Sterling sellers will have been pleasantly surprised by the pound’s consistent surge since Tuesday with the vote on a second Scottish referendum temporarily postponed and a stream of positive economic data releases the major drivers.
Yesterday saw Sterling protect it’s considerable gains and more against its major currency counterparts, climbing by 0.55% and 0.45% against the Euro and the Dollar respectively over the course of the day.
Next week GDP releases and the latest uk borrowing figures will give investors insight into just how the UK economy is shaping up in the build up to its divorce with the European Union and should provide potential spikes for our well-informed clients to capitalize on. Scotland’s push for a parliamentary vote on a second referendum is set for Tuesday and will also likely be a market mover.
It appears investors were drawn in by the impressive increase in UK consumer spending. Retail sales figures for February released by the Organization of National Statistics showed a rise of 3.7% across all types of spending since Feb 2016 and a jump of 1.7% from Jan 2017.Some experts are suggesting however that these gains could be quickly reversed as the consistent rise in oil prices and the reluctance of UK business’ to drive wage growth will begin to strangle consumer confidence.
It is interesting to note that since the referendum vote last year the currency compass has been particularly biased to politically charged news and now, as the triggering of article 50 looms, we may be seeing signs that investors are gradually beginning to take notice once more of economic trends.
Does this bode well for those hoping for long term Sterling strength?
I’m sure all those with a short-term GBP requirement will have quite rightly bookmarked the triggering of Article 50 on Wednesday 29th as a day to be closely watching the markets. With so much pending on how well Brexit negotiations start it may be wise for those selling Sterling to protect this week’s gains and take the risk out of the transfer in case the market turns against you. With EU leaders hoping to make an example of a deterioration within the UK economy to drive the attractiveness of the Union, initial GBP weakness is likely.
As the Pound sits delicately at pivotal rates of 1.16 and 1.25 against the Euro and the US Dollar respectively, with such a volatile week ahead, I would strongly recommend our clients get in touch with their account manager here at FCD before the close of play today, so we can help you build a plan of action and maximize your returns on the opportunities ahead. If you are yet to open an account with us, registering your interest is free by clicking here, and one of our specialists will be in touch.
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