By Ashley Finill
This week there has been a reversal in exchange rates as Sterling has lost over a cent against the Euro and over two cents against the Dollar.
Sterling made steady gains against the Euro and Dollar throughout this year due to the rapid rollout and take-up of the vaccine, which has now slowed due to most of the population being double jabbed. However now the EU’s vaccination rollout has ramped up and is now in full flow and vaccinating EU citizens at a rapid rate, focus has shifted to the Euro, which is likely a factor in Sterling’s turnaround in fortunes this week. Also, rising cases are applying pressure in a range of sectors throughout the UK. In retail the major supermarket chains are experiencing delivery shortages, with haulage companies also running at a much lower capacity, due to drivers contracting Covid, thus deliveries being delayed and shelves running out of stock. News reports have been running through the week on the food and supply shortages due to the ongoing pandemic, which is likely to influence the economy going forward – not what Sterling needs as it tries to make a recovery from the woes of 2020.
Moving onto travel, next week on the 26th the UK government will release information on which countries are to switch in their traffic lighting system. Most of our buyers are hoping that countries like Spain and France are switched to green to allow Brits to travel to these countries without having to pay for PCR tests. Travellers do need to be fully vaccinated to enter any countries on the green lists, whereas amber countries require entrants to be fully jabbed and to present PCR tests upon arrival and before travelling back.
Yesterday the Federal Reserve announced plans for tapering their Quantitative easing programme over the coming months. News of this broke in the afternoon of yesterday trading and handed the Dollar a boost, adding to Sterling’s fall against the Dollar.
To add to Sterling’s misfortunes, this morning UK retail sales figures have been released positing a wide contraction down; -2.4% following last month’s figure of 0%. It had been expected that retail sales were to come in at 0.3% and as you would expect the market has reacted to this very negative figure with Sterling already falling this morning across the board. Could this be a sign of things to come in the short term with the UK economy suffering to the ongoing pandemic?
Should you have a euro requirement in the coming months it may be worth contacting your account manager today to discuss your options – we have contract options available to you, so that you don’t get caught out in an unpredictable market.