Will Sterling’s recent gains be short lived against the Euro and the US Dollar? (Tom Holian)

The Pound made some gains vs the Euro and the US Dollar towards the end of this week as the Bank of England confirmed a split of 5-3 in favour of keeping interest rates on hold.

In recent months there has only been one MPC member that has voted for an interest rate hike so Thursday’s announcement came as a shock to the markets.

The reason given by the 3 members was that of rising inflation which is currently running at 2.9%, which is close to the highest level in almost 4 years.

The Bank of England’s primary objective is to keep inflation under control and the target is 2% so the disparity at the moment is rather concerning.

Indeed, with Average Earnings having fallen recently this is leading to a rise in the cost of living and long term if inflation is not kept under control this could be a real concern for the British economy.

However, the good news for the Pound is that if an interest rate hike is coming then this could lead to strength for Sterling exchange rates.

However, we are now just days before the Brexit negotiations begin and my opinion is that the discussions will be both difficult and protracted.

The problem is that there are 27 member states all with the same aim which is to discourage others countries from leaving the European Union. Therefore, I cannot foresee the talks going in the right direction.

As yet the UK has not decided whether it will opt for a hard or a soft Brexit and until this is decided this is likely to weigh heavily on the Pound.

As we go into next week I think these recent gains for the Pound will be short lived so if you need to send funds abroad then it may be with taking advantage of this recent spike.

If you would like to make a currency transfer and would like to save money when buying currency compared to using your own bank then contact me directly for a free quote and I look forward to hearing from you. 

Tom Holian [email protected]