Since Theresa May announced she would be stepping down as UK Prime Minister last month, sterling currency markets have generally suffered as a result with the threat of a ‘no-deal’ exit from the EU growing more prevalent, which has typically seen sentiment in the currency weaken.
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It could be argued that sterling markets have generally priced in such an outcome, with mid-market levels for the GBP/EUR pairing currently fluctuating around 1.12, approximately 5 cents lower than the 21-month highs experienced back in May.
As the Conservative leadership race continues to put pressure on the GBP, the second round of voting set to commence this afternoon could influence market movement, if there are any reports from the polls of shift in the most favoured candidate to succeed May.
It will be interesting to see whether there are any drastic changes to the distribution of votes, with Boris Johnson currently favourite and successfully gaining more than 105 votes in the previous ballot that would guarantee him a place in the final 2. There are also candidates still in the running such as Rory Stewart, who remain strong in the polls and are against a no-deal separation from the EU, which could see the final round of voting between 2 candidates with contrasting viewpoints.
It could be a busy week for UK economy data this week and with the addition of the Bank of England’s (BoE) latest interest rate decision, sterling currency markets could experience volatility as a result. The Governor of the Bank of England Mark Carney is set to speak tomorrow afternoon, in the wake of the latest retail and inflation figures and with the latest interest rate decision on Thursday, any commentary will be closely monitored by investors.
It could therefore be a busy week for GBP, so clients with an upcoming transfer can keep up to date with the latest releases by staying in touch with their account manager here at Foreign Currency Direct.
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