With the currency markets moving every two seconds, it can be vitally important to be aware of the driving factors behind the changes in currency exchange rates. In the table below we have shown the difference in buying £200,000 at the high and low points for this year to date for a number of currencies.

Currency Pair% ChangeDifference on £200,000
GBP/AUD+2.73%AUD $9527.64

What factors are currently impacting GBP exchange rates?

Both financial and tabloid headlines have been dominated this week by next Thursday’s general election and the factors surrounding it. Since Sunday night there have been a number of debates and prominent polls that have impacted Sterling exchange rates, particularly against the Euro and I think that those with an upcoming currency requirement involving the Pound should keep a close eye on similar events.

A question and answering session for both Jeremy Corbyn and Theresa May with Jeremy Paxman late on Sunday night offered Sterling some support as neither candidate particularly outshone the other, but since then two prominent polls, one from YouGov and the other from The Times, have both indicated that the race for Number 10 is a lot closer than previously thought.

Neither poll gave the Conservatives a clear lead and both implied that the Labour party is gaining ground in this election, which isn’t what many had expected when the election was initially called. Should these polls reflect the actual outcome the Conservatives may not even win the most seats let alone a majority of the vote, which would cause issues for Sterling during such a key time for the UK economy.
Political uncertainty is one of the main drivers of currency movements and in the lead up to political elections it’s opinion polls that are watched closely for indications of the potential outcome.

This is why we’ve seen Sterling fall to some of the lowest levels seen against the likes of the Euro, and moving forward I’m expecting to see this trend continue unless the polls once again reflect a clear majority for the Conservative party, so feel free to get in touch if you wish to be kept up to date on this topic.

Was Theresa May’s no-show a mistake, and how could it impact GBP exchange rates?

The stand-out event this week has been May’s decision not to involve herself in the BBC’s election debate, with Amber Rudd (Home Secretary) stepping in on her behalf. May’s political rivals lined up to lambast her for this move which could work against her in terms of popularity so close to the actual election, but at the same time perhaps not involving herself was a good move, as the debate has since come in for criticism.

Boris Johnson labelled the discussions an ‘echo chamber for left-wing views’ and at times the 7 panellists appeared to talk over one another in an unprofessional manner. It’s now up to the public to decide but in the meantime the Pound is being impacted by the negative press May is receiving and the Conservatives lead is slipping in opinion polls.

What issues are affecting the Pound outside of politics?

The resilient British consumer has kept the UK economy ticking over since Brexit to many analysts surprise, but as the lack of wage growth compared to the rate of Inflation begins impacting the economy, we’re beginning to see results which could offer us an insight into how the economy will perform in future, which of course ties into the Pounds value.

Just yesterday Nationwide announced that UK house prices have fallen for the 3rd consecutive month for the first time since 2009. Annual price growth is now down to 2.1% which is the slowest rate in 4 years, with affordability pressures being blamed for the cooling off in the housing market.

Yesterday Billionaire Financier George Soros warned that Brexit talks could take up to 5 years which would also spell bad news for the UK economy in the long-term, as the current government is hoping to have them wrapped up within 2 years.
In terms of economic data there is only one news release today for the UK specifically. Construction PMI data is out at 9.30 which will evaluate sentiment within the sector. The figure is expected to show a drop from April so expect to see a larger than expected drop result in the potential for further Sterling weakness, potentially pushing the likes of GBP/EUR down towards to lower end of its Year-To-Date range of 1.1350 – 1.1950

Thank you for reading today’s market report, I would appreciate any feedback you have and would be glad to reply personally. Feel free to e-mail me here.


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.