Buying Euros expected to become dearer after Monday (Joshua Privett)

After a stable final two weeks in August for the Pound and a fantastic initial two days in September for anyone with an upcoming Euro a Dollar requirement, it will now see its first tests over the next couple of weeks.

First, the good news:

Like clockwork we have come to expect that late on Friday afternoons Sterling begins to slip against the Euro and the various Dollars due to the phenomenon of profit-taking in the markets. Traders dealing with the 8-9 figure transactions at high street institutions have to choose a stable currency with which to store their profits in for the weekend. Quite understandably, due to the recent ‘leave’ vote the Pound is quite low on the list of desired currencies.

With the sudden fall of demand on Friday afternoons the Pound’s value plummets, with the gains made from Thursday’s strong manufacturing figures eaten into as a result. However, with trading commencing once more on Monday, normal activity resumes and the flood of demand for the cheaper Pound tends to offset these repeated losses. Unless any sudden political curveballs come out on Sunday, I fully expect buying Euro rates to be back above 1.19, GBP/USD to bridge 1.33, and GBP/AUD to begin testing the 1.75/6 boundaries.

However, with the new month comes another warning for a repeat performance of the Pound during the first two weeks of August, where GBP/EUR fell by almost 6 cents as just one example.

The first two weeks of each month see the heaviest releases of data showing economic performance infromation for all major global countries, with the value of their currency shifting based on the positive or negative nature of the results. Last month the UK’s was so immediately concerning that an interest rate cut was implemented, as well as an extension of emergency financial stimulus to the economy.

This month a further cut is not expected, however, the poor performance in key sectors last month – business confidence, the financial services sector, and UK investment – are set to perpetuate this negative spotlight on the Pound.

Furthermore, new data sets which could not be looked at until now following the Referendum, such as unemployment changes, are expected to put further pressure on those considering a Euro or Dollar purchase.

Eurozone growth figures on Tuesday are the main external red-flag for anyone considering purchasing Euros in the coming weeks. These are expected to reflect the continued turnaround in growth fortunes since January for the single-market.

Wednesday will have UK manufacturing production figures. In contrast to Thursday’s overwhelmingly positive business sentiment surveys for this sector (mainly based on future demand expectations brought forth from a cheaper Pound), these will be concrete growth figures for the sector which will not have registered much improvement yet. I expect this return to the  present rather than excitement for an improved outlook a few months from now to undercut the Pound further, creating greater expense for anyone with a Euro, USD, or AUD buying requirment.

With a quiet Monday expected to see some marginal gains for the Pound, and with the potential stumbling blocks in the immediate term, and over the course of this data heavy two week period, Euro and Dollar buyers alike may be wise to seize the recent gains in their favour after the bell rings for the first day of a new week of trading.

If you wish to discuss the options open to you to take advantage of any such peaks should they emerge on Monday, or if you wish to devise a plan of action for a future transfer aimed at maximising your currency return, you can contact me over the weekend on [email protected] or fill out the form below.

Whether you are selling or buying Sterling, I have never had an issue beating the rates exchange offered through alternative avenues, so a brief conversation could save you thousands on an upcoming transfer.

Furthermore, if you have a requirement later in the year and wish to secure the current exchange rates available now for your purchase you can do so using what is commonly termed as a forward contract, which is essentially a ‘buy now, pay later’ option.

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