Pound makes late surge
29 November, 2017
By close yesterday it seemed that GBPEUR was starting a negative trend again with negative data and investors heavily favouring the Euro. However, with news breaking later in the evening that the UK and EU had finally agreed a settlement on the Divorce bill saw the Pound surge 1.5 cents. With the agreed figure being in the region of 60 Billion Euros, triple the amount the UK had originally offered. It seems Mrs. May has found her magic money tree again.
These gains however could be short lived, with news that Germany’s Chancellor, Angela Merkel, has started coalition talks again with her allies from the last government it could be only a matter of time before Merkel takes her seat as the head of the German Government. As possibly the strongest economy in Europe, this provided a boost to the Euro and saw it claw back its losses from the back end of last week.
Negative forecast have become a trend for Sterling, with now both RBS and UBS predicting GBPEUR to get close to parity, or at least as low as 1.05 in the coming months. This does not fill investors with confidence and leaving market sentiments with the Euro, in fact since 30th November 2016, Sterling has lost 6% to the euro with the rate then at 1.18. For those of you waiting for things to improve before deciding to purchase, should the analysts be correct in their predictions, you could see a 6% increase on your property purchase. In money terms, a property costing £100,000 will cost you £6,000 more then compared to rates today. This, coupled with increasing property prices, ever increasing your costs. Have you got funds in reserve to cover for these costs?
With a busy week of currency news and speeches in the US continuing , yesterday, Fed Chair Nominee Powell, painted a positive picture for the USD. Pointing to a current GDP figure of 2.5% and more positive signs going forward accelerating the chances of a rate hike. With markets pricing in 90% chance of a rate hike in December. Should this happen we could see USD strengthen and see the rates drop between 2-4%. If you have a USD requirement in the future why not take advantage of a forward contract today to secure your USD in advance.
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