally has increased recently, the US Dollar has cooled off after benefiting earlier in the year from concerns of economic downturn.
There is also uncertainty as to how much higher the FED Reserve plans on hiking interest rates, which could be another reason for the dip in the Dollars value.
This morning’s focus on the strengthening Pound may come as a surprise for some of our readers as just last week there were warnings regarding the UK economy over the next year. The OECD (Organisation for Economic Cooperation and Development) last week reported that the UK will suffer the biggest downturn in economic growth out of all the advanced economies.
Of the G7 group of countries, both the UK and Germany are predicted to contract but the UK is expected to contract by the greatest amount of all 7 countries. For reference, the G7 is made up of the US, UK, Canada, France, Germany, Italy and Japan.
Next year the UK economy is expected to drop by 0.4% followed by an increase of just 0.2% in 2024.
Last week the OBR (Office for Budget Responsibility) also predicted an economic contraction for the UK next year. The OBR’s prediction is for a steeper drop of 1.4% so the Pounds strengthening late last week and yesterday morning may be short lived should the UK economy show signs of shrinking at a greater level than the current predictions.
If you wish to discuss an upcoming transfer involving the Pound and would like to discuss timings and exchange rates do feel free to get in touch with me (Joe). You can email me directly on [email protected] with any questions you may have regarding our currency exchange service also. We can also set up rate alerts and automatic orders if you’re targeting particular trade levels along with other useful tools.