This Pound Sterling report looks at factors that could affect GBP exchange rates this week, looking specifically at the Chancellor's Budget, Brexit news and Inflation. The table here shows the market movements for a number of Sterling currency pairings just last Friday:

Currency Pair% ChangeDifference on £200,000
GBPEUR0.6353%€1420
GBPUSD0.6834%$1800
GBPAUD1.0063%AUD $3500

Hammond under orders to provide an optimistic budget

Chancellor of the Exchequer, Philip Hammond is facing increased pressure by Tory Euro sceptics to be positive about Brexit and use the budget to put forward an ambitious plan of tax reductions and an increase in spending.

Brexit: Theresa May takes control

It has been reported there are severe tensions between May and Hammond.

Hammond has told fellow MPs he intends to stick to his guns and keep with his fiscal rules. He is confident in reassuring the markets that he has a firm handle on public finances during such a period of uncertainty created by Brexit.

Many Tory members who are pro-Brexit have criticised Hammond for his negative opinions on Brexit. Some feel he is not embracing the opportunities created by the UK’s exit from the EU. Personally I think he is quite right to be cautious there is very little clarity as to how Brexit negotiations are progressing.

I would expect Hammond to provide a sensible and constrained budget and I would be surprised to see any significant movements for the Pound.

Brexit Update

Ireland has issued a warning that it will block Brexit negotiations in December if the UK fails to guarantee there will be no hard border with Northern Ireland.

I am confident this situation can be resolved but keep an eye on developments if there is conflict expect Sterling to suffer.

Inflation Report Hearings

Tomorrow we will see the release of the inflation report hearings. The treasury committee examine the expenditure, administration and policy of HM Treasury, HM Revenue & Customs and associated public bodies including the Bank of England and the Financial Conduct Authority (FCA). The outcome could well influence the markets considering the current state of the UK economy. This could also influence Hammond’s stance on Wednesday.

Trading Strategy

If you have a Sterling to Euro transfer to make in the short to medium term I feel in such unpredictable times it is important to have realistic expectations.

Due to the impressive data coming out of the Eurozone and the lack of stability of the UK government I would consider performing a tranche of your requirement at current levels no then either setting a rate alert with your broker or setting a realistic limit order to try and maximise your return. The highest level for GBP/EUR in the last six months is 1.1450. To aim above this level in the current economic climate may well be too optimistic. Remember also in order for a limit order to fill you have to be above your target level.

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 dcj@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.