Sterling direction could shift quickly but not unexpectedly

Sterling buyers and sellers should be preparing themselves for many more twists and turns this month and beyond as politics continues to drive exchange rates. Any day now the long awaited Supreme Court case we have been dutifully covering is due. In short Sterling could rise up to 2% if the previous decision is upheld, it could fall up to 4% if it is rejected. The prospect of Sterling rising by 2% will not be much good news for clients holding pounds waiting to buy a foreign currency as Sterling has slumped some 2% since last week anyway.

Further hints Theresa May will seek a ‘harder’ form of Brexit (a labelling she says is wrong) has seen Sterling on the back foot before the Supreme Court case is decided.

Therefore clients holding the Pound looking for improvements on their foreign currency value should keep in very close contact with us as the imminent release of the Supreme Court case could give them a short lived opportunity to get out of trouble.

Next Tuesday has been set as the day Theresa May will give a speech on her Brexit plans and judging by her previous tones it is unlikely to help anyone but those clients looking to buy the Pound. Markets and the media see Mrs May aiming for a hard Brexit which is seen as bad for the UK.

Donald Trump’s Inauguration is the 20th January and this could be a volatile time. Sterling rose at the time of Trump being announced the winner of the US election. With UK spies being embroiled in the latest Trump scandal could this threaten the ‘special relationship’ Boris Johnson was so smugly tweeting the strength of this week? As you can see January has some key political events which could have a big impact on Sterling exchange rates.

Next week will be very busy for Sterling

Today is a quiet day for UK economic data but next week there is lots happening that could move exchange rates. On Monday Mark Carney will give a speech followed by Theresa May on Tuesday. We also have Inflation data and Unemployment figures on Wednesday. The week will be rounded off with UK Retail Sales. Credit card borrowing is up at record levels close to that prior to the financial crisis. Many supermarkets and shops have reported positive Christmas results. It looks like this was all fuelled by credit card debt rising, is this sustainable?

In my view clients holding the Pound looking to buy a foreign currency have a rocky road ahead. Even if the Supreme Court case goes their way and Sterling rises the uncertainty over Brexit is not going to go away quickly. This means Sterling will remain subject to shocks but there will be opportunities too.

We have a wide range of events pending all of which will I believe be vital to direction for the Pound. In such a market the best thing to do is be prepared and try to have some kind of plan. Speak to us today to get a full overview of your position and remove some of the risk in this volatile market.

With such an array of economic data due to be released in the UK next week, getting in touch with your dedicated broker may be beneficial if you have a currency requirement that needs attention. Call today on 01494 725 353 or email me at jmw@currencies.co.uk to discuss further.

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