The pound has received another major boost today across all of the major currencies ahead of the eagerly anticipated speech from UK Prime Minister Theresa May tomorrow. There is speculation that an offer of €20 billion will be made by the British government tomorrow and depending on how well this speech is received should determine the direction of sterling exchange rates tomorrow.
The general consensus is that Theresa May will seek to make friends rather than enemies and as such the markets have already begun to price in the prospect that trade negotiations will continue in the right direction after a recent stalemate. GBP EUR currently sits at 1.1360 having climbed 0.8% today whilst GBP USD hit a high of 1.3582. Clients needing to buy Australian dollars have seen levels rocket through 1.71 today.
Those clients holding pounds looking to buy other currencies could see a window of opportunity to buy. Those clients who need to buy Euros could be especially impacted and a strong speech could see gains of 1-2% for GBP EUR. The risk however is that if the speech does not deliver then the pound could see sizeable losses across all of the major currencies. There is a huge amount of pressure on the pound tomorrow but there could still be some good gains for the pound. The detail will be the response from the European Union and in my view this is where the pound could see problems. Clients reading this would be wise to get in touch and set things up ready for what should be a very volatile day. The time of the speech is yet to be confirmed.
ECB president Mario Draghi will also be making a speech tomorrow morning although he will be speaking at 9am. EU manufacturing and services data could also see some volatility for Euro exchange rates although tomorrow will clearly centre on the big speech.
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