With Sterling spiking this morning following Brexit news this Pound Sterling forecast discusses the outlook for GBP exchange rates. The table below shows the market movements for a number of GBP currency pairings during the last month:
|Currency Pair||% Change||Difference on £200,000|
Sterling rose across the board yesterday as news the UK will pay more for a Brexit bill filtered out. Reports suggest that a bill of around £40-50bn will be agreed which includes up to £100bn of liabilities for many years in the future. This should pave the way for the EU to accept the UK has ‘made sufficient progress’ and allow it to reach the second phase of Brexit negotiations concerning trade. This will ultimately be decided on the EU summit on the 14th and 15th December.
If you are buying a foreign currency with the Pound this dramatic improvement could be an excellent short term opportunity to maximise your transaction.
The good news and a more favourable view of Sterling has helped the Pound hit some of the best levels in 18 months. Against the New Zealand Dollar (NZD), Rand (ZAR), Australian Dollar (AUD), Swiss Franc (CHF) and even the US Dollar, Sterling has recently risen to the highest levels since the vote to leave 18 months ago.
The Pound and the UK are far from out of the woods however, the EU summit on the 14th and 15th will be key.
I expect the Pound to trade uneasily between now and then as markets scramble to price in the likelihood (or not) of this phase 2 being reached.
Good news that all UK banks had passed the Bank of England Stress tests has also helped Sterling, one of the criteria being able to withstand a recession contributing to a 4.6% fall in UK GDP (Gross Domestic Product data). Sterling’s recent buoyancy is most welcome for clients buying a foreign currency with the Pound and should be carefully considered for more short term requirements. Any whiff of further problems ahead of the EU summit could quickly see these excellent gains undone.
As we approach the end of November we may see ‘month end-flows’ where unexpected closing of open positions can see wholly unpredictable and unexpected swings on exchange rates.
Economic data is delivered today with Mortgage Approval figures and Consumer Credit data at 09:30 am. Mark Carney will give a speech this afternoon but it is not predicted to be a market mover, focusing more on banking standards.
All in all if you have a Sterling transaction the politics of Brexit will continue to be the biggest driver on the rates, if you are considering a transfer please ensure you highlight your requirement to us so that we can keep you informed of the latest news and developments to help maximise the position.
If you would like some more information on how upcoming events could affect your currency transfer call our trading floor on 01494 725 353 or email me directly at email@example.com.
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