Sterling drops from peak

By Matthew Boyle

It has been a busy few weeks for the Pound, seeing it reach near two-year highs against the Euro earlier this month following the announcement of the French election, and then the European Central bank cutting interest rates.

Last week however saw those highs fade, with rates dropping back by over half a cent amidst news that UK inflation is back under the Bank of England’s 2% target, greatly increasing the chance we will see them cut the UK interest rate in August.

In what is a relatively quiet week for data don’t be surprised if this slow decline continues. With the UK general election around the corner, political uncertainty may also take hold putting further downward pressure on GBP buying rates.

With the gambling scandal further damaging Sunak and the Tory party’s hope of continuing in government, it looks increasingly likely we will see a Labour government soon take power. Historically, Labour governments haven’t generally boded well for GBP strength. With the UK election next month, and as interest rate cuts become more heavily priced in for August, the Pound may have seen its best in the short term.

Given GBP/EUR pricing is still very close to the best it has been in two years, and with forward contract pricing currently so favourable, now may well be the time to consider locking in your upcoming Euro purchase.

Speak to your consultant at A Place in the Sun Currency today for some friendly guidance on how to make your money go further – or register for our service without cost or obligation if you are yet to do so.