With the currency markets moving every two seconds, it can be vitally important to be aware of what is driving the currencies in or out of your favour. The below table displays the difference in a number of currencies you would have achieved when buying £200,000 during trading on Friday.

Currency Pair% ChangeDifference on £200,000
GBP/EUR0.859%€1960
GBP/USD0.467%$1200
GBP/AUD0.976%AUD $3380

London Bridge Terror Attack

Saturday evening saw a white van mount the pavement on London Bridge and hit multiple pedestrians. Several men also exited the van wielding knives and proceeded to commit indiscriminate attacks on the public.

Three terrorists were shot dead after they killed six people and injured at least 48. Our thoughts are with those who are in any way affected by these atrocities.

When I first began working in the FX industry I was taught that terrorism could be one of the major factors that effected a currency’s value. It seems however that attacks are happening so frequently they are now not as significant as they once were.

May will chair a meeting of senior ministers and security chiefs at the government’s emergency Cobra committee this morning. The PM called for new measures to tackle extremism on Sunday stating “enough is enough.”

May will no doubt be criticised on her record for police cuts and parties will then set out their security credentials in a bid to win votes with their methods for combating terror.

Election Intensifies

The move by Theresa May to call a snap general election seemed to be a shrewd one while the opposition was so weak. A Tory victory is deemed to be the better option for the UK economy, which caused a rise an in Sterling value against the majority of major currencies following the announcement.

However, since then the PM has shot herself in the foot by attacking her core voters. The elderly will now have to pay for their own home care or care home if they have in excess of £100k in assets. May’s no show at last week’s debate also did not do her any favours. This has caused many to change their vote according to opinion polls. Corbyn on the other hand has gained popularity, particularly amongst the younger voters with sweeping changes to the education system which would greatly reduce student fees. The Tory lead has now been slashed and it will be difficult to for the conservatives to gain a majority victory, according to polls.

The currency in question historically weakens 24-48 hours before the vote due to political uncertainty.

If the conservatives gain power I would expect the pound to strengthen. A hung parliament is a possibility with Labor gaining ground. If we do see a hung parliament I would expect the pound to lose further value. If a coalition is required it may be difficult for the conservatives to find allies due to what happened to the Liberal Democrats during the last coalition. Although I’m sure the situation may change if an opportunity arises.

If Labour were to form a coalition there is the possibility it could be with more than one party. All the parties have differing manifestos and getting anything through parliament could be very problematic. We have Brexit to deal with, we need a strong, decisive, united government to negotiate some of the most challenging deals in the last fifty years. A coalition, unable to work together could be catastrophic for exit talks.

Friday’s Debate

Many have criticised May for not appearing at a recent debate. However, this may not have been such a horrendous move reported by the main stream media. The debate she did not attend was heavily biased and I do not think she would have been in a position to benefit from the debate.

She started Friday’s debate thoughtfully, confidently and fluently. She drew upon the audience to ask who is in a position to better negotiate the exit from the UK, Corbyn or herself.

She then went on to attack the credibility of a Corbyn led government “including Diane Abbott, who can’t count, John Mc Donnell, a Marxist, propped up by Nicola Sturgeon who wants to break up the UK, and Tim Farron, who wants to go back into the EU.”

It seems as though May came out on top, but polls are still very close. The latest YouGov poll has the conservatives ahead of Labour by just 3 points. As a general rule, the more uncertain the outcome the weaker the pound will become.

Consumer Inflation Expectations could make interesting viewing

Inflation is currently a major concern for the UK following the vote leave the EU. Many economists predicted there would be a sharp rise in inflation but it has only just materialised. It seems the Brits have kept calm and carried on.

The considerable rise came last month jumping from 2.3% to 2.7%. This is a direct result of the vote to leave. The weak value of Sterling is causing imports to become far more expensive. The retailers are now passing on these increases to the consumer, this is fine, providing people continue to spend. If however the average wage does not rise at the same rate as inflation and people are reluctant to spend there is the possibility the UK could be headed for a recession.

Consumer inflation expectations is released on Friday. It is a percentage that consumers expect the price of goods and services to change in the next 12 months. It will be interesting to see if expectations match up to the factual inflation data. It is well worth keeping an eye on inflation if you have trade involving Sterling it could have a significant effect on Sterling value.

Consumer inflation expectations is followed by manufacturing and industrial production and finally we will see trade balance figures. All of which give an indication as to the health of an economy and can cause market movement. The big market mover will obviously be the election result, but this data still has the power to move the market and I think data could be negative.

Thank you for reading my currency update currency report, if you have any questions about Sterling exchange rates I would be more than happy to discuss them – you can contact me with any queries here.

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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.