This update examines factors that could affect GBP exchange rates this week. The below table shows the movement for a number of GBP currency pairings in the last week:
|Currency Pair||% Change||Difference on £200,000|
Theresa May has attempted to play down troubles within the Government ranks following Boris Johnson’s 4000 word article published over the weekend. The Prime Minister, following accusations of “backseat driving” made it clear that the Government was in fact driven from the front. Mrs May also suggested that there will be talks taking place to discuss how the money previously given to the EU would be spent once the UK leaves the Union, following the return of “Saving 350m a week” by leaving.
The UK Prime Minister today was in Canada conducting pre-trade agreement talks with her counterpart Justin Trudeau, which is just another of the nations the UK are speaking to with regards to trade. Along with the Prime Minister meeting the Canadian leader the British High Commissioner to Canada also shared talks and after speaking with Mr Trudeau suggested the UK would be “crazy” to not start talks until they had left the European Union.
Whilst the UK cannot sign a deal until they have completely left the Union all of the ground work can be laid to make sure agreements are in place. News of trade agreements being organised will only be positive for Sterling as there will be more clarity on the UK’s future after the Brexit finally takes place.
Sterling yesterday afternoon dropped back to the level on Friday morning seeing the rate drop into the 1.12’s. Surprisingly this came at a similar time to Mark Carney suggesting that there is “likely to be a movement from historical interest rate lows” from the Bank of England (BoE). The Governor of the BoE did however have some concerns for the future suggesting the UK is starting to see some fallout from the Brexit.
The Bank are of the belief that investment in the UK in 2020 will be a 5th of the expected target pre Brexit, with this in mind the longer term forecast for the UK does show signs for economic concerns.
There is no doubt that the recent jumps have come as a surprise to many and in my opinion there is optimism for the near term future. If a movement towards 1.15 does start to happen then Euro buyers should capitalise on that, whilst there is momentum for Sterling there is little indication that the Pound will start to rocket.
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