Yesterday GBP/EUR broke through 1.18 for the first time since the end of April. Over the course of the last 24 hours the pound has come crashing back down to 1.1680.
Comments from the president of the ECB Mario Draghi slightly weakened the Euro yesterday morning when he highlighted risks to Euro zone growth.
The worrying thing for Euro buyers with sterling, is that Draghi went on to add that with the Euro being a recession hit economy with rising borrowing costs for debt struggling nations they are nowhere near exiting its accommodative monetary policy. Why I say this is worrying is because the Euro has once again weakened against the USD but not the pound. What will happen when positive comments come out of the Euro zone?
Events in the UK where the BoE Governor Mervyn King in his last Financial Stability Report gave a warning that Britain’s banking sector and borrowers remain vulnerable to any increases in global interest rates has ordered an investigation into the vulnerability of Britain’s financial institutions and borrowers to higher interest rates. This has contributed to the pound weakening.
Sterling hit a high of over 1.1906 at the end of April and over the last two months we have seen a decline at one stage by around three cents. When the pound eventually comes out of this range bound will we see the rate move back above the 1.20 level or test the lows we witnessed this year of 1.13? With pressure to remain on sterling I feel that further declines could be around the corner once the new Governor of the Bank of England comes into force in July.
If you are looking at buying or selling the Euro and would like to know more about the rates that we offer then please feel free contact me at firstname.lastname@example.org I offer all of my clients a very personal service and if I know what your requirement is I can explain the options that may be suitable for your own specific circumstances. Thank you for reading. Ben Amrany