Both UK and European equity markets along with the Pound were substantially boosted today, as investors welcomed the removal of uncertainty from the Conservative Party’s leadership contest.
Yesterday it was announced that Theresa May will be the UK’s Prime Minister in-waiting, giving GBP exchange rates a double boost. Political uncertainty almost always weighs negatively on the country in questions currency, so now that we’re aware of who will be leading the country in the period of separation from the EU, the future is looking a lot more certain and currency markets have welcomed the news.
Additionally, Theresa May was a ‘Remainer’ in the lead up to the UK’s EU Referendum. This is significant because markets had received the news of the UK’s shock decision to leave the EU badly, with GBP falling to a 31 year low against the US Dollar. With Theresa May’s public support for the EU in the past many investors are considering her leadership throughout the next couple of years to benefit the UK economy, with the separation of the UK from the EU to remain amicable.
The Pound has been boosted by news of a so called ‘Soft Brexit’ with GBP/EUR and GBP/USD both up over 2% today, but that could suddenly change this Thursday.
During the fallout from the ‘Brexit’ the governor of the Bank of England alluded to the possibility of a further Interest Rate cut down from 0.5% to 0.25%. Should this occur, and it could be a soon as the Monetary Policy Committee’s next meeting on Thursday, then I expect the Pound to fall against most if not all major currency pairs, perhaps wiping out all of yesterday and today’s gains.
Those looking to remove that risk from the market may wish to consider carrying out any planned currency exchanges they have to make, as Thursday could be a volatile day for trading and there’s a chance GBP may fall once again due to the aforementioned reason.
If you would like to discuss your currency exchange with me, and would like to consider taking advantage of award winning exchange rates from one of the UK’s leading regulated currency brokerages as well as help with the timing, feel free to email me directly ideally with a telephone number on [email protected] with an outline of your requirement. You can also call me directly on 01494 787 478, just ask one of the reception team for Joe.