With the Pound currently up against most major currencies this update examines factors that could affect Pound Sterling exchange rates this week. This table shows the market movements for a number of currency pairings in the last month:

Currency Pair% ChangeDifference on £200,000
GBPEUR6.25%€13,400
GBPUSD5.75%$14,750
GBPCHF4.4%CHF 14,950

Interest rate forecasts push the Pound up in value

Sterling levels are now near multi-month highs against both the Euro and the US Dollar.

The GBP/EUR exchange rate fell as low as 1.1234

The reason for the large monthly increase has been speculation on when the UK will raise interest rates next. Only a few weeks ago it was thought this would not be until 2018, however most now expect a hike within 6 months and it remains highly likely that we may even see the first climb as soon as November.

GBP/EUR rates are now over 5.5% up and GBP/USD up over 4%, giving clients an additional €12,000 or $13,000 on a £200,000 transfer.

Unfortunately, I personally don’t see these rates holding firm for long. With ongoing Brexit talks and the conversation about a transition period with ongoing costs, we only need the ‘divorce bill’ to leave the single currency to come out higher, or the GDP figures released this week to be weaker than expected and I can see rates potentially falling.

My view is that the Pound currently sits towards the top of the range I expect to see in the coming weeks; with either a small movement up or a larger movement down.

Will the Pound continue to climb?

As we come to the end of September the next cycle of economic data is released, and there are some very large events coming up in the near future that clients should be aware of.

Over the next 36 hours Mark Carney will hold two speeches, one this morning and another tomorrow afternoon. Mr Carney has historically suggested that the Bank of England (BoE) will take its time on raising interest rates, his speeches could either confirm the current forecasts on interest rate hikes or weaken the likelihood significantly which would almost certainly have a similar impact on the Pound – this is very much one to be aware of.

The Bank of England is holding a two day conference to celebrate their 20 years of independence from Government control. There are a number of central banks expected to attend whom could also release market moving commentary. These include ECB president Mario Draghi, FED vice chairman Stanley Fischer and IMF MD Christine Lagarde. Certainly something to watch if you have a currency requirement near term involving the UK Pound.

Tomorrow is also a key day for the Pound with GDP figures, Mortgage approvals, lending figures and consumer data released. The UK’s credit rating was cut one notch to Aa2 by Moody’s recently, due to over stressed public finances and Brexit risks. The BoE has been constantly highlighting the risks of personal debt and inflation hitting the performance of UK PLC so this is equally one to be aware of.

For further news on upcoming events that could affect your currency transfer, call our trading floor on 01494 725 353 or email me directly at hse@currencies.co.uk.

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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.