Following the more positive sentiment surrounding Brexit recently, Theresa May's speech was received well, but did little to affect the Pound's value. This report discusses recently Brexit news and events that could impact GBP rates this week. The table here shows the change over the last month for a number of GBP currency pairs:
|Currency Pair||% Change||Difference on £200,000|
Theresa May’s speech on Friday has given us more insight into the type of Brexit the UK will ultimately be aiming for. The speech has been warmly received by both sides of the Tory party in the aim for a more ‘pragmatic’ approach to target ‘binding commitments’ and ‘binding obligations’ to ensure a smooth future relationship with the EU.
This failed to spark huge interest in sterling since the mood had become slightly more optimistic over the general outlook on Brexit anyway, we are seeing more evidence of an overall deal emerging that is neither that hard nor soft. The fairly flat reaction on sterling is reflection of not just the lack of final clarity but also the possibility of something that isn’t in the end, all the bad.
Unfortunately, it seems any big movements in the value of sterling itself will be resigned to when we get finer and firm details of just what any final overall deal will look like, this might take us to the Autumn or the end of 2018. Clients holding the pound or looking to buy can take clue from elsewhere in the meantime.
The EU Summit on the 22-23rd March is a very important date for sterling this month as is the Bank of England interest rate decision on the 22nd. Much of the recent strength for sterling has been unwound as previous high expectations placed on it fail to materialise. Markets had begun to price in a much softer Brexit and the chance of the UK raising interest rates in May, these two events will give us greater clues as to the likelihood of positivity (or not) for the pound from these matters.
Whilst today there is no key economic data released the pound could remain sensitive to Brexit news and we have a Bank of England Monetary Policy Committee Member, Andy Haldane, speak at 18.15. He is not expected to make any bold statements but this could set the tone of the next Bank of England meeting on the 22nd March.
UK Services PMI (Purchasing Managers Index) data yesterday showed an improvement in the index to 54.5 from 53.0 previously. Sterling did not react massively to the news and more global economic and political factors could be more important before the bigger news later this week.
Friday is very important because we have the latest Trade Balance figures. With the pound finding favour on the back of an improved outlook but recently retreating, clients looking to buy and sell the pound should be very carefully monitoring the latest trends and themes.
Friday at 1pm we have the latest NIESR (National Institute of Economic and Social Research) GDP (Gross Domestic Product) news which could influence sterling rates as economic growth is a key area of concern for investors.
Whilst Brexit news and economic data are central to the pound this week, we could also see sterling rates driven from more global factors. In particular the ECB (European Central Bank) interest rate decision on Thursday and the US NFPR (Non-Farm Payroll) and Unemployment data on Friday.
For any sterling transactions the pound remains range bound against most currencies trading in familiar ranges, this will not last forever so making plans sooner than later could be best.
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 firstname.lastname@example.org.
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