By Luke Dyson
For the week to date we have seen a large amount of negative movement for sterling across the board.
The value of sterling against the Euro has taken a big hit in the last few days, now at levels last seen in June. This is due to many factors now coming to the surface.
Mainly this is down to the rising cost of the UK’s debt repayments as our country is heavily reliant on energy and goods imports. With prices for these sky rocketing across Europe it is putting the UK under massive strain. It is believed this debt burden will become worse as the weeks go on as the government are likely to throw out a safety net to the general population in an attempt to help with daily living due to inflation.
It is also believed the Bank of England will raise interest rates later this month by 50 basis points, which would typically be positive for sterling but in this case would hike the yield paid on government debt, further restricting borrowing, putting the UK under an even bigger squeeze.
For the week to come we could see some increased volatility depending on the outcome of who will be the next Prime Minister. Two candidates remain – Liz Truss and Rishi Sunak – the outcome will be announced Sep 5th around 12:30pm.
With the current situation of the UK’s financial status potentially deteriorating in the weeks to come, is it worth taking the risk and potentially loosing more on the rate following this week’s drop?
Please get in touch with your currency consultant today to see what we can do to limit your currency exposure for the weeks to come.