This report will examine the factors that could affect exchange rates this week in order to help you stay informed if you need to make a currency transfer. The table below shows the difference you would have received in a number of currencies when buying £200,000 at the high compared to the low for the past month.

Currency Pair% ChangeDifference on £200,000
GBPEUR3.12%€6,187 EUR
GBPUSD3.91%$10,520 USD
GBPAUD3.88%$14,160 AUD
Sterling finds support on Customs progress

Softer Brexit hopes underpin the Pound for now

Sterling has begun 2018 in a more buoyant mood cementing many of the gains we achieved back in December following the progress on Brexit.

This confidence that the two sides can work together to agree terms should provide a more solid foundation for talks to progress later in the year. Talks on a transition deal should begin very soon and trade talks thereafter, Sterling will remain sensitive to developments but seems to be much better adjusted to Brexit when compared to the wild swings of 2016 and 2017.

The Pound is overall benefitting from less uncertainty over Brexit, but until we get more substantial news on Brexit, economic data will become more important.

Today we have no key UK data but the negative headlines surrounding Carillion could attract further attention. Grimmer details emerging reflect the companies £29m in cash versus its £1.3bn worth of debts. With taxpayers and creditors on the hook, Sterling could take a knock. Yesterday’s Inflation data showed the Bank of England are right to be considering further interest rate hikes with Inflation at 3%, the small dip from 3.1% welcomed but not lower enough to rule out the likelihood of further hikes.

Will the Pound rise or fall for the rest of January?

Tomorrow we have the latest RICS (Royal Institute Chartered Surveyors) House Price survey and Friday the latest Retail Sales data, general expectations are for the Pound to rise if the figures have increased as expected. Retail Sales is always a volatile release as predicting the data is difficult, more so following the Christmas period.

Any clients looking to buy a foreign currency with the Pound might wish to be seriously considering a purchase at present levels. Buying US dollars are very near to the best rates since the Referendum, buying Euros we are 2 cents off the December high which was last reached in May 2017 and rates buying Canadian dollars, Australian dollars and New Zealand dollars are all within fairly close ranges to the best since the Referendum.

With no major urgency to progress on Brexit the market is enjoying a slightly less volatile period. Michel Barnier has given until October to finalise the Brexit talks so the pressure is off. However at some point in the very near future the market will begin taking much more notice of the outstanding lack of detail on Brexit and I would expect Sterling to struggle. Historically anytime there is any big important negotiation with the EU, whether it be the UK or Greece, everything seems to go down to the wire and a decision is released shortly after some kind of all-night summit.

Markets have been reasonably calm entering 2018 but this will clearly not last. My personal suggestion is that any clients buying or selling the Pound take real advantage of this quieter and less volatile period to examine their personal situation ahead of what is clearly going to be a significant and defining year for Brexit and the Pound.

Thank you for reading today’s Sterling market report, I would greatly appreciate any feedback you have and would take pleasure in replying personally. Feel free to e-mail me at jmw@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.