The pound has fallen against the Euro this morning after UK inflation suggests there is still little need for an interest rate hike to curb inflation. Speculation is also growing over the outcome of Thursday’s Scottish Referendum, as although the No campaign seem to have gained a marginal advantage in the last week, the vote is still too close to call and sterling has been suffering from a sell off as a result.
My gut feeling is that Scotland will vote no, and the pound will have a relief rally towards the end of the week (either if exit polls show a No vote is likely or the No result is published), however the implication of a Yes vote are still completely unknown, and could result in a big fall for the pound over an indefinite period. Whilst I don’t expect the financial Armageddon that some are suggesting, it is a concern for anyone moving sterling to euro in the short term.
We do also have the Bank of England Minutes published tomorrow, although I am expecting no change from the 7-2 split from last month, and UK unemployment is expected to show a slight fall. Again though I think any benefit for sterling may be suppressed until we see the results from Scotland.
EU inflation is also out on Wednesday so a weak showing could put the Euro under even more pressure against most currencies like the USD, and in the evening we have the latest Federal Reserve rate decision and economic forecasts. If this points towards an improving US economy, and a greater chance of the Fed moving towards an interest rate hike, we could see the Dollar strengthen further versus the euro and the pound.
All in all we are in for a very busy and volatile few days, so if you need to make a currency transfer, and want to get the best exchange rate, then feel free to email Colm at email@example.com and I would be happy to explain how our service works to save you money.