This Pound Sterling update discusses the currenct situation with the Pound as well as factors that could affect GBP exchange rates this week. The table below shows the market movements for a number of currency pairings in the last 30 days:

Currency Pair% ChangeDifference on £200,000
GBPEUR3.8%€8,620
GBPUSD3.9%$10,620
GBPAUD4.3%AUD $14,800

Brexit negotiations and political stability likely to drive Sterling’s value over the coming weeks

Sterling has found some much needed support over recent days, halting last week’s slide against the EUR, USD & AUD.

At yesterday’s highs, GBP/EUR rates hit 1.12, GBP/USD recovered to 1.32 and GBP/AUD closed in on 1.70.

Brexit latest

Despite the Pound retracting slightly against all three currencies towards close of European trading, investors holding Sterling positions will be at least somewhat buoyed by the improvement.

Whilst an aggressive spike for Sterling seems unlikely under current market conditions, at least it has gained a foothold and curbed any further losses against the majority of major currencies for the time being. This upturn in fortunes can be attributed to yesterday’s UK Manufacturing & Industrial Production figures, which came out above market expectation.

The figures of 1.6% and 2.8% growth, immediately boosted investor confidence in the UK economy and the Pound rallied, making gains across the board.

This spike is even more impressive considering the considerable amount of pressure currently on the UK economy. Brexit negotiations continue to dominate headlines and the negative association around these, continue to cast a dark shadow over the UK. Add to this political unrest, a leading party in turmoil and a Prime Minister struggling to cling to power and it becomes easier to understand why the UK and ultimately the Pound has faced hardships of late.

Where next for Sterling?

Over recent months investors have started to move their away from Sterling; a once safe haven currency of choice and the Pound’s value has diminished as a result.

Last year’s referendum result has had a direct impact on both the UK economy and investors risk appetite for Sterling.

Which direction the Pound takes next is a difficult question to answer and whilst no immediate recovery seems to be on the horizon, talk of a prospective interest rate hike by the BoE has at least helped alleviate some pressure. This has transpired to move Sterling away from the recent 8-year and 31-year lows against both the EUR and USD.

Looking ahead and it is likely that only a breakthrough in Brexit negations and an element of political stability can release Sterling from its shackles in the short-term and until then I expect any spikes to be met with resistance around key market thresholds.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me at mtv@currencies.co.uk.

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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.