For clients buying Euros with pounds it has seemed like a real uphill struggle in recent weeks as markets digest the latest expectations for both the Bank of England and the European Central Bank to start tightening monetary policy. Clients looking to buy or sell the pound and Euro should be very much aware of how important these considerations are in trying to predict what kind of rate they can expect in the future. If you are considering a large volume currency purchase (£10,000 to the multi-millions) and wish for some assistance in the timing and planning of the deal please contact me Jonny directly on firstname.lastname@example.org.
Central banks like the Bank of England (BoE) and the European Central Bank (ECB) decide whether to raise or lower interest rates for their respective economies. Raising or lowering rates has a big influence on the currency markets as it makes the currency that concerns more or less attractive to hold by investors. Investors can be anyone from pensions funds and other central banks to private individuals or currency speculators.
If the market believes interest rates will be higher in the future they will buy that currency in anticipation of it being stronger int he future. This is why sterling has been spiking against the Euro lately. Expectations for the Bank of England to raise interest rates have been higher than at any point for many years.
However Euro buyers with pounds rubbing their hands at this news should take note, in the Eurozone too there are also increasing calls much longer term for the ECB to raise their interest rates. This would of course help the Euro to strengthen further, Euro buyers with pounds could find there are actually more calls for the ECB to change their policy than the UK.
Tomorrow we will get the latest news on how the ECB view their economic policy in the afternoon. This will be closely watched by the markets for news or indications as to just what direction the ECB will take. Overall I expect to see more positive news from the ECB since the Eurozone economy is performing much better than the UK.
Only yesterday falling Inflation lead to the pound sliding as it made the chance of any immediate interest rate hike by the Bank of England much less likely. For now Euro buyers with pounds should be very much aware of the position they occupy being made even more tricky as sterling remains weak and the Euro gets even stronger.
If you have a transfer buying or selling the Euro tomorrow’s ECB news will be very important. Waiting until the event has happened can be too late as you can see spikes and opportunity happen very quickly. If you have a transfer to consider and wish to look at some strategies and options to help maximise your transfer please feel free to contact me Jonathan Watson directly by emailing email@example.com.
Thank you for reading and I look forward to hearing from you.