Is now the time to buy a foreign currency with the pound?

Over the last few weeks the pound has breached key resistance levels against certain currency pairs. GBPEUR had a period above 1.14 and GBPUSD also known as cable is fluctuating above 1.40. The pound has benefited from a transitional agreement with the EU, average earnings for the first rime in many years outpacing inflation and the Bank of England hinting that an interest rate hike in May is extremely likely.

For people that are buying a foreign currency over the next three months I believe there is a strong argument to buy now. Brexit negotiations are set to continue. The all important trade talks are set to begin alongside the Irish border agreement. The trade talks are arguably the most important part of Brexit and anytime the UK and EU start the initial talks about a certain area of ‘Brexit’ they can’t come to an agreement and therefore the pound falls in value.

The Irish border is a complete problem for the UK and EU. The UK Prime Minister Theresa May has announced that the plans are to keep the Irish border open and not make it a ‘hard border’ however at the same time the UK will be leaving the customs union. The EU have made it clear they will not agree to this therefore you don’t have to be an economist to work out this could also put pressure on the pound.

Have you just made an offer on a property abroad in Europe? 

Property purchases in Europe normally take 1-3 months to complete once an offer has been accepted. With the pound sitting close to the highest levels for buying euros since the start of the year and I expect the pound to come under pressure due to the upcoming Brexit negotiations, I would look to purchase my euros upfront. If your pounds are not available you can use a forward contract which allows you to purchase your euros now and pay later.

If you wish to take advantage and buy your euros upfront I would look to target the European inflation numbers Wednesday morning at 9am as a slight contraction is predicted which I’m not surprised about as the strength of the euro has been improving over the last 12 months.

If you are making a currency conversion in the upcoming weeks or months and would like further information, I would recommend emailing me with the currency pair you are converting (GBPEUR, GBPUSD) the reason for your transfer (business transaction, property purchase) and the timescales you are working to and I will respond to your email with my forecast and the process of using our company [email protected].