It’s been a topsy-turvy 24-hours for Sterling exchange rates as time runs out for the UK and EU leaders to agree on a Brexit deal. More on the latest from the EU summit in Salzburg and UK retail sales data due out today in the market report below; the table displays the range of exchange rates for a number of currency pairings throughout the past month when selling £200,000.00.
|Currency Pair||% Change||Difference on £200,000|
There are now less than 7-months remaining before the UK departs the European Union, and although some polls suggest the public now leans towards a Remain vote, the country is still split and so is the Government as what the plan should be.
We’ve seen Sterling spike this week after comments from the EU chief negotiator, Michel Barnier suggesting that the EU has softened its stance regarding the Irish border and it’s open to minimising physical checks as people pass through it. Those of our readers following the markets will be aware that it’s comments such as these that are the main drivers of GBP fluctuation, although yesterday morning we saw an anomaly to this rule.
Yesterday morning the Pound spiked to its highest levels in over 2-months against both the Euro and the US Dollar. This occurred just after 9.30am immediately after reports confirmed the UK inflation rate has hit a 6-month high unexpectedly. The rate has jumped to 2.7% (Aug) which was above the expected 2.4%, with the headline revolving around UK wage growth outstripping inflation as wage growth is running at 2.9%. It’s likely that Sterling spiked owing to this positive news, especially after wage growth was lagging earlier in the year to the extent that it prevented the Bank of England from hiking interest rates until just last month. The increased inflation levels also increase the chances and optimism of further interest rate hikes which is another reason Sterling climbed.
UK Prime Minister, Theresa May has rejected the idea of a second referendum despite increased calls for one, especially now that the plan for it appears unclear. She’s held strong regarding her plan, which is labelled the ‘Chequers plan’ and she will be encouraging other EU leaders to support her plans whilst in Salzburg, Austria over the next few days at the EU summit.
She’s faced criticism and there are up to 50 members of her own political party that aren’t on board with her plans. There has also been criticisms from the EU side regarding it, although the comments from Michel Barnier this week may have buoyed her.
Yesterday afternoon the gains for Sterling after the inflation report were reversed after news broke that May has rejected Barnier’s plans for the Northern Irish border. Although I don’t think this would have been a major surprise after the DUP party in Northern Ireland had already expressed their dissatisfaction.
Despite a quiet end to the week for UK data, I’m expecting today to be one of the busiest days for GBP exchange rates as UK Retail Sales data will be released at 9.30am this morning.
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