The positive sentiment surrounding the pound that we saw last month as the No-Deal Brexit was ruled out appears to have waned through April, with most GBP exchange rates now trading towards the lower end of recent ranges.

Currency Pair% Change (Month)Difference on £200,000
GBPEUR0.66%€1,528
GBPUSD2.27%$5,854
GBPAUD0.84%AUD $3,090

Cross party talks between Conservative and Labour leaders are continuing behind the scenes although rumours are that they’ve hit a deadlock, and another political party have now been thrown into the mix which could complicate things further and therefore, impact the pound. Nigel Farage’s Brexit Party is performing well according to polls, with much of their gains in the lead up to European Parliament elections in May being put down to departing Conservative supporters. This could be another headache for UK Prime Minister May and could influence GBP exchange rates so those of our readers with a currency requirement involving the pound should be aware of this topic.

Despite the pound trading towards the lower end of recent trends, it did see a slight improvement on Wednesday especially against the euro, when Tory Backbenchers voted against amending long standing rules that would’ve allowed for another vote of confidence regarding PM May’s position. The vote was forced due to grassroots pressure regarding her position as her approval rating is continuing to decline, and despite the rejection the 1922 committee (Conservative Private Members Committee) has requested that she’s clearer regarding her planned departure date.

GBP Falls after Wage Growth Data Disappoints

Which factors could influence GBP exchange rates moving forward?

Economic data is taking a back seat to politics at the moment as Brexit updates remain the key driver of GBP value. To Demonstrate this, just yesterday morning it was announced that British Retail Sales rose for the first time in 5-months during April, which is a huge positive for an under pressure area of the UK economy.

When we consider that March's figures hit the lowest levels in almost a year and a half, yesterday’s positive figure would usually give the pound a reason to climb but markets remained unchanged.

 

Aside from cross-party talks regarding Brexit, and the potential for another vote on PM May’s Brexit deal, I think that next Thursdays raft of economic data releases could influence GBP exchange rates despite politics being followed more closely in recent times.

At 12:00 next Thursday the Band of England’s (BoE) Interest Rate Decision will be released along with its Asset Purchase Facility update, Inflation report and also the Minutes afterwards which will outline the BoE’s monetary policy plans. Outgoing governor of the BoE, Mark Carney will also be speaking which could cause rates to move also. UK Inflation levels have been at or above the BoE’s target rate for some time now, and I personally think that a hike is more likely than a cut which could push the pound higher. I wouldn’t expect any changes for some time due to the ‘wait and see’ approach adopted for the last few years, but forward guidance implying a hike in future could influence the pound in a positive way.

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