The following Pound Sterling forecast discusses the factors that could affect GBP exchange rates in the coming days. This may be of particular interest if you are planning a currency transfer. The table below shows the difference you would have received when buying £200,000 at the high compared to the low during the last month. For current interbank rates please visit our live foreign exchange rate page.
|Currency Pair||% Change||Difference on £200,000|
The Pound had a fairly lacklustre beginning to the week despite strong house price data from Rightmove quelling rumours of a heavy slowdown in this key sector of the British economy. Whilst there were not large losses on the Pound there was also not much evidence of improvement. The Pound effectively began the week with a long yawn and a stretch with key pairings such as the Dollar only seeing fractional percentage point differences throughout the day.
Homeowners will rejoice that price growth for UK properties on average accelerated during the month of May compared to April, signalling a strong summer buying season. This is why Rightmove were confident enough to increase their forecasts for price growth this year up to 3% from 2.2%. Such growth represents billions in additional asset worth in the UK economy, yet currency markets barely battered an eyelid. The most plausible explanation is that market participants were more concerned with the more immediate impact that news released today is likely to bring.
Whilst registration for voting in the UK election ended last night, and the campaigns can finally focus purely on the issues rather than galvanising their bases into becoming viable voters, currency markets will largely be focussed on figures released at 9:30 this morning, and inflation report hearings commencing from 11am.
Public sector net borrowing figures have the potential to be a key mover, particularly during this election cycle. If there is a sudden rise in borrowing then Labour have extra ammunition in their war chest given the Conservative propensity to condemn their trigger happy spending - potentially impacting what seems to be a runaway Conservative victory according to the most recent polls. I am sure the current Government and Treasury are aware of this thought and will not wish to rock the boat, meaning the Pound should sail through early morning trading with little change in its value.
What is more likely to cause a stir will be inflation report hearings, which closely examine and flesh out the Quarterly Inflation Report released from the Bank of England Monetary Policy Committee earlier this month.
Though not the most exciting subject, currency markets are avid digesters of the hearings themselves. These are arguably more important than the paper report as BoE members and representatives will be grilled by Treasury Committee members and will not have the same luxury as they do with the press about being vague with their intentions.
The value of the Pound is heavily tied to its current historically low baseline interest rate of 0.25%. Hints at rises away from this mark should in theory yield to a stronger Pound, as higher interest returns would make the Pound a more attractive commodity - with increasing demand adding a parallel swing to its value.
Any greater detail as to how the Bank of England will act in particular inflation scenarios, particularly if they show a greater willingness to use the tools at their disposal to raise rates, should see the Pound boosted during lunchtime trading. With markets showing almost immediate reactions to particular words and phrases in the hearings, I recommend detailing any requirements to your account manager here to ensure any attractive opportunities are relayed to you with immediate effect. This is particularly important given the recent softening in the Pound's value.
*Breaking news* - Once more with a heavy heart we must report a terror attack in our daily market updates. There have been 22 confirmed deaths and 59 injured in the Manchester arena blast last night. The attacker is thought to be dead, and with the situation, whilst absolutely tragic, being contained, the Pound has had little reaction on the currency market of note.
For more updates on how future data releases could affect the Pound contact our trading floor on 01494 725 353 or email me here.
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.
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