By Luke Dyson
For the week to date, sterling is holding its strength across the board, with GBP/EUR at the top of its current multiple month range bound market. However at present, it still lacks the strength to break out and make new highs just yet.
The Bank of England has announced increasing levels of concern as inflation continues to rise and they are now looking to raise interest rates ahead of other major banks in the US and Euro zone, this is in an attempt to get back to pre covid crisis levels and normalize this setting ahead of other banks across the world to give GBP a competitive advantage in comparison to other currencies at the time. Following this announcement Citi bank have announced they are fully backing sterling and believe some good strength is to come to finish off the year on a high for GBP/EUR!
Late last night Boris made another announcement referring to his “plan B” winter covid strategy as the weather begins to worsen. He announced not all changes will be made at the same time but there will be adaptations to the current rules as we enter the colder period. With suggestions of compulsory face coverings in a number of locations as well as a potential work from home protocol, as it’s expected covid hospitalizations are likely to soar as we begin to enter October. A third booster jab has also been thrown into the mix to keep higher risk people at maximum protection.
Given the positivity from the bank of England regarding sterling strength moving forward it looks all to be set and plain sailing for the foreseeable future, but again the uncertainty for Covid related issues is still massively at bay and still could throw a spanner in the works again if these restrictions become tighter (another knockdown) or even case numbers begin to spike.
If you are looking to buy currency with GBP consider talking advantage of the current strong market as this easily could be turned as we enter the higher Covid risk couple of months, resulting in costing you more than initially expected.