Sterling holding up against Euro

3 November, 2017

Grace Rae

Brexit Talks Speed Up

Yesterdays trading day was highly volatile with various spikes happening throughout the afternoons trading. There were some positive Brexit related reports that the EU’S chief Brexit negotiator Michel Barnier had said that he the agenda and dates for the next round of Brexit talks would be set and that he was ready to speed up talks with the UK. This news is certainly Sterling positive as it defuses the threat of a no-deal outcome and the next round of face-to-face talks due to take place on Wednesday next week. Following the news the we saw the pound make significant gains, providing some of the best trading levels seen this month against the Euro and made significant gains against the Dollar.

Markets predicting a 80% chance of an interest rate rise

Sterling has continued to maintain its position against the Euro ahead of the Bank of England’s interest rate decision due at midday tomorrow. The currency has gained quite nicely over the past few days, as market analyst are predicting an 80-85% chance that a rise will occur, increasing the current rate of 0.25% to 0.50% and it looks as though the market has been pricing that outcome. If the bank do choose to increase the interest rate it will be the first time in almost a decade.

Although an interest rate rise for the UK will in theory provide strength to the currency, there is always a chance that the Bank could choose to keep interest rates at the current levels and hold off on a decision to raise them until the next decision meeting due in February next year. So those with an upcoming transfer and sterling in hand, it may be worth considering looking to secure your requirements ahead of the results tomorrow at midday to avoid loosing out on the current rates we have been experiencing and the risk of these gains diminishing should the expectation of an interest rate rise not happen.

Many clients have chosen to remove the risk and have taken the opportunity and secure their currency requirements ahead of the result. However those who are more risk adverse, remember, you have the option to spread the risk and you can secure a portion of your requirement ahead of the results and the remaining amount after. That way still achieving a good rate of exchange if the results don’t follow expectation.