This week we have seen the Pound fall further against the Euro as the probability of further Quantitative Easing (QE) from the Bank of England increased. Earlier in the week Mr Posen a member of the Bank’s Monetary Policy Committee (MPC) became the first member of the MPC to openly call for further QE since November. However, today his tone seems to have softened suggesting that the other MPC members may be able to convince him that his calls for further QE are premature.
Whilst further QE is by no means a foregone conclusion, the increased risk of further QE has weighed significantly on the Pound. Despite a raft of bad news from the Euro-zone; including the downgrading of Spain’s credit rating from AAA to AA1 and the mounting costs of the Irish bailout of Anglo Irish bank, the Euro has appreciated strongly against the Pound, trading above 0.86p (GBPEUR 1.15).
Further falls in Sterling could be seen, particularly if support for further QE gains momentum. Many analysts are now predicting that GBPEUR could fall further, with 1.12 being noted as the next downside level.
Given the current uncertainty surrounding the Pound, you may deem it appropriate to hedge against any future falls in the Pound’s value. Currency Matters can suggest a number of products and strategies which can eliminate currency risk. Please do not hesitate to contact the dealing team to discuss any upcoming currency requirements.
The exchange rates mentioned in the above email are based on the current interbank rate. Please do not hesitate to contact the dealing team on +44 (0) 1695 581 669 for a live quote.