This update discusses the recent political events that have suppressed the Pound and looks at the likelihood for a UK interest rate rise in 2017. The table here shows the market movements for a number of Sterling currency pairs in the last 30 days:

Currency Pair% ChangeDifference on £200,000
GBP/EUR2.1%€4,900
GBP/USD2.5%$6,520
GBP/AUD4%$13,920

Sterling weakness continues

With Prime Minister Theresa May still trying to get all of her cards in line and everything settled after last month’s roller-coaster election battle, we are still not much clearer on what kind of future lies ahead for the current Government, and what kind of role the DUP party will play in future Brexit negotiations. In my opinion this is what is hampering Sterling’s advances and keeping the GBP/EUR rate down at the late 1.139 level.

Brexit negotiations are rumoured to have hit stumbling block

We are now at the start of two years of hard Brexit negotiations, with our hand in my opinion being very much weakened by our political unrest and so much uncertainty surrounding our Government.

I feel this weakens our position and makes trade deals and sensitive issues that need to be addressed more difficult to agree on.

All of this is bound to add further pressure to an already sensitive GBP rate and I feel the days of Sterling to Euro exchange rates at 1.20 could be a long way off.

Is a rate interest rate hike likely in 2017?

At last month’s BoE meeting the board voted by 5-3 not to raise interest rates and keep the current rate 0.25%. If there is any further sign over the coming weeks that the BoE are considering lifting interest rates this could provide Sterling with a jab in the arm it needs and we may well see a spike in the market. In my opinion I do not think we will see any further rate hikes in 2017. I would strongly recommend anybody with a Sterling to Euro transfer to complete get in touch with their account manager to discuss your future options. You can get in touch with our trading floor for a free, no obligation chat on 01494 725353.

Economic data releases

On Thursday afternoon we have the NIESR (National Institute for Economic and Social Research) growth estimates, this will give investors an insight into current market sentiment and future growth, and if these figures are perceived as positive by the markets we may well see sterling spike tomorrow afternoon.

For more information on how future data releases could affect your currency requirement please call our trading floor on 01494 725 353.

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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.