This update examines factors that could affect GBP exchange rates this week. The below table shows the market movements for a number of currency pairings sine the start of the year:
|Currency Pair||% Change||Difference on £200,000|
Sterling has continued to rise further last week as we finished the week up in the high 1.12 region, this is almost a 4 month high within the markets and is certainly starting to fill those with a GBP/EUR requirement with more confidence.
With Brexit talks now underway again and the Eurozone standing firm on their decision not to make any trade deals official until our “divorce bill” has been paid, the Pound had continued to slide further before we had a steep jump in the UK inflation figures, released at 2.9%, which was a rise of 0.3% from the previous month. In my opinion Sterling could be set to stay at these kind of levels for some time to come, certainly over the next few weeks.
We have also seen positive talk from Mark Carney last week regarding a potential interest rate rise, and I would recommend anybody with a GBP/EUR exchange to make to get in contact with their account manager here as soon as possible to discuss your options.
This month’s inflation figures came in at a surprisingly high level of 2.9%, which was 0.3% higher than the previous month. This has started a strong recovery for the strength in the Pound and will have a knock on effect for any potential interest rate move. At this month’s interest rate decision meeting MPC members voted in favour of 7-2 to keep interest rates at the current levels of 0.25%.
Since this meeting we have had positive noises that the BoE are expected to raise interest rates sooner rather than later and we could even see an interest rate rise as early as November this year in my opinion. Generally if we see an interest rate hike it is perceived as positive for the currency involved. This could be another reason as to why Sterling is starting to creep back up against the Euro.
All eyes will be on the Prime Minister tomorrow as she will be delivering an important speech in Florence. Investors will be shifting their focus to this key event and awaiting what the Prime Minster has to say surrounding Brexit. It is expected that Mrs May will provide an update on Brexit and this could be an extremely volatile day for Sterling.
For more information on how future data releases could affect your currency requirement call our trading floor on 01494 725 353.
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