The pound has rallied today despite weaker than expected retail sales data which have taken the shine off the retail sector. Retail sales have fallen for the first time since 2013 and the blame has been placed on higher inflation and weak wage growth. The combination of the two are squeezing the pockets of British consumers and this is starting to have an impact on the official data releases and is a negative for the price of sterling.
The pound is still having a very tough time of it following the Brexit vote 23rd June 2016 but at this particular point in time the levels are struggling to break over 1.14 which is a key level of resistance for GBP EUR. With levels gradually moving lower each day this week the pound is now sitting just below 1.12 for GBP EUR and below 1.32 for GBP USD. Rates remain very attractive for those clients looking to sell Euros and dollar and buy pounds and there is a good opportunity coming back the other way. Clients with Euros in overseas bank accounts looking to move into sterling would be wise to make contact as this is something we can help with.
The political uncertainty that the government currently faces combined with the lack of clarity over Brexit are having a negative impact on sterling exchange rates. Next week’s budget which will be delivered by Chancellor of the Exchequer Philip Hammond could create considerable volatility for the pound. A bad budget will be seized upon by the opposition and any further heads that roll in government will not help the pound.
The two week deadline the EU imposed on Britain to cough up more money in the divorce settlement comes to an end next week and any developments here could see a shift in the price of sterling. My understanding is that it is actually December which will be when the important discussions in the EU will be taking place. When we get to that point there could be some new direction for the pound across all of the major currencies.
The risk is that it really could go either way although my view is optimistic that the discussion for a future trade deal should begin early in the New Year which would be positive for the pound. The rhetoric coming out of the EU for the time being is that there is a growing chance of a no deal scenario and this is being publicly stated in the Netherlands and this is only going ot keep the pressure on the pound.
Anyone holding sterling could find themselves in a deep water as events unfold over the next couple of weeks. It would be wise to make contact to see how these events are having a direct impact on any personal currency requirements. Please feel free to email me James, at email@example.com and I will be happy to look at your individual requirement.