This Sterling update examines factors that could affect exchange rates this week. The table below shows the market movements for a number of GBP currency pairings yesterday:

Currency Pair% ChangeDifference on £200,000
GBPEUR0.75%€1700
GBPUSD0.67%$1800
GBPAUD0.77%AUD $2660
Sterling slips following Services Purchasers Managers Index (PMI) report

Sterling set to struggle due to Brexit Negotiations

Phase two of Brexit talks are not going to be easy, with both Brussels and the UK at loggerheads before the talks have even begun.

The first round of talks hardly ran smoothly and Sterling suffered as a result. If we look at GBP/EUR for example, it has been range bound between 1.12 – 1.15. Be wary of having the thought that 1.15 will reached short term again. GBP/EUR hit 1.15 for a very small window following the announcement of the Irish border deal. The fragility of the pound was displayed when David Davis stated that the deal was not legally binding and the pound fell as a result.

Brexit Secretary, David Davis has stated he will not allow Brussels to cherry pick terms and also accused EU agencies of being discriminatory for urging UK business to leave Britain.

The next stage of talks is set to address transitional arrangements after the UK leaves. It will also cover security and economic co-operation. Trade talks will be crucial, possibly the most important subject of the entire Brexit process.

Phase 2 talks will begin towards the end of the month, no firm date has been given. With this in mind, it is vital to be in touch with your broker, so if a window of opportunity does arise you are notified quickly and will be in a position to take advantage of the rates. I would recommend putting a rate alert with your broker so they know your targets.

CPI data could cause movement on the exchange

The next data release of importance is Consumer Price Index figures (CPI). CPI is released on Tuesday next week, it is a measure of inflation and does have the power to influence Sterling value. Inflation is particularly key to the UK economy as we have seen rapid rises due to the weak value of the pound causing imports to become more expensive. This is eventually passed on to the consumer, and if average wage growth is not keeping up with inflation alarm bells are ringing.

For more information on how future data releases could affect your currency transfer call our trading floor on 01494 725 353 or email me here.

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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.