For anyone looking to buy foreign currency in the coming days, weeks or months ahead we have seen a welcome spike in the value of the Pound this week, hitting multi month highs against the Euro and Australian Dollar and the highest level against the U.S Dollar in 17 months! The reason for this is a mix of economic data and political comments.
The table here shows the change in the last week for a number of GBP currency pairs:
|Currency Pair||% Change||Difference on £200,000|
On Wednesday morning we saw the release of average earning figures for the U.K which had risen ever so slightly. This bought average earnings (the amount people are earning) up a little closer to the level of inflation (the rise in the cost of goods and services), which is currently 3%.
The Bank of England (BoE) have recently had a problem with the large difference between the pace at which wages are rising compared to the level of inflation, but now that we have news that the gap was closed a little, it has led to a number of analysts suggesting that the Bank of England may now need to consider raising interest rates again before the end of the year. A hike in interest rates is generally seen as positive for a currency as it makes it more attractive to investors, so even the mere speculation of this has been taken well by the markets.
Another interesting point of note, and perhaps another reason for this positive week for Sterling exchange rates is comments from Angela Merkel at the World Economic Forum in Davos.
Merkel suggested that although Brexit was regrettable she would still like to have the EU and post-Brexit Britain to have a close relationship going forward.
With Germany being the big powerhouse in the EU this again is positive news for both the U.K and the Pound, as it suggests that there is light at the end of the tunnel for Britain and trade deals/relationships may be easier to come by than many had suggested.
To round off the week of trading we have GDP (Growth figures) out for the U.K this morning at 09:30am.
This may lead to the Pound rounding off the week on a high but be wary it also has the potential to stop the trend in its tracks.
Expectations are for growth in the final quarter of 2017 to have logged at 0.4% so all eyes will be on whether or not the U.K economy has managed to meet analyst’s expectations.
Another positive release will more than likely round the week off with further Sterling strength but should the figure fall short of 0.4% then we may see the rate creep back a little as we near the weekend.
If you have a currency exchange to carry out in the coming days, weeks or months and you would like to speak to a member of our experienced dealing team then feel free to contact our trading floor on 01494 725353 and we will be more than happy to help you.
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