Rising tensions between Israel and Iran continue to escalate as the US bombed nuclear sites on Saturday. As geopolitical uncertainty grows, traders seek safe-haven currencies, which has seen the pound weaken against the euro.
In response, Iran has threatened to shut the Strait of Hormuz. As one of the world most important oil chokepoints, the strait is the highway for one fifth of the world’s oil.
Closing it would push Brent crude oil prices even higher from the current $78 per barrel, potentially weakening the pound further against the dollar, since oil is priced in USD.
Why this matters?
Last week we saw the GBP to EUR rate fall for the fourth consecutive week in a row, falling 2.5% from highs in late May which is bad news if you are sending money to Europe. For example, the difference from the highs of May to now is around £2,500 on a £100,000 transfer*. *Example based on current mid-market rates and may not reflect your actual exchange rate. Speak to a Lumon specialist for a personalised quote.
The pound could experience on-going volatility against safe-haven currencies, if you’re planning to move abroad, buy a property overseas, or transfer your pension, a forward contact would allow you to lock-in an exchange rate and guarantee the costs of your purchase.
Key weekly events:
- Bank of England addresses market:
Bank of England governor Andrew Bailey addressing the markets so look for any clues as to his comments which may influence monetary policy moving forward. - First quarter GDP figures released:
We end the week with one of the biggest announcements with GDP figures for the first quarter so if you have a currency transfer to make involving the pound then keep a close eye on the data.
If you’re planning a transfer this week, whether it’s a property payment, investment, or sending money to family speak to a Lumon currency specialist today. Call +44 (0)204 506 5672 to explore your options.
