This GBP update examines factors that could affect Pound Sterling exchange rates this week, along with an update on Brexit negotiations and comments from Tony Blair. The table here shows the market movements for a number of GBP currency pairings since the beginning of 2017:

Currency Pair% ChangeDifference on £200,000
GBP/EUR2.07%€4,712.46
GBP/USD6.30%$16,455.60
GBP/AUD1.57%AUD $5250.29

Will the Pound break out of its current trends?

After around a month or so of flat trading for the Pound, the currency bucked the trend last week after reaching both an 8-month low and a 1-month high against the Euro, in just 1-week of trading.

Poor economic data had been weighing on the Pound's value, along with mixed messages as to whether the Bank of England will raise interest rates this year in order to lessen the negative effects of increasing inflation on the UK economy.

The Pound spiked though on Friday afternoon after Brexit Minister, Joyce Anelay acknowledged that the UK will need to pay a ‘fair’ divorce bill in a written to statement to Parliament.

To put these moves into a financial context, the difference between trading at last week’s lowest point compared to its highest would have resulted in a difference of €2500 on a £100,000 Pound to Euro transfer, which highlights the importance of keeping in touch with your currency broker here at Foreign Currency Direct.

UK politicians take centre stage, but not necessarily for the right reasons

The importance of the wording used by the current UK government is of the utmost importance in the current climate, as Brexit negotiations are likely to be one of, if not the biggest mover of GBP exchange rates for now and into the foreseeable future.

The familiar figure of Tony Blair offered his opinions over the weekend and they certainly didn’t go unnoticed. He stated that the Brexit may still not go ahead and that the vote could be overturned, and then yesterday The Times reported that Blair has now made a U-turn regarding his opinion on Jeremy Corbyn and now thinks he could become Prime Minister, after previous writing him off.

Talk of a prolonged period of negotiations, also referred to as a Soft Brexit, from key figures within market hours could well result in a boost for the Pound’s value. Do feel free to register with us if you want to be kept updated regarding any short-term price fluctuations.

Keeping to the topic of UK politicians, yesterday one of the UK’s most important in David Davis was unfortunately ridiculed and used as a meme on social media. The reason for this in case you haven’t already seen the picture, is he turned up to the 1st stage of Brexit negotiation in Brussels without a set of notes which was in stark contrast to the other members of the meeting such as Michael Barnier, the EU’s chief Brexit negotiator.

The aforementioned poor PR moment for Davis resulted in a sell-off of the Pound in early trading even if only subtle, which just goes to show how much the markets are reading into the negotiations.

Lastly, the current UK PM Theresa May has warned her cabinet members that top level discussions must remain private after a number of leaks recently. This coupled with Mr Davis' gaff aren’t filling me with huge confidence as we enter such a crucial time of discussions with the rest of Europe and the World.

Potential market movers this week for the Pound

My colleague Jonathan Sherman covered this week’s UK data well in yesterday’s report, but I would like to highlight this morning’s Consumer Price Index figure that will be released at 9.30am. Due to the mixed messages from the BoE regarding potential rate hikes it’s difficult to determine which way the markets will turn in the event of a higher figure than expected (2.9% Year on Year). If you are against the idea of taking any risks over this news release it may be worth getting in touch bright and early this morning.

BoE governor Mark Carney is also scheduled to give a speech on Inflation today at 2.30pm, although this event has already been postponed in the past so we’ll see if it goes to plan.

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