The pound starts the week with manufacturing and trade figures along with the key Gross Domestic Product (GDP) number for April released at 08:30 this morning. Today's releases may act as a precursor to tomorrow's average earnings release which could provide volatility to sterling exchange rates, given it has been a primary area of focus for the Bank of England (BoE).

Currency Pair% Change (Month)Difference on £200,000
GBPEUR2.40%€5,400
GBPUSD2.28%$5,800
GBPCAD3.68%CAD $12,400

For obvious reasons, reaction from the Bank of England to these releases has consistently been produced with a cautious tone. As the potential of a Brexit no deal once again returns to the table, business confidence has fallen considerably, with key figureheads collectively lamenting parliament's ability to reach an agreement.

Conservatives defeated in an attempt to call a snap election

Nomination day: 10th of June

Following PM May's resignation on Friday, the race to become the new Conservative Party leader officially commences today. The markets will be watching closely, keen to see how the new winner plans to better May's efforts both in pushing for new agreements with the EU and crucially breaking the deadlock in Parliament. It is clear that much of sterling's value in the coming days and weeks may hinge on the type of Brexit the likely winners are pushing.

This has already been reflected in sterling exchange rates, as since May announced her resignation, the pound has struggled to find any foothold with the markets.

As the number of nominees swelled (11), the task for the markets to gauge the potential winner has become more difficult and a as result the degree of uncertainty lifted, ultimately driving the pound down to multi-month lows against the dollar and the euro.

Only candidates with at least 8 nominations behind them will progress to the next rounds. So this process of elimination should mark the start of some degree of certainty which in theory could help the sterling gain some traction with the markets as the week goes on. Of course the ration of pro "Brexit no deal", to "Brexit with a deal", to "No Brexit at all" making it through each stage could bring volatility too.

A favourite to make the next round of course is Boris Johnson, he has already drawn criticism from the EU over the weekend. Johnson once again presented his push to delay any payment of the prearranged divorce bill of 39 billion pounds to the EU in a bid to push for a better one. French President Macron's representatives immediately labelled this path as the equivalent of sovereign debt default.

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