And then there were two

By Ashley Finill

The Conservative party leadership race has now entered its final stage this week as now there are only two candidates left standing, the ex-chancellor Rishi Sunak and the foreign secretary Liz Truss. Over the course of the debating Rishi and Penny Mordaunt had been the favourites for the position receiving the most votes throughout each knockout stage but with each stage a standing candidate lost out and with it their supporters having to lodge their vote with someone else, and third favourite at the time Liz Truss pipped Penny to the post as she received an 8-vote swing over Mordaunt dumping her out of the leadership race. Last night, a poll by YouGov was released which shower Liz Truss now as the front runner in the contest. The results of a poll found that Truss would beat the former chancellor by 62% to 38%. Since this poll was released it has added fuel to claims that tactical voting has played a part in the leadership race throughout those voting stages. Liz Truss has put forward her pitch to become the new Prime Minister as she has said that she will make big tax cuts to help the sharp rising living crisis in the UK and to curb inflation. Although this would be much welcomed news to most of us, Kier Starmer of the Labour party has suggested such a move could plunge the UK into an era much like the 1950s. Rishi Sunak has refused to match Liz Truss on tax cuts as he warns that early reductions would fuel inflation. The contest concludes he 5th of September.

Economy and Market update

This week the inflation figure in the UK rose again to hit a fresh 40-year high to 9.4% and economists are predicting that come October the inflation rate could rise to a record 12% as it is reported that energy prices are set to rise again. With energy, fuel and food costs getting more and more expensive in the UK, spending money has started to become tighter thus rising inflation in the UK. Eyes will be on the Bank of England’s next meeting to see where the monetary policy committee will look to raise interest rates again in the UK for a fourth time, however this may be unlikely given that the interest rate has not been risen on so many occasions in such little space of time, but the pressure will be on the bank as we trundle on through these unprecedented times. With uncertainty brings hesitation from investors to invest their money into sterling and as a result we have seen sterling in a little bit of limbo over the past couple of weeks trading with the currency moving sideways within a cent a half range. The dollar has been heavily backed by investors as seen with record gains on the Euro and the pound, gaining 15 cents on Sterling and 14 cents to parity on the Euro.

The ECB yesterday announced a rate hike by 50 basis points, doubling by expected hike of 0.25%. As a result, the euro gained ground on sterling, losing just over half a cent from exchange rates within a matter of moments. Sterling gained back those losses on the Euro by the end of Thursday’s trading, but it does outline the pound vulnerabilities to the Euro. Since Friday of last week sterling has been steadily falling from the highs seen over the pasts couple of months.

Forward Contracts

Those of you with a currency requirement in the coming weeks/months may not want to take the risk in these uncertain times. At A Place in the Sun Currency, we have you covered with our popular forward contract option. This allows you to secure all your currency needed for your property purchase at today’s rate, with only a 10% deposit of the sterling amount. You can set the full settlement of the euros at the date of completion or when all your funds are available, giving you peace of mind that during this time you are not at the mercy of the everchanging, unpredictable currency market. Please see below a link for more information, also feel free to contact your currency consultant for more information and friendly guidance.