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Sterling Overview (Matthew Vassallo)
As we finish the first official trading day of 2016, I thought it would be poignant to consider Sterling’s positon in the market and how it may fair again the major currencies during 2016.
On a whole the Pound performed above expectation for much of 2015, with highs against the EUR, USD & AUD providing some excellent buying opportunities. Whilst the UK recovery has remained on track, it has not proved as infallible as many thought. For much of last year Sterling defied any hiccups to rise to a near 10 year high against the EUR & AUD, and a 6 year high against the USD. However, as we moved into the last quarter we did see the Pound come under pressure against all of these currencies, in particular the EUR & USD.
GBP/EUR rates are now trading around 1.35, whilst Cable has nosedived under 1.50. The losses against the USD were somewhat expected due to the US FED’s decision to raise interest rates but with the Eurozone still struggling to gain any sustainable investor confidence, I felt we may see the Pound fair slightly better.
The point is that regardless of how an economy is performing, there will always be outside factors that are going to affect exchange rates. This makes it very difficult to predict how, or when a market trend will evolve. Of course we can paint a picture and quite often this provides an accurate guide but if rates do hit these highs, as we saw last year, then in my opinion they should be taken advantage of.
Looking ahead and whilst I expect the UK recovery to remain firmly on track during 2016, the Bank of England (BoE) have already confirmed they do not expect interest rates to rise this year. This is likely to handicap any major advances for Sterling and therefore we may find the Pound struggles to reach the highs we saw last summer.
There will still be opportunities for those clients looking to purchase and it is important to stay in close contact with your currency broker ahead of any major currency transfer, to ensure you are maximizing the market value available.
If you have an upcoming currency requirement and would like to be kept up to date with all the latest market movements, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact us directly on [email protected]
Happy New Year to all our readers!
Source: http://www.poundsterlingforecast.com/2016/01/04/sterling-overview-matthew-vassallo/
