This Pound Sterling update discusses recent comments from Mark Carney and looks at the impact of the vote on the Queen's speech in the House of Commons later today. The below table shows the market movements for a number of currency pairs yesterday:
|Currency Pair||% Change||Difference on £200,000|
The Pound received an excellent boost in afternoon trade yesterday after Bank of England Governor Mark Carney said that “some removal of monetary stimulus may become necessary”. He pointed out that there was a pickup in investment which should feed through into higher wage growth and this could see a need to tighten policy. This hawkish statement from Mark Carney came out of the blue and the reaction was strong. GBP/USD in particular rocketed whilst GBP/EUR saw a double whammy making extra gains after a statement from the European Central Bank earlier which played down comments made from ECB President Mario Draghi earlier in the week.
The agreement between the Conservative party and Democratic Unionist Party (DUP) earlier this week saw very little market reaction for the Pound. However, this could all change after the House of Commons vote on the Queen's Speech later today. It has the potential to cause a major political upset and volatility for the Pound. Labour leader Jeremy Corbyn was abundantly clear after the general election three weeks ago when he said he would look to try and vote down the Queen's speech. If this happened it would effectively be a vote of no confidence and the Pound would likely fall sharply as there would be no immediate clear government. The last time there was a vote of no confidence was back in 1924 when the Kings speech was voted down. The then Prime Minister Stanley Baldwin resigned and a Labour minority government took over.
Although the speech could be voted down today the feeling is that Theresa May will receive the votes she requires. MPs last night rejected the amendment to the Queen's Speech put forward by Labour so Theresa May is half way there.
In my view, the financial markets will feel more comfortable once this vote is out of the way and this could see the Pound rally if all goes through without a hitch. It should bring some much-needed stability to the country which would also be good news for the Pound. Clients looking to buy currencies with Sterling could see an improvement in rates in the short term although political uncertainty will still weigh heavy on Sterling considering Theresa May will be running a minority government going forward. There is still a long way to go with Brexit and opposition will be tough.
This morning sees mortgage approvals data from the Bank of England which should make for interesting reading. There have been concerns the property market is cooling particularly at the top end. A small drop to 64,000 for May is expected and anything lower could see the Pound fall lower. UK Gross Domestic Product numbers for the first quarter are released tomorrow and could make for an interesting end to the week.
For more information on how future data releases could affect your Pound Sterling transfer call our trading floor on 01494 725 353 or email me directly at firstname.lastname@example.org.
I had the money from the sale of our villa in Spain transferred to my bank account in the UK. My contact was James and they handled every aspect of the transfer quickly and efficiently and after agreeing the rate the money was in my uk bank account the same day.
Foreign Currency Direct are simply the best! I have been using them for the last 16 months since buying our home abroad. I regularly need to transfer money into Euros to pay for bills & they always make the transactions very simple & easy to do.
Professional and a first class service, thanks to James and the payment team!
Always quick efficient and good rates and on time with transactions. Brilliant