Sterling has benefitted in the latter part of the week against both the Euro and the Dollar, following positive words from Michel Barnier on Wednesday, and French Prime Minister Macron yesterday whereby he promised to help push other EU leaders towards Prime Minister Theresa May’s plan after Brexit for hopes of a ‘united Europe’. More on the impact this positive news could have on the Pound as the deadline for agreement to be reached drawers nearer in today's Sterling report. The table below shows the range of exchange rates for a number of currencies during the past week, demonstrating the difference in return you could have achieved when selling £200,000.00.
|Currency Pair||% Change||Difference on £200,000|
Macron, a very pro-business President is reportedly planning to use a summit in Austria next month to outline using the UK to strengthen European alliances. Macron is believed to have significant influence over EU policy so if these reports are true, this could be extremely beneficial. According to reports, this is what helped Sterling’s surge to continue in yesterday afternoons trading.
Whilst this is a positive shift for Sterling, analysts are still not convinced this run will hold. Whilst the initial tone from Barnier’s comments was reconciliatory, analysts are now expecting Sterling to drop again as we wait for new reports on Brexit developments to emerge. It is worth being aware that Domnic Raab and Michel Barnier are due for an intense 6 hour sit down today to discuss the latest developments on Brexit. For this reason, I would personally be tempted to take advantage of current highs incase these talks take a turn for the worse.
According to reports yesterday, the UK consumer has started to reign in its spending and desire for credit. The figure released from the Bank of England was well below estimates and suggested that the UK consumer may now be growing wary of fast track credit. Ironically, Wonga loans yesterday entered into administration after hitting consumers with unrealistically high interest.
With little data out today, I would largely expect Sterling’s value to be influenced by further comments on Brexit from EU leaders and the UK. The pound has been hypersensitive to Brexit news and the recent surge emphasizes this. Therefore, I would suggest that clients buying foreign currency with Sterling consider the recent yearly highs against the Euro and weekly highs against the Dollar very seriously before Sterling’s value drops off again in my opinion.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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