This Sterling article discusses some of the factors that could impact GBP exchange rates this week, including the outlook for Brexit and some key data expected over the next week. The table here shows the market movements for a number of currency pairings in the last month:

Currency Pair% ChangeDifference on £200,000
GBPEUR1.85%€4,200
GBPUSD2.25%$6,100
GBPCHF1.3%CHF 3,400
The Pound could climb to end the week

The Pound climbs to new highs following Cabinet reshuffle

This week as the political and economic world returns from the festive period we have seen a surge in Sterling’s value.

GBPEUR exchange rates are now near a 5 week high and ignoring a 36 hour period at the beginning of December are nearer a 3 month high. GBPUSD rates have also climbed and now sit near to a 1 year high.

The majority of these gains have come from the recent reshuffle from Theresa May in the UK. These are normally seen as a strengthening exercise politically which has resulted in the run in value for the Pound recently.

Overall this reshuffle in the eyes of the Pound was a plus as the Government get ready for the next round of Brexit negotiations while trying to refresh their ‘brand’ in the search for future voters

The most high-profile cabinet ministers all kept their jobs however there were a few ‘embarrassments’ as Justine Greening quit after refusing to move departments, and Jeremy Hunt persuaded the PM to keep him in his post convincing her to actually add further responsibility to his remit.

Moving forward politically it will be how the Brexit negotiations develop which I expect to be the major mover to the Pounds value in the weeks ahead. Plus the ongoing challenge for the government to achieve growth in the economy while being in an environment of continual cost-control.

Brexit review into 2018

The UK’s Industrial Development Agency suggested that the Brexit has weakened the UK’s ability to attract overseas investment which has resulted in other European countries benefiting.

There is still a number of points on the to-do list for the UK to complete before the scheduled Brexit in a years’ time. Over the next 12 months there will be lots of discussion and expected compromise as agreements have to be made on the transitional period and the future relationship with the EU, all while the UK has to continue to search for post-Brexit partners outside of the EU whilst keep relationships with the United States strong.

The first point will be the transition period. If agreed quickly this could be Sterling positive as it would push back the unknown to a later date. Whereas if delays or confusion are prolonged it could equally weaken the Pound's value as demand for the Pound falls.

Speculation that UK could join the Trans-Pacific Partnership (TPP)

There have been suggestions that the UK has held informal talks about joining the Trans-Pacific Partnership (TPP), which would make the UK the first member of the TPP trade group that does not border the Pacific Ocean or the South China Sea. Likely some time away, as official talks cannot take place until after Brexit concludes, but I would expect speculation like this to drive Sterling’s value as we go through the year.

Next cycle of economic data due

Within the next 7 days we have a number of key economic data releases for the UK due out. These include Industrial Production, Manufacturing Production, Trade balance figures and GDP figures today. Tomorrow credit figures are released and next Tuesday Production Price data.

Today’s data is expected to be rather insightful and most expect some level of improvement, especially in industrial and manufacturing as UK productivity rose at its fastest pace in six years towards the end of last year. I personally would not be surprised if we see an increase and as a result Sterling may well gain in value today.

For further information on how upcoming events could affect GBP exchange rates 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.