The Pound has gained in value against the US Dollar for the third day running today, as the currency markets appear to have become more confident with the Pound moving forward after a bullish speech from the Bank of England yesterday.
It’s the first time the Pound has done this since January, and it’s a promising sign for those hoping the Pound will climb in value as the year goes on and especially in the wake of the triggering of Article 50 which will officially commence the beginning of the Brexit.
Due to the fact the Pound has lost a lot of value over the past year, the inflation rate within the UK is increasing at quite an sharp rate and it’s looking likely that the Bank of England will raise interest rates within the UK to counter this. A upward move in the UK base interest rate is considered a positive hence the upward move in the Pounds value yesterday afternoon when hikes were alluded to by the BoE, and with one of the voting members of the BoE voting in favour of a hike yesterday it’s looking like a hike is more likely than a cut.
Over the past year the pound dropped significantly both in the wake of the Brexit vote last June, and then again in October when Theresa May spooked investors after giving a particularly bearish speech at the Conservative party conference.
The next major announcement will be the official beginning of the Brexit. It’s difficult to say how the markets will react, but I do think those who wish to avoid risk may be wise to consider making their conversion sooner as opposed to later just in case there’s another steep drop.
Sterling sellers will of course be hoping the Pound climbs in the wake of the triggering of Article 50, but I think that the lower levels of GBPUSD $1.20 and GBPEUR €1.10 should be watched closely as they’re the current lower levels/support levels if the current trading ranges.
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