Over the last 12 months people that have converted euros into pounds have been receiving fantastic exchange rates. Since the UK public decided to vote out of the EU GBPEUR exchange rates dropped approximately 15-18%.
For people that are still holding onto euros hoping for improved rates to buy sterling, I believe this strategy in the months to come could become costly. Below are my key reasons.
The ECB last week confirmed they would be extended the quantitative easing program which devalued the euro even though the tapered the program by €30bn.
US growth figures exceeded expectation last week which indicates that the Federal Reserve will raise interest rates in December. As EURUSD is the most traded currency pair globally, if the US dollar strengthens the euro tends to weaken.
Forecasters are suggesting that the monetary policy committee from the Bank of England will raise interest rates to 0.5% this Thursday which would strengthen the pound. I’m not convinced this will happen this week and I believe that the Bank of England are more likely to hike early next year. Nevertheless currency investment should reach the UK.
Lastly the most important event that I believe will strengthen the pound against the euro are the Brexit negotiations. Both parties have announced that decisions need to made, and Theresa May announced last week that the UK and EU are close to negotiating a deal in regards to EU citizens rights, which means the UK are one step closer to stage 2 negotiations (trade negotiations).
For clients that are holding onto euros to buy pounds I would strongly recommend getting in touch to discuss how we can assist you with your currency transfer. The company I work for offer fantastic exchange rates, rates that my clients cannot achieve by going through there own bank. For more information email email@example.com.