Sterling continues big gains; good time buy euros, dollars and more.

Pound sterling has hit a new 11 month high against the euro this week, with the currency continuing its strong recovery in the early weeks of 2021. A number of factors seem to be behind the gains seen so far in the pound that has helped push the currency to 1.15 against the euro, 1.40 against the US dollar for the first time since April 2018 and over 1.25 against the Swiss Franc also a 11-month high. Here are some of the reasons why the pound has been so strong recently.

The UK leading the race to vaccinate the population

So far, over 15 million of the UK’s most vulnerable population have been vaccinated, which is around 25 out of every 100 people living in the UK. These are strong numbers compared with the rest of the world, only Israel and the UAE have vaccinated at a faster pace. This has given confidence that a successful vaccination programme will allow the UK to soon start to ease lockdown measures providing a boast for the economy with many businesses able to reopen after months of closure. What seemed like a gamble to delay the second vaccine by 12 weeks is now starting to be supported by the scientist. By delaying the second vaccine the UK have been able to offer the first vaccine to more people. The gamble could prove to be masterstroke.

Post Brexit realignment

Prior to the global pandemic Brexit was the big talking point when analysing pounds sterling’s value and outlook for over 4 years. For majority of this time sterling’s valued suffered as a result of the Brexit uncertainty, with a no deal or hard Brexit feared for so long. Now all deadlines have passed and the UK is officially out of the EU with a deal in place (how good is open to opinion still) the gaining realisation that all is not as bad as feared for the UK now not governed by the EU. Confidence is now gaining momentum providing the pound with another reason to recover the losses seen during the years of debating Brexit.

The Bank of England is less likely to go negative with interest rate.

Ahead of the last BOE meeting it was feared that the policy members may look to cut interest rates from 0.1% and into negative territory for the first time. This would have undermined the pounds value with a drop in the rate against other currencies likely if a cut was announced. However, the BOE voted to keep rates on hold and provided a positive prediction for the UK economy in the coming months.

How long these positive drivers remain in place will likely determine how far the pound will go against other currencies. As good as things are now, nothing should be taken for granted or expected to last for ever. So while the rates are at these levels, it is welcomed by UK businesses paying for goods or services in another country or our privates clients buying properties abroad or paying bills. Buying $100,000 in March 2020 would have cost £87,719, today the same amount would cost £71,942, and difference of £15,777. At the same time €100,000 would have cost €96,153, while today it would cost you £87,719 a difference of £8,434. After a difficult 12 month, these savings are welcomed by all those exchanging pounds.

Next week UK Prime Minster Boris Johnson is due to provide an update on how he expects to lockdowns to be eased in the UK with schools expected to be the first to reopen in March, what he outlines for the rest of the county and economy could either boast or dampen confidence which will be equally reflected in the direction pound will go.

If you are looking to exchange any currency now or in the future don’t hesitate to get in touch with us today to find out how we can make your currency transfer less confusing and less costly than it needs to be. Give us a call today on +44 (0)204 524 7280