This Pound Sterling report looks at what's next for the Pound, discussing factors that could affect GBP exchange rates this week. The below table shows the market movements for a number of GBP currency pairings in the last week:

Currency Pair% ChangeDifference on £200,000
GBP/EUR1.73%€3900
GBP/USD1.84%$4760
GBP/AUD2.59%$8500
Mark Carney to Stay as Governor Carney yesterday agreed to remain as the Bank of England Governor until 2020 which should see him see out the whole of the Brexit transition from start to finish. Philip Hammond decided that keeping a “smooth exit” from the EU would be easier without a change of Governor at the central bank. The gbp/eur did climb to a 5-week high yesterday and the news of consistency at the central bank only helps to add a little more certainty to Sterling’s position. Carney himself said he’s “prepared to do whatever he can to promote a successful Brexit and an effective transition at the Bank of England”

UK inflation is still on investors’ minds

Sterling remained under pressure yesterday following a surprise drop in inflation on Tuesday down to 2.6% from 2.9% the previous month.

Markets were expecting inflation to remain largely unchanged from the previous month, however the drop in oil prices during June (Brent Oil dropped to $40 per barrel) fed through to consumers.

The reason for the Pound's slump in value was that the chances of the UK raising interest rates at their next policy meeting faded with this data release.

The Bank of England had been under pressure of late to raise interest rates in an attempt to try and slow inflation as passed the target rate of 2%.

I personally think that the Pound's recent surge may have reached an abrupt end. I think that the Pound is now in a vulnerable position and could be set to decline further as Brexit negotiations heat up.

What next for the Pound?

With the pressure on the Bank of England to raise interest rates on the back burner for now, I feel that attention must now be focused again on Brexit and trying to minimise any negative effects that negotiations could have on the Pound.

Many analysts are now claiming that the negative effects of Sterling’s drop off following Brexit has now been fully passed on to the consumer now in terms of prices of goods and services.

Today we have Retail Sales data for investors to digest. The latest Retail Sales data is expected to show a healthy gain and if this does occur I wouldn’t be surprised to see a brief spike in Sterling’s favour. This could be a volatile data release as the continued squeeze on household incomes following higher prices and a slump in the wage growth of late poses a real risk of making the predicted healthy gain turn ugly very quickly.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353.

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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.