It was another volatile day for Sterling yesterday, with the Pound spiking up to a high of 1.1956, before retracting back towards 1.18 by close of European trading.
The Pound received another welcome boost following apparent comments made by Boris Johnson, regarding the free movement of people within the UK following our upcoming Brexit. This immediately gave the Pound market support, with GBP/EUR rates spiking off the back of it. Johnson was quick to speak out against this and claimed he had in fact never made the statement and the Pound lost value as quickly as it had gained it.
There were further comments made by Brexit secretary who clarified the government’s stance to some extent, by claiming the UK would consider contributing to the EU budget in order to guarantee the best possible access for goods and services to Europe. This more official statement is likely to help support the Pound over the coming days but whether it is enough to push GBP/EUR rates back towards the 1.20 mark is unclear.
Yesterday’s rates were the best in over three months for those clients holding GBP and I’m still of the opinion that clients should be looking at these short-term improvements as a window of opportunity. I’m still not convinced that any further Sterling strength will be sustainable under current market conditions, with so much uncertainty still engulfing the UK economy. We still have no clear picture of how we will facilitate our Brexit and with the high court ruling in regards to the triggering of Article 50 still to be ratified by the Supreme Court, who knows what the state of play will be, come the start of 2017.
Sterling has gained over 4 cents in the past few weeks, which on a £100,000 GBP/EUR exchange would be the equivalent of an additional 4000 EUR and considering how fragile the UK economy remains in the eyes of investors, this could the opportunity clients have been waiting for.
For the more risk adverse this month’s Italian referendum could put additional pressure of the Eurozone economy. If the Italian public vote NO to the reforms then current Italian Prime Minister Matteo Renzi is likely to step down, which could pave the way for the far right party to gain support. This would increase the likelihood of a another referendum on Italy’s future participation in the EU and the EUR could come under pressure as a result.
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 firstname.lastname@example.org