November brought with it a number of key market moving events for Sterling exchange rates. Firstly, the Bank of England decided to raise interest rates to from 0.25% to 0.5%. Although this would usually be well received by the markets, the Pound actually weakened significantly following this announcement. The reason behind this was that the commentary from Governor Mark Carney painted a bleak outlook for the UK economy, and instead of suggesting that interest rates would steadily climb over the years ahead, which had been widely expected, he suggested there may only be two further hikes over the next 3 years.
Another key event followed towards the end of the month when Chancellor of the Exchequer Philip Hammond delivered the Budget.
This did little to lighten the mood for Sterling, with the main disappointment being caused by the downwards revisions of UK growth forecasts for the years ahead.
GBP/EUR exchange rates in November
GBP/EUR interbank exchange rates fluctuated by over 3% during the course of November. This equates to an additional €7,000 on a £200,000 transfer for those buying in France, or an additional £5,500 on a €200,000 transfer when selling to move back to the UK, if the transfer was timed at the peaks of the month. This just highlights the importance of being in touch with a currency broker to alert you as these spikes occur.
Although December may appear to be a quiet month with Christmas festivities being the focus for many, this is certainly not the case for the currency markets. The topic of Brexit is really heating up now, and in just over 2 weeks’ time on 14th-15th December, all 27 EU leaders will meet to discuss whether the UK can move on to the second stage of negotiations - trade talks. Many topics need to be addressed and decided before this can happen, including an agreement on the amount the UK will pay for the Brexit “divorce”, as well as coming to a decision on the Irish border dispute.
Also on 14th December, the Bank of England will meet to deliver their decision on any changes to the UK’s interest rate, and although no change is expected, the minutes following this usually creates volatility for GBP/EUR exchange rates.
Please note that exchange rates quoted within this report are interbank rates of exchange. These are used to give an accurate picture of the market but unfortunately these are not dealing levels.