Getting the best exchange rate can be achieved by understanding what is driving rates and the service of a specialist currency broker. Below are movements in just a month affecting a number of currencies when buying £200,000:

Currency Pair% ChangeDifference on £200,000
GBP/EUR2.4%€5,400
GBP/USD3.0%$7,600
GBP/CHF4.4%CHF 14,950

Anything but ‘Strong and stable’ for the Pound

As we enter the last week of June the main loser this month has been the value of Sterling following the ‘failed’ snap election. GBPEUR rates have been down by as much as 4% over the last month meaning a £200,000 transfer secured nearly €10,000 less when compared to the beginning of the month. As Theresa May came out weaker than when she called the election, the political uncertainty it has created has weighed heavily on the value of the Pound.

DUP deal drives Sterling up

Yesterday we had news that there had been an agreement made between the Conservatives and the Democratic Unionist Party (DUP) allowing Theresa May to form a Government.
This so-called ‘Confidence and Supply’ agreement means that the DUP will line up behind the Conservatives in key votes, such as the Queen’s speech and future Budgets.
This has however come at a cost as it has been reported that up to £1 billion of tax payers’ money will be directed towards Northern Ireland as part of the agreement. This being the figure sought by the DUP in additional finances to modernise their infrastructure and NHS after two decades of under-investment. Details are still being released on the financial promises made, and could easily impact on the value of the Pound if they are this high.

Politics on the Pound going forward

Moving forward Westminster will continue to be at centre stage in the eyes of the currency market with some potentially significant impacts expected maybe later this week. Next we have the Queen’s speech vote and the potential for a ‘call of no confidence’ on the Conservative leader, again not something that creates a ‘strong and stable’ Government and is potentially a negative event on the UK Pound.

Then lastly, slightly longer term, we have the potential that Theresa May could resign after the embarrassment of the UK election. Who would lead the Conservatives and the country thereafter is a question all with a currency exposure should be considering? There is commentary coming out of Westminster that this could happen as soon as September after the August break in Government.

All of the above are topics that will continually impact the value of the Pound and anything other than a stable Government is likely to be negative on the value of Sterling. In these ever changing times our pro-active service is highly prized and I would suggest anyone with exposure to notify your account manager here. When was the last time that your bank pro-actively contacted you?

UK GDP figures key for Sterling this week

Economic data for the UK this week is fairly busy. We had UK mortgage approvals climb yesterday which helped the gains for the Pound across a number of currencies.

Later today we have the Financial Stability Report and a speech from the Governor of the Bank of England, Mark Carney. Many expect him to present a dovish tone about the UK and the impact of the Brexit on the UK economy. As a result many expect the gains seen for the Pound yesterday to evaporate today.

The largest data release this week for the UK is Friday’s GDP figures. This is expected to show a rise of 2% annually. We expect this to be priced into the market beforehand meaning that if the result matching this expectation there will be little change in the value of the Pound. Anything different from this however and the market will move to price this in quickly, referred to as a SPIKE in the market.

The current trend for the Pound’s value is that if there is good news the Pound climbs a little however if bad the Pound dropped by a larger degree. As a result, if I was in the market this week selling Sterling I see little argument to wait.

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

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.