Finance
Currency outlook
T
he GBP/EUR exchange rate traded in a wide range over the past month, with the pairing trading in a range between ¤1.17 and ¤1.20 as a result of heightened Brexit uncertainty. EUR/GBP, meanwhile, fluctuated between ¤0.85 and ¤0.82 while GBP/USD held at $1.30.
What boosted the pound? After closing January on a high, after the Bank of England (BoE) opted keep interest rates on hold following its first policy meeting of the year, the pound swiftly fell out of favour again at the start of February. This came as fears of a no-deal Brexit were reignited by Boris Johnson, in a speech outlining his vision for a new trade agreement with the EU. The PM struck a decidedly combative tone, calling for a free trade agreement, but refusing outright to pursue any kind of alignment with EU regulation. Terms which will be unconceivable to the EU as it seeks to ensure the UK maintains a ‘level-playing field’ with the continent. Sterling would quickly bounce back however, with GBP/ EUR striking a fresh 2020 high following the resignation of Sajid Javid as UK Chancellor, on hopes a new team at the Treasury will be a little more willing to loosen the purse strings. The euro meanwhile, has been plagued by a run of gloomy data in recent weeks, which alongside concerns over the impact of the coronavirus led to a sustained sell-off of the single currency. Three things to watch out for in the month ahead… The currency market is always moving, but we’ve picked out the three things we think will have the most impact on the GBP/EUR exchange rate in the month ahead. UK Budget – 11 March After being delayed due to the General election, the Boris Johnson’s government will finally publish its first Budget next month. Markets are hoping for an ambitious Budget, with increased government spending helping to boost domestic growth and easing pressure on the Bank of England to cut interest rates. Potential impact on GBP/EUR: POSITIVE
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Brexit Trade Negotiations Next month will also see the start of UK-EU trade negotiations. With both the UK and EU seeking to strike a tough stance on trade, clashes between the two sides
In the current climate of concern, Jose Almeida of Currencies Direct looks at potential changes to GBP/EUR... seem inevitable, likely stoking fears of a no-deal Brexit at the end of 2020. Potential impact on GBP/EUR: NEGATIVE
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European Central Bank (ECB) rate decision – 12 March The European Central Bank (ECB) is due to deliver its latest rate decision on 12 March. While no policy changes are expected from the bank this month, expect to see the euro take a knock if the ECB expresses concern about the coronavirus’ potential impact on the Eurozone economy. Potential impact on GBP/EUR: NEUTRAL/NEGATIVE Top tip for making your money go further If you need to move money to or from Portugal in the weeks ahead, here’s our March top tip for getting a better return for your currency transfers. Take advantage of Forward Contracts The GBP/EUR exchange rate has experienced some notable volatility over the last four weeks and this can make planning a future transfer somewhat tricky. However, leading currency providers like Currencies Direct offer a range of handy services to make it easier to achieve the rate you want. Forward Contracts are one such service. These allow you to fix an exchange rate for up to a year, ensuring your transfer amount will remain the same regardless of any movement in the market. Forward contracts are particularly useful when purchasing a property abroad, as the often lengthy process can leave you significantly out of pocket if there is an unfavourable shift in the exchange rate between making an offer and finalising a purchase. Please get in touch if you want to know more about the latest news or how it could influence your currency transfers. Since 1996 we have helped more than 275,000 customers with their currency transfers, so why not give us a call to find out more. For detailed information, please contact the local office by phone or visit the Currencies Direct website to register to receive regular updates on the currency markets. And do mention Simply Algarve magazine as how you heard about us. T: +351 289 395739 W: currenciesdirect.com/portugal
March 2020
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