This Pound Sterling forecast examines factors that could affect GBP exchange rates this week, which is dominated by the UK general election on Thursday. The below table shows the market movements for a number of currency pairings in the last 30 days:
|Currency Pair||% Change||Difference on £200,000|
Poll after poll has seemingly whittled away the 20-point lead Theresa May held over Jeremy Corbyn at the point a Snap General Election was called just 50 days ago.
A YouGov poll released yesterday suggests Theresa May could now lose her (4 seat) majority in the House of Commons, walking away with just 305 seats, 21 short of the 326 needed for an overall majority. This signifies a worrying time for Theresa May; the findings of the results from the same poll conducted on Saturday gave the Conservative party 308 seats, a loss of 3 seats in 4 days.
If the general election result on Friday morning shows the Conservative party to have lost their majority in the House of Commons I believe we may see GBP/EUR rates weaken significantly as markets price in the uncertainty of a political shake-up so close to the start of Brexit negotiations on June 19th. The extent to which GBP may shift could be similar to the surprise overall majority victory for David Cameron in 2015, which saw GBP gain by almost 4 cents against EUR and 6 cents against USD over a very short period. If Theresa May loses her majority in Parliament we may see an equal and opposite decline for GBP across the board with the possibility of testing key 1.10 and 1.25 resistance levels for EUR and USD respectively.
As the results for this General Election will begin to slowly creep in throughout the early hours of Friday morning, outside of trading hours, it may be wise for those with a currency requirement to contact your account broker in advance of the election to discuss how a limit order may help you take advantage of market movements.
Month on month Industrial and Manufacturing production figures are released on Friday morning at 9:30am. Strong gains are anticipated, with Manufacturing Production expected to rise from -0.6% to 0.9% and Industrial Production from -0.5% to 0.8%. If these data releases fail to deliver the significant improvements expected we could see GBP drop across the board against major counterparts.
For more information on how future data releases could affect your currency requirement call our trading floor on 01494 725 353.
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