Clients holding Sterling will have enjoyed the Pound’s robustness this week having seen their buying power rise by 0.9% against the Euro and 1.3% against the Dollar since Monday. The table here shows the movements for a number of GBP currency pairs during the last week:

Currency Pair% ChangeDifference on £200,000
GBPEUR0.9%€2,000
GBPUSD1.3%$3,400
GBPNZD1.5%NZD $5,800

Since the referendum vote, we have become accustomed to seeing the Pound fall drastically across the board when either the UK’s political ties are shaken or rumours of Multinational corporations deciding to relocate their activity away from the UK due to Brexit uncertainty begin to surface. This week we have had both, and yet Sterling held strong.

Sterling holds strong despite intense political and economic tests

Sterling holds strong despite intense political and economic tests

The UK Government quickly called out Russia for the Salisbury nerve agent attack and the cold reaction from the Kremlin could have sent jitters through the markets. The UK sent Boris Johnson to Russia last year to try and salvage the relationship, indicating that the UK may have been looking to improve trade prospects to give business’ another market to target should talks go south with the EU. I think the strong show of support from the leading political heads in Europe and the US will have comforted the markets. Clearly PM May is able to highlight our common interests with regards to international diplomacy, if we are to see Sterling break through these key resistance levels, we’ll need to her to do the same in the ongoing Brexit talks.

Equally yesterday’s news that multinational Unilever has decided to relocate its HQ to Rotterdam could also have been a heavy sticking point for Sterling exchange rates. Fortunately the overall impact on the majority of jobs seems like it will be minimal. But previously rumours of a major companies leaving UK shores spelt bad news for the UK economy in the eyes of investors, sapping their appetite for the Pound. However, Sterling held on once again, which suggests to me we that maybe the markets have finally factored in the worst possible outcomes of Brexit which certainly fills me with confidence for the Pound’s long-term value.

Next opportunity to buy foreign currency?

This isn’t to say Sterling may be immune to short term struggles. There are a number of tests next week in the form of inflation and average earnings data. Both have begun to stagnate since the impressive rises we saw towards the back end of last year which may lead the Bank of England to put a negative spin on their interest rate decision on Thursday. With this in mind I feel there is more scope for disappointment than sustained gains. If you are looking to buy foreign currency it may pay to capitalise on this week’s impressive rise.

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For more information on how future events could affect exchange rates, call our currency experts on 01494 725 353. You can also keep track of live interbank exchange rates here.

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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.