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Sterling Loses Ground Against its Counterparts

Matthew Farrell - Currency Broker - Sterling Loses Ground Against its Counterparts
Written by
Matthew Farrell

Currency Broker
T: +44 (0)1442 892 060

Yesterday was a relatively choppy day for sterling crosses which saw the pound lose ground against the majority of it’s counterparts bar the Dollar. GBP/EUR started the day in the low 1.18’s and finished in the mid 1.17’s. GBP/USD started the day in the high 1.24s and finished around the same level after losing around half a percent throughout the morning. However, the pound regained the ground it lost in the early part of the session following FED chair Yellen’s testimony in the afternoon.

Sterling fell throughout the morning due to worse than expected UK data. Average earning figures came in worse than expected which, following Tuesday’s inflation data that had showed the fastest rise since June 2014, caused concern for sterling investors. The reason behind this is should inflation continue to rise faster than average earnings it means the cost of living increases quicker than earnings, in turn meaning there is less ‘real money’ being spent which has a detrimental knock on affect to the economy.

Following a poor morning against the Greenback, the pound managed to claw back all of the ground it lost following Chairwoman Janet Yellen’s testimony. Yellen suggested that the FOMC will be looking at tightening monetary policy in their ‘upcoming meetings’ reducing expectations that they could raise interest rates at their next meeting.

GBP/EUR exchange rate graph

GBP/EUR exchange rate graph

GBP/USD exchange rate graph

GBP/USD exchange rate graph

What this means for you

I’m sure hearing that living in the UK will be more expensive is not the best news. However, if you are looking to buy a property abroad, over the last month GBP/EUR has risen by over 4 cents. To put that into monetary terms, those looking to buy €400,000 would save over £12,500 if they were to buy now rather than at the beginning of the year.

If you don’t have the funds available, a forward contract may be helpful. This is when we can lock in the current exchange rate for you for a transaction that can take place up to two years into the future. You secure the forward contract by lodging 10% of the total settlement. This contract can also be useful for budgeting when buying overseas.

Get in Touch

If you are looking to exchange currency and are worried about the current volatility in this economic climate, get in touch with your expert, knowledgeable broker at Foremost for a free, no obligation consultation (01442 892 060) or you can get in contact via our website.

Today’s Data

There is no key data to note today. However, this afternoon at 12:30 the ECB monetary Policy Meeting Accounts will be announced. This is a record of the ECB governing board’s most recent meeting. Any unexpected comments from the board after these figures could cause adverse movements for the Euro against any of its major counterparts.

Out in the US this afternoon, there will be building permits figures, housing starts changes and jobless claims count. Any deviation from the expected figure could cause movements for USD against any of its counterparts.

Matthew Farrell
Currency Broker
+44 (0) 1442 892060

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