Sterling has gained against many major currencies since yesterday lunch time as there appears to be more certainty forming with the announcement of a new British Prime Minister. Theresa May this afternoon is going to take over from David Cameron and it will be interesting to see where she starts.
May has been quite explicit in suggesting that she will not enforce Article 50, which starts the process of the UK leaving the EU. Instead she will wait and allow the dust to settle before causing any further shocks to an already rocky road.
Thursday will bring an interest rate decision from Governor Mark Carney and the Bank of England. There is currently a high expectation that there could be a cut by 0.25% however the late rally for Sterling and a jump to in the FTSE to an 11-month high may change opinions. Sterling could continue to rise towards the end of the week if there is no movement on the interest rate. Especially as it appears the market has priced in a rate cut, there could be major gains.
I don’t think there will be a cut tomorrow and therefore I am expecting Sterling strength in the coming few days. Potentially moving into the mid 1.20’s by the start of next week.
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