With a series of Brexit speeches from Cabinet members planned in the coming weeks this Pound Sterling report discusses how these could affect exchange rates, as well providing an update on other factors that could affect GBP exchange rates this week. The table here shows the difference between the high and low points for a number of currency pairings in the last month:

Currency Pair% ChangeDifference on £200,000
GBPEUR3.40%€7,500
GBPUSD4.00%$11,500
GBPCHF4.50%CHF 11,500

Is another crash on the way?

Last week equity markets fell pretty dramatically. The US market dropped 5%, the worst week in two years, plus the FTSE100 and German DAX also fell down almost 5%. This started 10 days ago when there was an unexpectedly sharp rise in US wages. This which has cast doubt on the theory that inflation and interest rates would rise only slowly and instead woke up the idea that rates could climb steeply. This change in view had a dramatic impact on equity markets and in turn the value of some currencies. The future expectation on interest rates is a key influence on the currency markets so this topic is very much something to continue to watch.

Prime Minister Theresa May speaking regarding current Brexit position

UK Brexit update

Tomorrow we are expecting a key speech from MP Boris Johnson in the first of a series of speeches by Cabinet members on Brexit. This could potentially be a non-event in the eyes of the currency market but with so much at stake if Mr Johnson gets pulled into conversations off topic fireworks could follow. This is something to be very aware of as a potential driver for markets this week.

There are other large speeches expected in the coming weeks with regards to Brexit to equally watch out for, including Prime Minister May on Saturday. EU Brexit Secretary David Davis and International Trade Secretary Liam Fox are also due to hold speeches this month, all of which could give insight to what the future for UK PLC could look like and therefore impact the Pound.

 

Within a 36 hour period at the end of last week we saw GBPEUR rates change by nearly 2% giving Euro buyers an additional €4,250 on £200,000 if timed well.

Cost of no-deal Brexit starts to climb

The cost of Brexit been potentially leaked this last week with a government paper assessing the impact of a no-deal Brexit. It suggested that the government will need to borrow £120 billion more over the next 15 years in the case of a no-deal, something that could be very damaging and could easily impact the value of the Pound if that was how negotiations concluded.

UK data improves

Over the last week we had a surprise announcement from the Bank of England which upgraded its UK growth forecasts to 1.8% this year and next. This sent the Pound higher as it nearly reached an 8 month high last week. This however was short lived as Brexit negotiations took centre stage on Friday and we saw levels fall to end the week.

UK Consumer Price Index data to drive Sterling

Later today we have Consumer Price Index data due which is expected to show a slight contraction. This fall, if confirmed, will probably result in the value of the Pound dropping making things more expensive to buy in Europe. Something to maybe consider if you are currently in the market for euros.

For more information on how future data releases could affect your currency exchange call our trading floor on 01494 725 353 or email me directly at hse@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.