Sterling has started the month on the back foot as Prime minister May’s counterparts both domestically and from within the EU upped the intensity which ultimately left Sterling in the balance after a positive run during last week’s trading. More on the uncertatinty surrounding the Pound in today's Sterling report, the table below shows the difference in exchange rates for the past 30 days, showing the potential difference in return you could have achieved when selling £200,000.00 during the high and low points.
|Currency Pair||% Change||Difference on £200,000|
Boris Johnson’s claims that May is leading the UK to a worse situation to the one it was in Pre-referendum will not have sat well with investors, particularly following the news that there are a reported 20 MP’s considering moving their allegiances away for the Prime Minister because of the lack of clarity she has been able to provide thus far.
Furthermore, French president Macron highlighted his concerns that a “blind Brexit” may lead to an unacceptable extension to the 21-month transition period.
EU law makers yesterday made it clear that the EU Parliament is pushing to be in a position to vote on a Brexit proposal just 2 weeks before the march deadline showing just how tight the EU negotiators expect the ongoing talks to be.
The UK Government’s reaction to the above claims will likely be the main driver for Sterling exchange rates in the short term. There has been little to no support for Sterling since May’s statement yesterday, promising to push back any kind of calls for compromise from the EU on the final Chequers agreement laid out by her cabinet, which does make me question the market’s underlying faith in the PM and indeed the Pound at present. Certainly something worth bearing in mind if you have an upcoming foreign currency requirement. In the short term I’m not convinced it will get any cheaper.
To further compound sterling’s woes, yesterday also showed fairly bleak readings from the latest manufacturing survey. Posting a drop to the lowest levels since mid-2016, the PMI reading of 52.8 resulted in a fall in foreign demand and the uncertainty from Brexit continuing to weigh heavily on business confidence within the UK.
This may well bring further scrutiny to today’s inflation report hearing from the Bank of England this afternoon. Last month’s equivalent gathering prompted strength for sterling as the BoE nodded to the fact that the UK was above it’s inflation target and formed the basis of an argument that a rise in interest rates could still be forecasted to happen in the not too distant future. If Sterling is to gain any kind of traction short term, similar comments need to made at today’s meeting.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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