Sterling is enjoying some fresh buoyancy at the moment with all eyes on the impressive gains seen against the Euro with rates hitting 1.19 today presenting the best levels to buy Euros with pounds in 2017. Against the US dollar the pound is also higher and the likelihood is that the pound could even rise further as markets seem to shrug off the fears over Brexit and ponder if actually life outside of the EU will not be all too bad. The big question as always is will this be a short term spike to take advantage for clients buying a foreign currency with the pound? Or should clients looking be looking for an quick exit strategy?
In my opinion the pound is going to remain very susceptible to shocks from unexpected news which could move the rates. If you are looking to buy the pound then I would not be giving up hope just yet, hopefully there will be some further improvements after a couple of tough weeks. The Article 50 negotiations, the triggering of Article 50 and in some cases some worse economic data could all contribute to a decline in the value of the pound. Most commentators suggest the worst is not over for sterling, this recent buoyancy should not be taken too much for granted!
The recent improvement is not necessarily the result of the pound doing better, more the other currencies weakening. In particular the Euro has weakened lately which is not a good sign for the future for clients holding Euros. I would suggest that the Euro will come under further pressure in the coming weeks as we approach the Dutch and French elections. However analysts expect that the pound will probably weaken further before it gets stronger.
The likelihood of the pound rising significantly are in my opinion slim. There is still tremendous uncertainty over the Brexit and this will manifest sooner or later for sterling. If you have a transfer to make in the coming weeks or months why not start preparing for your exchange rate now? To discuss strategy and options please contact me Jonathan on email@example.com.