It would appear that the surprisingly bullish run for Sterling exchange rates is now slowly coming to an end, as we’re beginning to experience daily falls for GBP exchange rates against some of the other major currencies.
After ending the month of April in such a strong fashion the Pound is having quite a negative start to May, having fallen as low as 1.2628 from the GBPEUR peak of 1.2900 last month which was close to a 3 month high.
I personally believe the falling GBPEUR exchange rate is currently the most reflective of Sterling’s true value, as the Pound has actually gained against the Aussie Dollar due to the Reserve Bank of Australia’s decision to cut interest rates from 2% down to the record low of 1.75%. Similarly, cable (GBPUSD) has so far managed to hold on to it’s recent gains mostly due to USD weakness, as the markets are beginning to price in the unlikelihood of an interest rate hike anytime soon. Had it not been for the weakness in USD and AUD for the reasons previously stated, I think that we could have seen GBP fall against both so far in May.
Sterling had been boosted as the ‘Brexit’ polls indicated a strong ‘Remain’ lead around the time of US President Barack Obama’s recent trip to the UK. Barack Obama, Christine Largarde and Mark Carney have all recently lent their support to the ‘Remain’ campaign and warned the UK of the risks moving forward and this helped swing the polls in favor of a vote to remain within the Eurozone.
I feel that the positive sentiment surrounding Sterling is now beginning to wain, and with poor manufacturing data coming out of the UK yesterday (UK manufacturing activity fell in April for the first time since 2013) along with UK GDP falling in the first quarter of this year, I won’t be surprised to see Sterling fall once again in the lead up to the EU Referendum on the 23rd of June.
This morning will see the release of UK Construction Data at 9.30am which could provide some direction for GBP exchange rates which are currently flat so far. With a quiet week for financial data releases I’m expecting investor sentiment to continue to drive GBP exchange rates this week, and anyone with a GBPUSD currency requirement should be aware that Non Farm Payroll figures are out this Friday which could cause volatility around the time of its release. Feel free to get in contact if you would like to discuss this news release in further detail.
If you are planning to use GBP to buy a foreign currency, it may well be worth your time getting in contact with me (Joseph Wright) on [email protected] in order to ensure you make a well informed decision on when to make that particular transfer, as well as benefiting from highly competitive exchange rates from one of the UK’s leading foreign currency brokerages. Just provide me with a basic outline of your currency requirement and I will be back in touch with you as soon as possible, you can also call me directly on 01494 787 478.