With currency exchange rates moving every two seconds, it is very important to be aware of what is driving the currencies in or out of your favour. This Pound Sterling update looks at the factors that could affect Sterling exchange rates this week in order to help you stay informed if you need to make a transfer.
It’s certainly been a mixed bag for those clients holding Sterling of late, with both negative and positive spikes occurring during the past trading week. Investors are struggling to predict short-term movements and with mixed UK economic data of late, this trend is likely to continue over the coming days. The Pound is struggling to regain the position it held against the major currencies during the summer and with losses against the EUR, USD & AUD of late, many clients holding Sterling have been locking in contracts to protect themselves against any further market drops.
Looking at GBP/EUR exchange rates and it did seem as though the Euro was gaining enough support to move away from the recent lows and only a couple of weeks ago was even threatening to make a move back towards 1.30. This move was halted fairly abruptly by positive UK unemployment figures, which helped push the Pound’s value back up. Despite this improvement I believe it’s poignant that we were once again able to consider a scenario where GBP/EUR exchange rates would head back to 1.30, a situation far removed from that of the summer when many were predicting 1.50 on the pair by the end of the year.
This to me highlights just how volatile and unpredictable the currency markets have become and my view is that now the exchange rates have moved back towards the mid 1.30’s, those buying Euros with Pounds have been given another opportunity to trade at some of the best levels of the past decade. I am not anticipating a recovery back above 1.40 under current conditions, so much will depend on both the Bank of England’s (BoE) & European Central Bank’s (ECB) stance on both prospective interest rate hikes and any additional monetary easing.
With little data of note this week for the UK, all eyes will be firmly fixed on the release of Thursday’s UK Retail Sales figures. The expectation is for a small improvement to 0.3% growth but anything outside of this is likely to cause additional volatility on Sterling exchange rates.
For more information on how future data releases could affect Pound Sterling exchange rates, or for more information about sending money abroad, please email me at email@example.com.
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