Volatile week for the Pound

As expected, it has been an extremely volatile week for the Pound with political news being the main driver for Sterling instability. Hitting lows of 1.19 and 1.13 against the dollar and the euro, then rallying to highs of 1.24 and 1.158 respectively, our well informed GBP clients have been able to make the most these fantastic buying and selling opportunities by capitalising on the recent Brexit fuelled spikes in the market.

Brexiteers consolidate Sterling’s short term gains

Prime Minister Theresa May’s clarifications on Tuesday helped the Pound jump back from last weekend’s crash courtesy of UK Chancellor Phillip Hammond’s wobbly statement about the UK’s economic model post Brexit. Sterling rallied by almost 3% against the greenback with May’s dynamic speech regarding the UK’s clean break from the single market soothing investors woes and temporarily bringing GBP back from the dead.

Yesterday, the Brexiteers helped to protect some of those record breaking gains (best gains in one day since 1998) with GBPUSD just about holding firm at 1.23.

Brexit secretary David Davis re-iterated the difference between leaving the single market and not having access to the single market, confirming once again that the UK would be willing to partially contribute to EU funding as a result. Furthermore, foreign secretary Boris Johnson stated leading economies are queuing up for trade deals with the UK in a bid to warn off any knee jerk reactions from European political figureheads. Both statements helped sterling ride any immediate reaction from the euro zone, the question is for how long?

Factors for Sterling weakness

Although the Pound survived this week’s hit, I am not convinced we will see the same resilience over the coming weeks with the Supreme Court confirming yesterday that it will give its article 50 trigger case ruling next Tuesday. Once again I expect the markets to be predictably unpredictable however if the UK’s Brexit negotiators continue to deploy the same ill-advised tactics that Boris Johnson used yesterday, they could see their negotiating stance shrink drastically in a short space of time and I expect sterling to suffer as a result, much to the enjoyment of Euro sellers I’m sure. I recommend sterling holders to capitalise on these monthly highs sooner rather than later as I can only see an extremely volatile month ahead for the Pound. Why not register for a free account here at FCD and let one of our foreign currency experts outline a plan to help you maximise your returns.

Economic data to consider

Those hoping for long term Sterling strength would have been pleased by the recent UK unemployment data released yesterday with 52,000 jobs having been created in the last 3 months. Further economic releases to consider in the build-up to the high court ruling next Tuesday is the Right Move price index release as well as Bank of Englands governor Mark Carneys speech. Both will provide great insight into how the UK is adapting amidst all of this political uncertainty.

Get in touch with a member of our team if youd like to discuss an exchange, further movements for the Pound are to be expected as we approach Article 50 in the coming weeks. Call us on 01494 725 353 or email me here to find out how this could affect you.

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