By Luke Dyson
Over the course of the week we have seen a gradual rally for sterling to Euro, now being called a relief rally, following its previous aggressive drop.
With the US equity markets now beginning to recover, global investors are starting to prioritise the dollar again as the safe haven currency, and so moving their investments from euro to dollar. In turn this helps the Sterling to Euro rate recover (a couple of cents this week) as the euro loses traction.
Earlier this week, Trump had spooked the market by insulting the Federal Reserve chair Jerome Powell by calling him a “loser” and insinuating he’s going to be sacked for his decision to hold interest rates, potentially putting the US economy at risk of a decline.
However, positively for the markets , Trump come forward and made an announcement to confirm he had “no intention of firing him”, putting more stability into the market and in turn bolstering the dollar back up slightly.
Following on from this news, we may see some larger positive movements for sterling to Euro in the next few weeks. As US treasury Secretary Scott Bessent made a statement saying the current tariff situation is “unsustainable” and will likely result in a tariff de-escalation in the short or medium term.
Overall for sterling it seems there could be a light at the end of the tunnel depending how the next few weeks are played out. Given some gains have been made from where the market crashed to, I would say it’s not a bad time to buy some euros now, just on the basis of where the market was a couple of weeks ago. If not all of your euros, you can look into buying half or a chunk of them to limit your risk, as again these gains that have been made could be very short lived – primarily down to whatever Trump does next.
With very little economic data out this week (although UK retail sales came out better than expected this morning), the main driving factors will likely be political. Please get in touch with your A Place in the Sun Currency to discuss this and get a plan to help limit your risk whilst also maximising any opportunities.