Pound Rallies to give UK buyers early Christmas present
22 December, 2014
Sterling enjoyed a strong week last week, giving better exchange rates for Brits sending money abroad against most major currencies.
Against the Euro we saw a surge to near the best rates since 2012, as UK retail sales posted a surprise increase on Thursday. There were also gains against the US Dollar on Friday, and with other currencies weakening (the Swiss Franc, where exchange rates improved following the move to negative interest rates; the Canadian Dollar, which suffered after lower inflation figured on Friday; and the Norwegian Krone, which has weakened significantly due to falling oil prices) we have some attractive rates in the market for many currencies.
The Pound also benefitted from a surprise from UK public sector borrowing numbers on Friday, with November’s £13.4bn figure much better than the expected £15bn.
Economic Data out before Christmas
We still have UK GDP figures out (tomorrow) before the Christmas break, although there is no major data today. The Pound will be vulnerable to any GDP reading below the expected final figure of 3% growth for the third quarter this year. In general we see the UK’s high deficit, which the government is really struggling to control, and political instability in the lead up to May’s General Election, as the risk factors for the Pound in the coming weeks and months. While other currencies have had their own problems this has flattered sterling and current preferential rates may not last long, so consider taking advantage by fixing your exchange rate for your upcoming requirements before the turkey goes in on Thursday morning. Forward contracts are a great way to protect yourself against downturns in the market so give us a call if you would like to talk through your options.
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