By Luke Dyson
Following on from a very volatile last week’s trading, we have seen sterling take quite a tumble from its recent highs.
Across the week sterling lost just over 2 cents against euro, heavily driven by the fact the ECB cut interest rates from 2.75% to 2.5%. Although a rate cut would normally weaken the currency as less investors will be interested placing money there, we saw the complete opposite occur as swiftly after the rate cut European leaders agreed to spend billions more investing into defence which in turn will likely shoot inflation up in the short term.
Moving forward for sterling-euro we are likely to see some major volatility as the weeks progress. With now significant risk President Trump will place tariffs on the EU for sales of goods in America, but also the Russia-Ukraine war, which despite Trump & EU leaders’ efforts to get a ceasefire, still seems to be in full swing with no end in sight yet.
Although sterling lost some traction against the euro, against the dollar we have seen some good gains being made.
This was down to significant uncertainty with new tariffs being place on Canada , Mexico , China which may significantly impair a lot of US businesses.
But separate to this we saw non farm payroll come in at 151k new jobs created, below the expected 160k.
Also unemployment figures on the climb now at 4.1%; all quite negative factors for the dollar in the immediate short term.
Whether you are buying or selling, dollars or euros, or other currencies, please get in touch with A Place in the Sun Currency to discuss a strategy to limit your risk in the next few weeks. For the dollar it’s a very good time to buy, and although the euro rate has dropped slightly it still is worth considering locking in for the peace of mind, as both these rates could be significantly different in the near future.