Will Sterling recover against the Euro? (Tom Holian)

Sterling Euro exchange rates have seen big falls since Thursday’s Bank of England announcement to cut interest rates from 0.5% to 0.25%.

The central bank also decided to increase the volume of Quantitative Easing by an additional £60bn to total £435bn.

The impact of the interest rate cut combined with the additional stimulus of QE has caused Sterling to drop by over 2 cents against the Euro as investors are concerned about the health of the British economy since the Brexit vote.

The vote to leave the European Union has sent shockwaves through the currency market and we have seen falls of over 13 cents since the vote just 5 weeks ago.

The Bank of England have also suggested that further interest rate cuts could come in order to avoid the UK falling into a recession.

Indeed, the data releases from the Purchasing Managers Index for both construction and more importantly services have come in hugely worse than expected showing worryingly levels of contraction.

The next meeting for the Bank of England will not come until 3rd November but the central bank can meet again if it becomes necessary.

Next week I expect Sterling to fall further against the Euro as manufacturing and industrial production data is published.

Also on Tuesday the NIESR releases its estimate of UK GDP for the last three months and any signs of a further slowdown is likely to cause further losses for Sterling vs the Euro.

If you have a currency transfer to make and want to save money on exchange rates compared to using your own bank then contact me directly for a free quote. Tom Holian [email protected]

I look forward to hearing from you.