Pound sterling hits new highs

Good news for Britain's sending money abroad this week as pound sterling continued to make significant gains across the board including currencies like the euro, US dollar and Swiss Franc. The British pound has been lifted by optimism that the UK is making the right steps towards a recovery from the huge economic downturn caused by the global pandemic.

Exchanging pounds into most currencies in 2020 became incredibly expensive as the currency was one of the biggest casualties at the start of the pandemic, so this is a welcome and timely boast for those looking to transfer pounds into another currency. If this is you, why not give us a call today to get a free no obligation quote on +44 (0)204 524 7280.

Things started well for the pound this week when Swiss bank Credit Suisse raised its forecast for pound sterling against the Euro, citing negative political developments in Europe along with a slow rollout of the vaccine throughout the bloc.

Foreign exchange strategist at leading UK high street bank NatWest, on Wednesday then said they are constructive on the British pound’s prospects against the Euro and Swiss franc in the first half of 2021, citing the UK’s vaccine-led drive towards economic recovery. There was still room for caution from NatWest as they also expect sterling resurgence to be short-lived with them predicting the UK economy and currency will show signs of struggling under the new post-Brexit dispensation later in the year.

So far however it continues to be a strong start for pound sterling in 2021. Gains made against the euro with rates of 1.14 seen for the first time since May 2020, while GBP USD reached 1.3860 for the first time since April 2018, and was back up to 1.23 against the Swiss Franc for the first time since March 2020 when the pound fell sharply due to the global break out of the Covid-19 pandemic. Its proving to be a solid start British pound in 2021 helping increase the returns when exchanging pounds.

Last week The Bank of England poured cold water on rumours they were about to cut UK base interest rates from the already record low rate of 0.1%. The BOE stated there was no chance of another interest rate cut in the near-term, whilst also stating a strong economic recovery would soon take hold in the UK owed to the country’s leading vaccination programme. Being able to avoid another interest rate cut which would have likely taken the UK into negative rate territory for the first time, in contrast to the European Central Bank which continue to offer negative interest rates, add to this a problematic economy that is struggling to shows significant signs of a recovery and provide a adequate vaccination programme needed to aide the any recovery. The differentials between the UK and Eurozone are building and, in the UK’s and pounds sterling’s favour.

The BOE also added that despite their optimism for the UK to perform well later this year, should the post-pandemic bounce back in economic activity fail to transpire, the Bank would perceivably cut interest rates and boost quantitative easing once more. Any signs of a change in the Banks expectations to a more negative tone is likely to reflect badly for the pound.

While the first 6 weeks of 2021 has so far seen strong gains for GBP, much seems reliant on the recovery aided by the vaccination programme, where the UK seems to leading from the front. However still with a long way to go and the unknown risks the new variants may carry disrupting a recovery, it is still too early to say how long and far sterling’s gains can go. If you are considering exchanging currency in the near future and want to know how we can help you complete your transfers at a great price, safely and securely then give us a call today to speak with one of our friendly experts on +44(0)204 524 7280.