As my post above mentioned on Sunday today was expected to show some improvement for the Pound as market speculation allowed for some of the ground lost on Friday to be retrieved. Thanks to some choice comments by Theresa May, this actually extended beyond the losses on Friday to breach fresh two month highs above 1.17 (and this time is remaining above this level).
Speculation fuels the currency markets before the close of play each weekend, with high street traders scrambling to move their profits for the week into secure and stable currencies ahead of the weekend.
Sterling, for very obvious reasons, is near the bottom of this list of stable currencies, so despite the recent improvements, the Pound experienced a heavy period of sell-offs ahead of the weekend as traders seek to protect themselves by relieving their portfolio of Sterling. This is normally reversed to some degree by Monday when markets reopen and the mountain of cheap Sterling available is bought back up in droves, which is what was seen this morning when GBP/EUR climbed back above and settled in the high 1.16’s by midday.
This was then exaggerated by Theresa May’s comments today which suggested the UK may not have a clean break from the Eurozone now that it seems more likely that Parliament will be involved in the negotiation process.
Whilst this was in no way binding, the news was enough to see confidence in the Pound surge further, allowing the fresh highs today to be breached more than 4 separate occasions by over 0.2 of a cent as the afternoon wore on.
Moving forward the only real ‘red flag’ for Euro buyers as the month draws to an end is the Autumn Statement on Wednesday, which will be a first look in detail about how Government spending is expected to evolve into in this Post-leave vote atmosphere. Heavy spending to stimulate the economy has been hinted at, and if this is quite alarmingly high, the Pound will likely experience some losses in the short term.
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