This report will address the factors that are likely to affect Pound Sterling exchange rates today, and during the week ahead. The table below displays the market movements for a number of GBP currency pairings over the last 30 days:

Currency Pair% ChangeDifference on £200,000
GBP/EUR3.80%€8,240
The GBP/EUR exchange rate fell as low as 1.1234

GBPEUR falls to fresh 8 year lows!

Throughout yesterday’s trading session the Pound fell to fresh lows against the Euro as UK Prime Minister Theresa May announced the UK's partnership with the European Court of Justice will come to an end when the UK leaves the EU. The European Court of Justice’s role is to ensure member states comply with laws set out by the EU and to settle any disputes between countries.

The Government's white paper released yesterday suggests the UK will take back control of making its own laws however it has been heavily criticized as this is another stumbling block that UK and EU negotiators now need to overcome when discussing EU citizens’ rights within the UK.

If the whitepaper stands EU citizens will not be protected, which in turn leads me to think that the EU and UK will not overcome this problem and trade deal negotiation’s will never take place.

Some of the leading investment banks including JP Morgan, Citibank and Morgan Stanley recently have been predicting GBPEUR could reach parity by 2018 and I have always been of the opinion this would not occur as the UK economy is stronger than the Europeans. However yesterday’s white paper leads me to believe that Theresa May’s stance of ‘no deal is better than a bad deal’ could actually materialise in the years to come. If this is the case the investment banks could actually be right.

UK GPD to take centre stage

This morning at 9:30am the UK are set to release their latest Gross Domestic Product numbers. GDP gives a good insight to the strength of the economy and since the start of the year the total value of goods and services measured quarterly have shown a decline. This is no surprise as investor confidence released earlier this week is down compared to before the referendum vote over 16 months ago.

I expect the release to cause minimal market movement as the quarterly GDP numbers to be released at 0.3%, however if there is any alteration I expect the number to drop to 0.2%, which could result in Sterling weakness. For clients that are purchasing a foreign currency short term, it may work in your favour to make arrangements now as further falls look likely.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me at drl@currencies.co.uk.

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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.