With the currency markets moving every two seconds it can be very important when planning a currency transfer to be aware of what could impact exchange rates. Here we examine the factors that could affect Pound Sterling exchange rates over the next few days.

Bank of England intent on keeping the Pound weak?

Yesterday it came as no surprise that the Bank of England voted to keep interest rates on hold at 0.5%. Eight of the nine members of the Bank of England’s Monetary Policy Committee continue to express concern that inflation will remain low and therefore are hesitant to change the base rate without the UK economy showing strong signs of improvement and hitting the growth target of 2%.

Inflation in the UK has now been negative for the second time in October reflecting on the poor performance of the UK economy and the difficulty the MPC (Monetary Policy Committee) have.

The reluctance to change interest rates has prevented Sterling from making any significant headway against any of its counterparts, specifically the Euro where several times this year GBP has found resistance above 1.42

Yesterday’s minutes implied that the Bank of England have intended on keeping The Pound weak for as long as possible. A stronger Pound makes imports cheaper, which is reflected in yesterday’s Trade Balance figures. The reading showed that imports had risen by 5.4% whereas exports had fallen by 1.6%.

UK Data Analysis

Despite the UK economy showing a distinct lack of activity there is some signs of improvement which should be taken as a positive.

Unemployment is now down by over 5%, wages and house prices are rising, the Services and Retail Sector are in good health and over 175 thousand new jobs have been created. This data for the UK is positive and suggests that general confidence in a sustained recovery should still be high although Consumer Confidence has decreased by 0.2% this month.

There is little data out of any significance for the UK today so all eyes turn to next week’s US interest rate decision. I expect that there will be huge volatility in the run up to and during the event so if you wish to hedge your exposure to the markets and prevent losses incurred from the expected movement please call our friendly team of brokers now.

BoE Governor, Mark Carneys Speech

Yesterday at 18:30 Governor of the Bank of England, Mark Carney spoke about his views on the current state of the UK economy. Carney implied that inflation levels will stay low until the second quarter of 2016 with low oil prices and a stronger Pound weighing down on the UK economy.

Those with GBP to sell must be mindful of the MPC’s commitment to a weaker Pound. With yesterday’s reading highlighting the effect of Sterling being up above 1.40 I would personally aim to sell off Pounds before their intentions are reflected on the exchange rates.

To learn more about GBP exchange rates or transferring money overseas you can email me at cxe@currencies.co.uk.


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