The pound still has the good feel factor after the impressive retail sales data this week which saw a huge boost for the high street. Retail sales arrived at 1.3% against just 0.5% which was expected providing an excellent boost for the pound a good opportunity for buying Euros in particular.
The pound has rallied by over 1% against the Euro as we end the week higher for the GBP EUR pair. After the European Central Bank (ECB) yesterday made a bold statement on maintaining interest rates in the EU at record lows until the end of 2019 and committing to ending its bond purchases by the end of this year the Euro took a sharp dive lower. Effectively the ECB gave very clear forward guidance as to future policy on when changes will take place and the market reaction was particularly strong. For clients looking to buy Euros there is a good window of opportunity whilst the markets still remain volatile with the ongoing Brexit negotiations still continuing. The economic data is finally looking a bit brighter in the UK after the cold winter and the outlook is starting to look more optimistic.
The pound is likely to see a flurry of activity over the next week after there was disagreement within government over the wording of an amendment that the House of Lords which puts forward the case for a “meaningful vote” on the final Brexit deal. It would appear that what was promised behind closed doors to rebel conservatives is not what the government is in fact prepared to offer and this is causing a headache for the Prime Minister who wants to have the option to be able to walk away from the negotiations without a deal which she feels will strengthen her hand in the negotiations. Monday will see the Brexit bill go back to the House of Lords before returning to the Commons on Wednesday. In my view this key detail will shape the negotiations and government strategy going forward and clients with a pending requirement should plan around this event.
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