This Pound Sterling update examines factors that could affect GBP exchange rates over the next week. In the table below you'll find the market movement for a number of GBP currency pair over the last month:
|Currency Pair||% Change||Difference on £200,000|
The current downturn was softened somewhat by some better than expected employment data on Wednesday and yesterday’s positive UK Retail Sales figures. These came out above market expectation, bringing some much needed relief to those clients holding Sterling positions.
The current market remains as unpredictable as ever and the Pound has certainly had some false dawns of late. With this in mind some of my clients have been holding out for more sustainable Sterling improvements but my opinion on this has not wavered.
We are currently working in a short-term market and clients should react accordingly, rather than gamble on longer-term sustainable gains.
The UK economy is under a huge amount of pressure and despite the Bank of England (BoE) raising interest rates by a marginal 0.25%, there has been no real change in market perception. BoE governor Mark Carney spoke again yesterday and once again warned of a Brexit “shock” to Britain’s financial backbone.
This comes amid reports that Brussels have thrown out UK Prime Minister Theresa May’s bid for a bespoke trade deal, news which is hardly likely to breed investor confidence, or create any real momentum for Sterling.
Looking ahead and next week’s budget is likely to take centre stage, although historically it generally has little impact on the currency markets. Whilst it is of some interest, clients are unlikely to see any major upturn for Sterling off the back of it.
If anything the current political instability amongst the government and calls by Shadow Chancellor John McDonnell for “an emergency budget due to on-going public services crisis”, could heap more pressure on the Pound.
Theresa May is under increasing pressure over Brexit and a failing UK economy and the negative undertone and perception surrounding this, is far more likely to drive market sentiment and impact the Pound’s value over the coming months.
Whilst the markets never move simply in one direction, whilst conditions remain as they are, I do not anticipate any major improvement for Sterling.
I would be looking to protect the current value on any short to medium range transfers and avoid the very real risk of a further downturn.
For more information on how future data releases could affect exchange rates, call our trading floor on 01494 725 353 or email me here.
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