Sterling has made further gains during Friday morning’s trading, with GBP/EUR now trading above 1.17. The Pound has performed well for most of the week, continuing the momentum gained from Donald Trump’s unexpected US election victory last week.
Trump’s surprise victory boosted market confidence in the UK economy, due to previous comments the property tycoon made regarding future trade deals with the UK. These comments were made despite our upcoming Brexit from the EU and this allowed the Pound to surge against the major currencies.
GBP/USD rates have now levelled out following comments made by FED chairlady Janet Yellen, who gave strong indications that they would be raising interest rates next month, a year after their last hike. If this does occur expect the Pound to weakened against the USD ahead of the triggering of Article 50 early next year, which will officially start the process of the UK leaving the EU.
GBP/EUR rates have improved to their best levels of the past 2 months and this positive move has intensified following UK Retail Sales figures released yesterday morning, which came out well above market expectation. When economic data come outside of the expected remit, we often see aggressive market swings and this can be the time for clients and investors alike to take advantage of an opportunity they did not expect. With European Central Bank (ECB) president also leaving the central bank open to extending their current monetary policy (QE) programme, the EUR looks to have hit its peak against the Pound in the short-term.
However, I would be wary about relying on the current trend continuing into next week, with the Autumn budget being delivered. Philip Hammond could deliver a blow to the Pound, as he is expected to announce that the UK faces a £100bn deficit due to our Brexit over the next 5 years. This news is likely to knock confidence in our fragile economy, so today could be a prime opportunity for those clients holding Sterling.
If you have an upcoming GBP currency exchange to make and you are concerned by the increased market volatility of late, it may be wise to look at protecting the gains you’ve made, or limiting your losses with one of our forward contracts, rather than gamble on what has become an increasingly volatile and unpredictable market.
If you would like to be kept up to date with all the latest market movements ahead of your currency exchange, or simply wish to compare our award-winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 478 and ask one of the team for Matt. Alternatively, I can be emailed directly on email@example.com