Sterling remains unshaken for now, but does this mean the worst is over for the Pound? The below table provides a number of currency pairs and their exchange rate movements for the last 3 months:
|Currency Pair||% Change||Difference on £200,000|
This week begins quietly for UK news as markets digest the results from Macron's victory in the French election. The Euro has gained slightly against the Pound in the opening but the impact from this could be more long term as we learn more of Macron and his pro-EU stance, and how that impacts Brexit negotiations. Could his tough stance on Brexit hurt the Pound in the future? Thursday is without doubt the big day for the Pound this week with the ‘Super Thursday’ release of the Bank of England Interest Rate decision and Quarterly Inflation Report.
Markets will be gauging the accompanying commentary to these releases for clues on future policy from the Bank of England. Overall it seems the very worst for the Pound is now over although Sterling could easily drift lower if growth forecasts are lowered on Thursday.
So far April’s economic data is looking good which is pointing towards a potentially stronger quarter of growth in Q2 versus Q1. The beginning of the year however showed growth faltering so it will be interesting to see how Mark Carney and his team interpret all of this. Personally with the Pound having recovered and Inflation now perhaps unlikely to rise as much as predicted I foresee a more cautious Bank of England in line with a generally more settled Pound and UK economy. Could the worst now be over for Sterling and the UK?
Sterling has become hardened to the political news, last week’s public spat between Juncker and May failed to influence the market in quite the same way we have become accustomed to last year and early in 2017. There are of course many risks ahead with Brexit negotiations and the General Election but it seems one of the biggest short term risks could be for Sterling to keep up with its own improved performance.
Thursday’s news will be the real test for this improved status for the Great British currency. As well as the Bank of England releases we also have Industrial and Manufacturing economic data plus the NIESR (National Institute of Economic and Social Research) GDP (Gross Domestic Product) estimate for the February to April period.
All in all the worst appears to be over for Sterling so if you have a transfer to make, whether buying or selling, keep in contact with your broker here to try and catch the swings in your favour over the coming busy week.
The Pound has settled down in recent weeks but that does not mean clients should become complacent. The difficult period for the Pound is yet to come once markets become mindful of how trade negotiations are taking form. If you have a foreign currency requirement, be sure to detail your needs to your dedicated broker so that they can formulate a plan for you. If you are yet to trade with us, sign up here and one of our team will be in touch. You can also call us on 01494 725353 or email myself directly here.
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