Pound respite following May’s Speech

The Pound jumped over 2.8% against the US Dollar yesterday following Theresa May’s speech, where she provided some direction as to her plans for Brexit and confirmed her hard Brexit stance. I believe that some of the strength for the Pound from yesterday can also be attributed to Donald Trump’s aide Anthony Scaramucci, who has stated that a UK – US trade deal will be negotiated within 6 months of the UK leaving the EU, and added that the UK would be a priority for the President when he enters the White House on Friday.

What next for GBP/USD exchange rates?

The Greenback has gone from strength to strength this year, (albeit for yesterday) especially against the Pound and the Euro. I think anyone looking at buying US Dollars should look at doing something sooner, whilst the rates are favourable after Theresa May’s positive speech. The reason I think that this may be wise is due to comments from Donald Trump’s aide again, Anthony Scaramucci who told members of the Davos convention that the US was looking to create better trade deals for itself, rather than focusing on helping other countries to improve their living standards. I think this bullish tone, if implemented by Donald Trump after Friday, could be extremely beneficial for the US Dollar.

Although, a surging Dollar may not be exactly what Trump has ordered. He has warned that the US should be cautious about the effects of a strong dollar and has urged the US Federal Reserve to act independently. As the economy goes from strength to strength, questions will be asked of the FED as to when they will look to raise interest rates – further strengthening the USD which could create further problems for the US.

This could be an extremely confusing time for any clients with a US Dollar requirement in the short or medium, whilst new trade deals are outlined I would expect a large amount of volatility on the markets. There are a number of ways that Foreign Currency Direct can help limit your exposure to this, get in touch for more information.

The Pound remains vulnerable with Theresa May set to invoke Article 50 in the coming weeks. Making the most of spikes in the market is important to maximising our clients needs, so please get in touch with your dedicated broker if you have an upcoming transfer that requires our attention on 01494 725 353.

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