Pound to Euro, USD and AUD all at Pivotal Points

GBPEUR: Pound Slumps Against Majors as ‘No deal Brexit’ Chances Rise

Sterling has had a tough start to the trading week so far, with pound to euro, pound to US dollar and pound to Australian dollar exchange rates currently sat at key pivotal points.

GBP EUR interbank exchange rate is currently sat at 1.10 precisely at the time of writing this blog, and that is a level that has been a key level of resistance for some time now, and should we see sterling break through and remain below that level tomorrow then the pound may be in for a tough end to the trading week against the single currency.

A similar story is in place for both USD and AUD with GBP USD interbank exchange rates sat at 1.25 and GBP AUD interbank exchange rates at 1.80.

You can often find that these round levels can lead to resistance, as much like when you set you alarm clock in the morning for round numbers, speculators and businesses that may have market orders can tend to do exactly so there may be many market orders in and around this level that will need to trigger before the exchange rate can push lower.

Yesterday saw the release of growth figures for the U.K and again it was fairly difficult reading, but the U.K is only following the pattern of the rest of the world so why are sterling exchange rates still falling?

Brexit Still Casting a Shadow Over Sterling Exchange Rates

Brexit is still clearly a key concern for investors and speculators alike, as it adds an extra element of uncertainty to what the U.K economy will look like 12 months from now.

Uncertainty can be really damaging to a currency and will often tend to investors and speculators stepping back unless they are of the riskier kind, and this drop in demand can lead to a currency falling in value.

Talks between the U.K and EU are continuing each week throughout July and my personal thoughts are that we really should start to hear some clarifications soon as to what the plans are, if no deal appears to have been progressed towards by September then it is likely the pound will struggle and many companies and institutions may have to start planning for the potential of no deal.

It is because of this that I actually (and I may be wrong) feel that we may have some positive news on a deal in the next 6 weeks, both sides have shown very small signs of looking to compromise and should they manage to agree on a landing zone and actually make good solid progress towards a positive outcome and a deal then sterling exchange rates could really reap the rewards.

Unemployment Out Tomorrow

Tomorrow morning we have the release of unemployment figures for the U.K and expectations are for unemployment for May to have risen to 4.2% and average earnings to have decreased.

It is clear that without the furlough scheme this number is likely to have been dramatically higher, and there are large concerns on how much unemployment may actually rise in the coming months as the furlough scheme is slowly phased out, with some analysts believing that 15% may be a more realistic figure to expect in the months ahead.

Either way, tomorrows figure will still be keenly watched and many predictions on unemployment have been quite wide of the mark, so if the unemployment levels come out way above the predicted 4.2% then the pound may be in for a tough morning of trading as this will be seen as bad news now but will also suggest there is even worse news around the corner.

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