This report will examine the factors that could affect exchange rates in the coming months 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 30 days. For current live exchange rates click here.

Currency Pair% ChangeDifference on £200,000
GBPEUR2.2%€5,050
GBPUSD2.1%$5,450
GBPCAD2.6%CAD $8,840
What will drive the pound this week?

Will the Pound find support this week?

The Pound has had a very positive run vs the US Dollar hitting pre-referendum highs and remaining relatively stable since the start of the year against the Euro. However, problems with the UK could be coming as the second biggest construction company Carillion is looking to go into liquidation which could mean losing thousands of jobs. Carillion still runs a number of contracts including HS2 as well as a number of public services including the running of schools and prisons.

This could cause a huge knock on effect on a number of firms who rely on Carillion’s projects and so things could unravel quite badly. Indeed, a huge amount of pension money is also tied up with the construction giant.

Further investigation appears to show that the company had issued three profit-warnings in the last six months yet the government has continued to give contracts to the company. Therefore, could this pose a big question to the government in terms of political integrity.

Since taking power Prime Minister Theresa May has had a very difficult time with the ongoing Brexit negotiations as well as having on a number of occasions reshuffle her government. Therefore, if we see further political problems this could potentially have a detrimental effect on the value of Sterling exchange rates.

Could Inflation & Retail Sales give the Pound a Boost?

Inflation is a key measure of how an economy is performing and later this morning the UK releases it latest set of inflation data in the form of the Consumer Price Index. The estimate is for 3.2% and with inflation remaining higher than the target this could put pressure on the Bank of England to bring an interest rate hike forward.

Indeed, last week Deputy Governor of the Bank of England Ben Broadbent suggested that the central bank’s next move will be to raise rates however he did not commit to a timescale. When the BoE raised rates back in November one of the main reasons given was because inflation was rising so I think if the figures come out the same we could potentially see a small rise in the value of the Pound later this morning.

On Thursday the UK releases the latest UK Retail Sales for December and as this covers the Christmas break it will make for very interesting reading as it is likely to have a big impact on Sterling exchange rates. Therefore, if you’re in the process of making a currency transfer then contact your account manager who will be able to keep you updated.

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

News

Read more articles
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.