28th September 2023
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Spotlight: Volatility in GBP/EUR continued throughout August

The Pound/Euro exchange rate experienced on-going volatility throughout August, slipping to a two-month low before climbing to briefly strike a one-year high.

Fortunately the experts at Currencies Direct are here to help you make sense of what happened to the GBP/EUR exchange rate in August and what steps you can take to protect your money from further volatility.   

What’s been happening?

The Pound fluctuated lower in early August following the Bank of England’s (BoE) interest rate decision. The British central bank raised rates by a quarter of a percent, but some analysts had been expecting a larger half-point hike, so this smaller move put pressure on Sterling.

Meanwhile, the Euro enjoyed its negative correlation with the US Dollar as the latter currency faced selling pressure.

As the month went on, GBP/EUR began to gain ground. New data showed that the UK economy unexpectedly grew by 0.2% in the second quarter of this year, while record-high wage growth and persistent inflation raised the likelihood of more BoE rate hikes.

Some upbeat economic data from the Eurozone failed to prevent the Euro falling against the Pound, with a recovery in the US Dollar pressuring the single currency.

At the end of the month, GBP/EUR briefly spiked to a one-year high before falling sharply lower. The latest PMI surveys showed that UK business activity unexpectedly contracted in August, raising recession fears.

New British retail sales data added to GBP investors’ concerns, as rising interest rates and declining consumer demand weigh heavily on the UK retail sector.

The Pound managed to gain ground again at the end of the month, however, with GBP/EUR ending August higher overall amid speculation that the European Central Bank (ECB) may be near the end of its rate hiking cycle.

The month ahead

Looking forward, the interest rate decisions from the BoE and the ECB are the focus this month.

First up is the European Central Bank, with the Governing Council set to meet in the middle of the month. There is huge uncertainty over whether the ECB will raise rates or not, which may lead to heightened volatility. If the bank raises rates, the Euro could climb. A pause, on the other hand, could dent EUR.

The Bank of England then meets one week later. Markets are expecting the BoE to deliver its 15th consecutive interest rate rise, which may lift Sterling. However, if policymakers express concern about the risks of a UK recession, the Pound may find its gains limited.

Navigating currency volatility

When moving money to and from Spain, the value of your transfer will be largely dependent on what is happening in the currency market.

If you are moving money to Spain you will benefit from a weak Euro, while anyone repatriating funds will want EUR exchange rates to be stronger. While the difference may only be a few cents, this can make a big difference when transferring larger amounts.

However, as the currency market is highly volatile it can be extremely difficult to judge when it will be most favourable for you to make a transfer. This is particularly true when moving money through a bank as you will only be able to make a transfer at the current exchange rate.

How can Currencies Direct Help?

Currencies Direct offers excellent exchange rates, expert support, and a range of transfer options. We also have an exclusive deal with CaixaBank which means you’ll never pay receiving charges in any Spanish bank.

Our dedicated currency experts are on hand to keep you up to date with the latest market movements, giving you all the insights you need to time your transfers effectively.

Currencies Direct is also fully licensed to operate as a currency provider within the EU. So you know your money is always covered by the relevant authority.

Pop into your local branch and speak to one of our friendly currency brokers to see how much we could help you save when transferring funds to and from Spain.

About Currencies Direct

Currencies Direct have been helping individuals and businesses save time and money since 1996 with excellent exchange rates and no transfer fees.

With a team of over 550 currency experts and 20+ branches across Spain, Currencies Direct are never far away when you need them.

They’ll keep you up to date with the latest market movements so you can pick the right time to move your money. They also offer a range of specialist services that can be tailored to your individual requirements.

If you have a currency requirement coming up, get a quote now to find out how much you could save.

This a Spotlight Advertising Feature in collaboration with Currencies Direct.

ALSO READ: Spotlight: How to save money when buying or selling property in Spain as an expat.

ALSO READ: Spotlight: Protect your money from the volatility that plagued GBP/EUR in July.

ALSO READ: Spotlight: Three tips to save you money when making a currency transfer to Spain.

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