GBPEUR rates and GBPUSD rates have climbed significantly this week. A majority of these gains have been secured following the news that the transitional deal with the EU has moved forward. This created some certainty for the markets about what the world will look like after Brexit. The table below shows the market movements for a number of GBP currency pairings over the last month:
|Currency Pair||% Change||Difference on £200,000|
Pound to Euro exchange rates are now near the closest levels that we have seen since May 2017 and GBPUSD levels, excluding the first week of February, are at the best levels seen since the Brexit vote.
EU negotiators have been reported to accept that the United Kingdom could sign trade deals with other nations whilst it remains in the EU customs union and the single market during the proposed Brexit transition period. Additionally the Office for Budget Responsibility upgraded the UK’s economic growth forecast for this year to 1.5%, adding further optimism and strength to the value of the Pound.
This news gives clients a great opportunity to get more for their money with GBPEUR levels up nearly 2.5% within the last 72 hours.
Moving forward today is a very key day for the Pound with a number of key events. At 9:30 we have the latest update on the Retail sector for the UK - this has been a troubling area of the economy as consumers move onto ecommerce over the traditional high street with brands like Toys'R'Us, Matalan and recently Carpet Right releasing profit warnings and closures. New Look has only yesterday confirmed that over 1,000 jobs will be lost along with the closure of 60 stores. A further decline in the retail sector could well put the pound under pressure as we start the day today.
At noon today we have the highly anticipated Bank of England (BoE) interest rate decision and subsequent monetary policy meeting. At this event we expect more information from the BoE with regards to the timelines of potential interest rate hikes climbing. Historically the bank has suggested that hikes are pending and could come as soon as their May meeting.
However with such a bad news coming out of the Retail market and indeed as inflation fell recently closer to wage growth figures, the pressure to raise interest rates soon may well have evaporated.
The information from today’s update from the bank could significantly challenge the Pounds current strength if an interest rate hikes are indeed pushed back to later in the year.
Currently GBPEUR levels are near a 14 month high and with the above updates and the European meeting concluding tomorrow, the next 48 hours I think will be key to the near future direction of exchange rates.
Personally I think that the current GBPEUR levels are near to the top end of the range we could expect within the next 6 weeks and see rates either climbing slightly higher or dropping off like so many times before over the last 12 months.
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