If you have an upcoming currency exchange to make and would like to know more about the best time to buy foreign currency in December, read on for upcoming events that may influence your currency transfer.

 

2019 election special – How will the election effect the pound?

The pound has been stronger as we enter December, on the suggestion from the polls that the Conservatives will win the first British Winter election since 1923. At the time of writing the Conservatives lead in the polls, with the Financial Times ‘poll of polls (an average of all the recent leading polls) on 29th November indicating the Conservatives on 42% of the vote, Labour on 31%, and Lib Dems 14%.

The election is set for December 12th and we may expect rising attention for sterling nearer the date. The currency markets would typically become increasingly focused on the event, with the possibility of increased buying and selling of the pound around this time, thereby leading to volatility.

With an expectation that the Conservative majority will allow Boris Johnson to pass his Brexit Withdrawal Bill through parliament, the markets appear more confident that the UK will avoid no-deal. The actual result will not come to fruition until the early hours of Friday December 13th.

Elections are historically times of increased political uncertainty, and the increased spending commitments touted by all the leading parties would usually have increased investor fears over British government finances.
With Brexit remaining a key factor in determining the value of sterling, this change in spending has been overlooked for now. Whatever the results of the election, it does not look like it will be settling Brexit, as markets will then need to focus on what type of future relationship the UK will have with the EU.

There is still the potential for a surprise outcome, which may include a stronger than expected Conservative majority, a very slim Conservative majority, a hung parliament, a Labour majority, a Labour / Liberal coalition to name a few.

It is by its nature, impossible for the currency market to predict all eventualities; it can only try and account for the most likely outcome, which is constantly subject to change. Clients interested in sterling may find increased volatility around the time of the election, as the market reacts to the latest news.

Currency market behaviour during previous elections in 2010, 2015 and 2017 indicates a far from calm period ahead. If you have a requirement to send money internationally its a good idea to keep abreast of the political and economic factors with the potential to impact exchange rates. Being in regular contact with your Account Manager here, and highlighting your upcoming requirements enables you to make informed decisions about your currency transfers.

 

What other news and events may shape exchange rates in December?

The second week of December, commencing on the 9th could see increased volatility for many currency pairs including GBPEUR and GBPUSD, as it features the release of the UK election and Interest Rate decisions for both the Eurozone and the United States.

Pound to euro exchange rates are likely to be impacted by events on December 12th and not just because of the UK Election, but also the European Interest Rate decision by the European Central Bank (ECB). This will be Christine Lagardes – the new ECB Presidents – first meeting and investors will be keen to better understand her approach to this vital role.
The euro could face some scrutiny by investors having weakened earlier in the year, following the announcement of policy changes that saw lower interest rates and a new Quantitative Easing (QE) program.

QE is the purchase of government bonds by a Central Bank, and this policy of the ECB has not been universally popular. It will be interesting to see how the new ECB President plans to confront this issue and the concerns over future European growth and job creation.

Changing the direction of focus across the Atlantic, Donald Trumps potential impeachment looks to be an ongoing issue that will warrant interest in December. At the time of writing the expectation is that there will not be enough Republican support to formally impeach Trump, but the ongoing issue may weigh on sentiment towards the US dollar, and as we know, typically political uncertainty can weaken a currency.

The ongoing developments for the US – China trade wars may also influence US dollar sentiments, as well as the US Interest Rate decision on December 11th, where the prospect of any further interest rate cuts might influence sentiment on the US dollar.

Actions of the US Federal Reserve can have wider influence on sentiments currencies from further afield, including the Australian dollar, New Zealand dollar and Canadian dollar.

December is shaping up to be a very important month with the release of some key economic and political news which has the potential to change the outlook for various currencies.

 

Economic dates in December

Here is a snapshot of some of the key economic releases in November, although there are many more which may influence the market and various currency pairings.

 

Monday 2nd – USD

ISM (Institute Supply Management) Manufacturing PMI (USD)

Tuesday 3rd – AUD

RBA (Reserve Bank of Australia) Interest Rate Decision and Rate Statement (AUD)

Wednesday 4th – AUDCAD

Australian GDP (Gross Domestic Product) data (AUD) / UK Markit Services PMI (Purchasing Managers Index) data / BoC (Bank of Canada) Interest Rate decision and Rate Statement (CAD)

Thursday 5th – EUR

Eurozone GDP data (EUR)

Friday 6th – USD – CAD & others

US NFPR (Non-Farm Payroll) and Unemployment data (USD & others) / Canadian Unemployment Rate (CAD)

Tuesday 10th – GBPUSD & others

Chinese Inflation data (AUD & others) / UK GDP and Trade Balance data (GBP)

Wednesday 11th – USD & others

US Inflation data (USD) / FOMC (Federal Open Market Committee) Interest Rate Decision (USD & others)

Thursday 12th – GBPEUR

UK General Election (GBP) / ECB (European Central Bank) Interest Rate decision and Press Conference (EUR)

Friday 13th – USD

US Retail Sales (USD)

Tuesday 17th – GBP AUD

RBA Meeting Minutes (AUD) / UK Unemployment Rate (GBP)

Wednesday 18th – GBPEUR

UK Inflation data (GBP) Eurozone Inflation data (EUR)

Friday 22nd – GBPAUD

BoE (Bank of England) Interest Rate decision (GBP) / UK Retail Sales (GBP) / Australian Unemployment Rate (AUD)

Are you planning a currency transfer in December or 2020? Our service is designed to offer an informed range of commentary on the market and what may move rates in the future.

In any event, our currency experts are on standby to answer any of your questions, so feel free to call our trading floor on 01494 725 353 if you would like to discuss a transfer.

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