Theresa May’s diplomacy spells Pound boost

The Pound has seen marginal gains to begin the week against most of its major currencies following a busy weekend on the political calendar. Throughout the day yesterday Sterling was seen to be making tentative gains in the currency markets, and with little other news of import hitting the wire, I think it’s safe to allow may to take the credit for the boost. Donald Trump’s ascension to the heights of the Presidency in November saw a hefty boost to Sterling to counteract what had been a dismal October.

His support for the Brexit negotiations and his frank offer of a trade deal as soon as we break from the EU dispelled much of the perceived anxiety surrounding the UK’s future at the time.

Many Sterling holders were hopefully that a re-affirmation of this support from Trump would deliver similar results. Unfortunately, it seems that the timing of the visit wasn’t as fortuitous.

Much of the narrative was taken over by the media frenzy over Trump’s Executive Order banning refugees from particularly ‘high risk’ (in his opinion) countries. May was called on repeatedly for her opinion, and the specifics of the talks were largely glossed over when it came to questioning and reporting. A small boost to Sterling holders yes, but Trump didn’t deliver as well as he could, with the Pound making only small inroads and began to back-track in the afternoon.

Afternoon dip for Sterling following EU press conference

Verhofstadt, the head of negotiations on the EU side of the Brexit, put a dent in the Pound yesterday afternoon. His firm point out that any deal for the UK will need EU Parliament consent was a wake-up call to the markets that there are a number of steps to agree an eventual deal. A number of leaders have pointed to how firm they will be with the UK, and Verhofstadt’s choice to make that explicit statement was enough to see a small run against the Pound.

This was a reminder to Sterling holders that in this politically charged atmosphere the landscape can change very quickly. It is imperative that your account manager is aware of your situation so that such news to you can be relayed immediately to avoid any extensive losses.

Will housing market data today continue Sterling’s rally?

Lending and mortgage data will be coming out at 9:30am this morning and as with the past few months, should polish Sterling’s attractiveness to investors.

This will be a comprehensive look at total mortgage approvals as well as net-lending as a whole, which lends itself to gauging the health of the economy and the confidence of its consumer base.

This is a comprehensive look at December, and total mortgage approvals compared to November, despite it being the run up to the holiday period, is forecasted to produce almost 2000 more that month.

This may then be complimented by a look at housing market changes on Wednesday, and should produce a strong finish for the month for the Pound.

Following this a new calendar month with a fresh look at performance data for the UK, most notably with the Bank of England interest rate decision and monetary policy statement on Thursday, will set the reset button and new trends will be established for February.

If you do not wish to gamble on losing the gains made this month, I recommend contacting your account manager today to discuss how to protect your position for any planned foreign currency purchases. Our trading floor number is 01494 725 353 or alternatively, you can email me at jjp@currencies.co.uk.

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