Over the last few months in 2018 we have seen the GBP/EUR average rate gradually climb up with the rate spending most of its time around the 1.14 level. Whilst there hasn’t been a movement outside the 1.13-1.153 level for some time, there is an optimism that the Pound is starting to strengthen.
The table here shows the market movements for a number of GBP currency pairings during the last week:
|Currency Pair||% Change||Difference on £200,000|
On Friday a Reuters Poll found Sterling forecasts are at their highest since the Brexit vote in 2016. The reason for the optimism was put down to progression in the Brexit talks coupled with the expectations of at least one interest rate hike on the cards. Furthermore, it should be worth noting that the number of traders at a net-long position for Sterling was at the highest level last seen in July 2014, this is investors who believe Sterling is going to strengthen.
Next month with the expected interest rate hike from the Bank of England following the 7-2 vote from the Monetary Policy Committee last month, we should start to see Sterling strengthening.
The trend we have seen in the last few months is that Sterling gains several weeks before the event looks set to take place.
Next month with the expected interest rate hike from the Bank of England following the 7-2 vote from the Monetary Policy Committee last month, we should start to see Sterling strengthening. However, the trend we have seen in the last few months is that Sterling gains several weeks before the event looks set to take place.
The next Interest Rate Decision from the BoE will take place on the 10th May and following past form Sterling could see a spike at the start of the month or the end of April. If you’re looking to purchase currency using Sterling in the next few months, then we could see year highs in the next few weeks.
Alternatively, if you’re looking to purchase Sterling then in my opinion you should be acting sooner rather than later, the current levels could become the desired rate in the next few months.
The main release this week comes on Wednesday with Manufacturing and Industrial Production data which are both expected to be significantly lower than previous months. This however will be attributed to the “Beast from the East” weather system.
Whilst data is quiet the currency markets can always surprise so make sure you’re in contact with your broker to capitalise on any movements in your favour.
For more news on how future data releases and events could affect exchange rates, call our trading floor on 01494 725 353 or email me here.
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