Pound Sterling Forecast

Anyone with currency requirements over the past few weeks will no doubt have been keeping a very close eye on the markets, (and hopefully pound sterling forecast!)  The pound has seen swings of 3% and more as the election, Greek crisis and stock market volatility have all played their part in causing considerable market volatility.

Now that we have a coalition government in place the questions turn from who will be in Government?….. to how will they govern?

The basic premise of a Conservative majority in coalition with the Lib Dems has pleased the markets and the pound has spiked in value over the course of this morning.  Looking ahead the ‘how’  is now key to the UK and to the GBP.  Any uncertainty about the strength or legitimacy of the coalition could cause sterling weakness, we have in fact seen a little weakness this afternoon.  With key issues such as the budget deficit, and national debt to address there are plenty of challenges ahead.  For the pound a lot will depend on exactly how our new coalition government deal with these issues.  Clear, credible policy will be essential if the pound is to avoid taking losses.

The final point I would like to make is that anyone now hoping to see the pound to push on through the 1.20′s and toward the 1.30′s, may want to consider the fact that the Government, and Bank of England are likely to be keen on keeping the pound weak.  This will help attractinvesment from overseas and assit the economy through making exports cheaper.

The good news is that we are currently trading just below a 10 month high against the Euro, and the pound is up against the USD and CHF from last week.

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