This Pound Sterling report discusses the current factors influencing the Pound's value and looks ahead to next week's data releases and how they may affect GBP exchange rates. The below table shows the market movements for a number of currency pairings in the last 30 days:

Currency Pair% ChangeDifference on £200,000
GBP/EUR0.5080%€1100
GBP/USD0.4932%$1260
GBP/CAD0.4371%CAD $1400
Resilient Pound in favour with the markets

Is there any basis for a potential Sterling rally?

If you remove the anomaly of the flash crash in October 2016 Sterling now sits at an eight year low against the Euro, currently sitting in the 1.08s. There has been news regarding UK business confidence and Eurozone growth which has also been a catalyst for current GBP/EUR levels. I am finding it increasingly difficult to find any basis as to why we could see any significant gains for Sterling.

Political uncertainty is major factor in the Sterling value. While Theresa May’s position is in jeopardy the Pound stands little chance of making any substantial gains. There is a growing number of members in the Conservative party who have little confidence in Theresa May’s ability to conduct her role as Prime minister.

This issue does not look like it is something that is going to be put to bed quickly and it is highly probable this will keep the Pound at a low level against all major currencies.

Brexit is another key factor in the value of the Pound and will be for the foreseeable future. There is a lack of clarity on the UK’s Brexit stance and the markets do not react well to uncertainty. Brexit white papers are being released in drips and drabs but each release does not have the impact to strengthen Sterling. Until we have further clarity on how Brexit negotiations will pan out the Pound will continue to struggle.

With many of the world’s top banks predicting parity on GBP/EUR exchange rate by the end of the year. If you have a requirement which involves selling Sterling it is looking like it may be a wise move to bite the bullet at current levels.

Consumer Confidence and  Manufacturing PMI  could cause further problems for the Pound

Consumer Confidence is due on Wednesday and measures the level of confidence the consumer has in current economic conditions. This is of particular influence considering the current high levels of inflation which is not matching up with average wage growth, which is some way behind.

Manufacturing PMI is released next Friday, it captures business conditions in the manufacturing sector. Manufacturing makes up a significant amount of GDP and as such can influence Sterling strength. This is not a data release I would hang on for if I was hoping for Sterling gains. I think there is the possibility of a fall and its influence does not warrant waiting for a week to trade.

Thank you for reading my Sterling currency report, if you have any questions about GBP exchange rates I would be more than happy to discuss them – you can contact me with any queries at dcj@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.