This report will examine the factors that could affect exchange rates this week in order to help you stay informed if you need to make a currency transfer. The table below shows the difference you would have received when buying £200,000 at the high compared to the low for the past month.
|Currency Pair||% Change||Difference on £200,000|
The Pound ended the week on a high last week following a set of optimistic economic reports. On top of this, the Pound is also being pushed higher against the Euro following the Catalan election result and is up against the Dollar after President Donald Trump's tax reform was pushed through.
On Friday it was announced that the UK's current account deficit had narrowed to -£22.8 billion during the 3 months leading up to the end of September according to the office of National Statistics and stood at -£23.2 previously. Furthermore, economic growth was confirmed at 0.4% for the third quarter, which was 0.1% more than what was confirmed in the first two quarters of the year.
Finally, business investment in the UK grew faster than originally anticipated, growing by 0.5% compared to the 0.2% originally thought from preliminary readings in November. All in all, this has helped the Pound to regain some of the losses against the Euro and the Dollar, over the festive period when data is particularly light, moving on these data releases could be the difference.
The main influence and talking point of Sterling is still Brexit, and will be for many years in my opinion. The Pound's value has been hyper sensitive in recent months to Brexit developments and I would expect this trend to continue. Earlier this month, the European Union had decided that 'sufficient progress' had been made to progress to the next stage of negotiations which focuses on trade. Comments from Brexit Secretary David Davis and EU Chief Negotiator Michel Barnier have already reinforced the difficulties that lie ahead for both parties involved in the up and coming months, if not longer. As such, many analysts are expecting the Pound to remain under pressure with the range on GBPEUR expected to be between 1.10 - 1.15 and GBPUSD to remain between 1.28 - 1.35.
This week remains fairly light in terms of economic data, later today the UK mortgage approvals data will be released with only a small change expected and I wouldn’t expect this to affect Sterling too much. On Friday before the new year break, the consumer confidence index is set to be released and could help to boost the Pound ever so slightly as the reading is set to drop from –12 to –11.
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