This GBP report looks at the reasons behind Sterling's recent boost and the factors that are likely to affect exchange rates today. The table below shows the market movements for a number of currency pairings for the year to date:
|Currency Pair||% Change||Difference on £200,000|
The Pound has risen across the board of major currencies this week, mostly off the back of some unexpected economic data releases.
UK inflation levels jumped 0.3% in August and hit their joint highest level of 2.9%, which was both above expectations and the highest inflation level seen since May.
This data gave the Pound a much needed boost after the currency had been in the financial news for the wrong reasons recently, most notably for hitting an 8-year low against the Euro.
Cable (GBP/USD) is now trading at a 1-year high and the Pound to Euro rate has hit a 6-week high and is back above the key 1.10 psychological level which in my opinion can only be a good thing for the Pound moving forward, as many had feared GBP/EUR would consolidate below this benchmark level.
These positive price movements have come at a time that Brexit talks are on being put on hold. The 4th round of negotiations were originally scheduled to start next Monday but earlier this week it emerged that talks are to be shelved for a week to ‘allow more time for consultation’ and ‘give negotiators the flexibility to make progress’.
Brexit talks, led by Brexit Secretary David Davis, have been taking place once a month since June so it will be interesting to see how many times they’re delayed, who suggests these delays and how this impacts the Pound in future. Especially when we consider how Mr Davis European counterpart, Michel Barnier has emphasised how the clock is ticking for the UK as well as his frustrations regarding them.
Today has the potential to be busy for GBP exchange rates, and I would suggest those with an impending currency requirement involving the Pound make us at FCD aware so we’re on hand to update you if there are any major price movements.
The impressive inflation figure out on Tuesday is being put down mostly to the increasing cost of clothing and petrol in the UK, so I don’t think that an interest rate hike to mitigate the increasing cost of living is likely anytime soon. But with that being said, the next opportunity for the Bank of England to make a change is today at 12pm, and I think that if in the discussion afterwards Mark Carney (BoE governor) alludes to bringing the rate hike plans forward from 2019, we can expect to see a boost to the Pounds value.
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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