Recession on the way?

By Luke Dyson

For the week to date we have seen a relatively stable market for GBP/EUR , with minimal intra-day movement following on from the sudden drop last week after the interest rate announcements.

Sterling is however holding its strength at present on the basis Europe is now struggling with two energy sources. The first being the gas pipeline now being fully turned off from Russia to Germany but also the water levels on the Rhine riverway in Germany drastically dropping due to the recent heatwave across Europe, now struggling to generate natural energy.

Moving forward for sterling there is a large amount of uncertainty in the weeks and months to come. Mainly due to two factors, the first one being inflation and how the Bank of England are looking to tackle it, and the second being who will be the next Prime Minister.

It has been announced by the BoE that they are still looking to aggressively hike interest rates further in an attempt to combat inflation. It is said this will peak in November at 2.5% under the current plan. These hikes are typically positive for sterling however it has been stated due to the rate hikes the UK could enter a recession likely to begin in December, which could last for more than a year.

If you have an up and coming currency requirement please consider taking advantage of sterling’s current strength as this could be very short lived with the looming recession in the background. With the market still above the multiple month range we have seen recently, it is still a very good buying opportunity for GBP/EUR. Please get in contact with your currency consultant today to discus strategies of how we can limit your currency risk in the near future.