The pound reached its highest level against the US dollar at the close of play on Friday when cable (GBPUSD) exchange rates broke through 1.37. The pound also made considerable gains against the Australian and New Zealand dollar when rumours filtered through to the markets that the Spanish and Dutch finance ministers had agreed that they seek the softest Brexit deal as possible, however both parties have denied the rumour, but this hasn’t stopped the positive run for the pound.
The relationship at present between the UK and EU negotiations is strained to say the least. So far this year UK Brexit Secretary David Davis complained the EU is scaremonger UK firms that have affiliation with Europe and the Chancellor Philip Hammond went above head EU negotiator Michel Barnier and gave a direct plea to the leaders of the European countries.
So far the commentary coming from other key political leaders from the UK and EU that are not directly involved with the negotiations have been muted. However if it’s true and key figure heads such as finance ministers start to announce they want the UK to remain as close to possible to the EU, this should only be good news for sterling exchange rates.
For the last three months I have said it is clear that the UK and EU are trying to find a solution and I believe at some point this year the UK will form what Theresa May likes to call a ‘special arrangement’ therefore I expect the pound to begin its recovery against the G10 currencies. If you are reading this website for the first time and are looking to purchase sterling I believe you should take advantage now.
Short term all eyes will turn to this weeks inflation numbers released at 9.30am on Tuesday. Reports are suggesting that inflation could rise again this month to 3.2%. With inflation rising globally we have seen central banks raise interest rates in a bid to combat the rising inflation levels and the Bank of England did this late last year. If the numbers rise to 3.2% this puts further pressure on the Bank of England however medium term forecasts are suggesting inflation will fall back below 3% and closer to 2.5%.
Later in the week Retail Sales numbers for December are to be released Friday morning at 9.30am. With the Christmas festivities yearly Retail Sales numbers should increase again this could be another data release that benefits people that are looking to purchase a foreign currency.
The only currency that the pound is not performing well against is the Euro and exchange rates remain in the lower teens. For more information surrounding GBPEUR exchange rates email me directly on firstname.lastname@example.org.
To summarise I expect it to be a fairly positive week for sterling however it is always important to analyse the other currency that you are converting. For example, I expect the pound to continue its charge against the US dollar as President Donald Trump continues to defend his comments that have been branded racist. Where as the Bank of Canada are likely going to raise interest rates Wednesday therefore Canadian dollar buyers should move before Wednesday.
If you would like a further forecast on a certain currency pair and are looking to achieve the best possible exchange rates on your currency transfer feel free to email me directly on email@example.com.