Sterling forecasts provide hope for Irish exporters

Irish firms exporting to the UK were given a glimmer of good news yesterday as Investec Ireland said sterling will strengthen again later this year as long as the UK votes to stay in the EU.

In new forecasts, the bank projects sterling will rise 73.5p against the euro by the end of the second quarter and firm slightly again, to 73p, by the end of September.

That compares with the rate of around 78p sterling was trading at yesterday.

A strong sterling against the euro has previously helped Irish firms and the wider economy because it boosts the attractiveness of Irish goods and services when sold into Britain.

Jobs-rich exports of goods and services into the UK account for around 15% of all of Ireland’s exports.

Amid the uncertainty over the Brexit vote on June 23, sterling had weakened significantly against the euro to around 83p at one stage last month, down sharply from 70p last November.

Philip O’Sullivan, chief economist at Investec Ireland, said that sterling had reacted as a barometer to the UK opinion polls and betting odds over the Brexit concerns.

He said there was some surprise that opinion polls did not react sharply to the intervention of President Barack Obama in the Brexit debate last weekend, when he clashed with Boris Johnson — outgoing London lord mayor and leading political proponent for Britain to exit the EU.

Sterling nonetheless headed for its first monthly gain since November against the euro.