This Pound Sterling report will discusses the events that are likely to affect exchange rates today if you are buying abroad or making a currency transfer. The below table shows the market movements for a number of Sterling currency pairings during the last 30 days:

Currency Pair% ChangeDifference on £200,000
GBPEUR2.8%€6,400
GBPUSD3.6%$9,400
GBPAUD5%AUD $17,120

Irish border agreement boosts Sterling

The Pound has rocketed to a 6-month high against the Euro this morning after the breaking news that a deal has been reached between the UK and EU to move on to ‘phase two’ in Brexit talks. This spike in the Pound’s value means that a €200,000 transfer today compared to the low of this week would now be more than £3,000 cheaper to buy.

Early this morning Jean-Claude Juncker has announced that he believes sufficient progress has been made on the Irish border issue, with no hard border being agreed, a reciprocal deal on EU and UK citizen’s rights and the Brexit divorce bill, which is believed to be in the region of €50bn.

The GBP/EUR exchange rate fell as low as 1.1234

This means that talks in next week’s EU summit can move on to future UK-EU trading relationships, which will be key in determining how the two economies will collaborate post Brexit.

Clients selling Sterling to buy Euros or Dollars were teased by the markets at the beginning of this week, with the Pound enjoying a short-lived spike following rumours of the Irish border situation being resolved, only for these gains to be very quickly reversed once Theresa May announced there was still some work to be done. Even though an agreement has now been reached and the Pound has benefitted, I still don’t believe that we are out of the woods yet and Euro buyers should still be very wary of the potential sticking points that the Pound is going to have to navigate as talks progress in to ‘phase two’.

Production output set to drop

There are also a number of data releases from the UK today that could have an impact on the Pound’s value in the short-term. Industrial and Manufacturing production figures are set to be released for October at 9.30am. September’s figures highlighted the fastest growth in this sector for the whole of 2017 due to a rise in car production, however the estimates for October are set to show a significant fall compared to previous figures which is being put down to the rising cost of oil. If figures come in as expected, then we could see a drop in the Pound’s value for Euro sellers to take advantage of. We also have the NIESR’s GDP estimate at 13.00 and this this will give a good indication of how well the economy has performed over the past three months.

How will next week’s data releases affect the Pound?

Looking further ahead to next week and inflation data on Tuesday morning followed by average earnings for October on Wednesday are likely to be keenly watched by investors. The Bank of England raised interest rates recently from their record lows, but if the expectations for next week’s figures are anything to go by then the cost of living is still increasing, whilst average earnings are set to fall even further below the rise in the cost of goods. Once again if that is the case then there could be some further pressure on the Pound. Whether buying or selling foreign currency, next week looks set to be a volatile one for the Pound and therefore keeping in touch with your account manager here could help you in navigating these uncertain times to ensure you achieve the exchange rate you are targeting.

For more information on how these events could affect exchange rates call our currency brokers on 01494 725 353 or email me directly at rjh@currencies.co.uk.

News

Read more articles

 

Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.