Despite some sizeable wobbles at the top the pound continues to maintain the higher ground against most of the major currencies. GBP EUR is back over 1.16 and has recovered from Tuesdays sharp decline following a leaked report surrounding Brexit which turned out to not be credible. GBP USD is struggling to climb much higher but is safely over 1.24 for the time being.
UK retail sales data are released this morning and could create some volatility for the pound. Often in the Christmas run up there can be big spike higher in retail sales but I don’t think we are at that time yet.
EU inflation data is also released today and should give the European Central Bank (ECB) some new direction. The ECB has been fighting a losing battle against persistent low inflation and weak growth for years. With the Trump election victory expected to cause uncertainty for the Eurozone then it is likely that ECB President Mario Draghi will look to extend its Quantitative Easing scheme sooner rather than later. An extension of 6 months is on the cards and such action would likely see the Euro weaken. A weak inflation number this morning could be the signal that Mario Draghi will take action at the next ECB meeting in December. There may be a jump higher for GBP EUR on the back of a weak number. Clients looking to buy Euros should be aware of the December ECB meeting as it could provide a very good opportunity to buy Euros.
Clients who are holding sterling are finally seeing some better times after all the Brexit uncertainty. There may be a little bit further to go for the pound although there will inevitably be more problems to come for the pound in the form of Brexit. Clients who are selling Euros or selling Australian dollars for example would be wise to consider taking advantage of the excellent levels which are currently still available.
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