Sterling exchange rates had a strong finish to the month yesterday, seeing a slight boost against all major currencies in the afternoon’s trading which may have been put down to month end flows, something that can cause market shifts on the final day of the trading month.
Investors and funds can look to rebalance their portfolios at the end of a month, and depending on how well each market has performed you can see investors shift currency accordingly to bring the fund back into balance, leading to large currency exchanges and market movements off the back of it.
Still awaiting Brexit news – This could be key for where Sterling exchange rates head next
The markets opened this week with a rise in sentiment towards a Brexit trade agreement being agreed, however this was short lived and it does seem now that investors and speculators are watching and waiting for any news today or tomorrow about how the final round has gone.
Being the 9th round of trade talks this isn’t a situation we have not seen before, however on this occasion this is effectively the last round scheduled before Boris Johnson’s date of 15th October where he has suggested that he would walk away with no deal.
For those who have been following the markets over the last few years and particularly the last few months you may be aware that any heightened chance of a Brexit trade deal with the EU has tended to lead to Sterling strength and an increased chance of a no deal Brexit has had the opposite impact and led to the pound losing value.
This is why any information that does come from the latest round of talks from either Lord David Frost or Michel Barnier could be really key for how the pound may perform at the end of this week and in the short term as a whole, so be poised for news if you are looking to buy or sell foreign currency in the coming days weeks or months.
COVID-19 Cases Still Rising – Will This Impact the Pound?
Once again yesterday the number of covid-19 cases in the U.K breached 7,000 cases and there are worries that the second wave has taken grip of the nation once again and may lead to further restrictions which may impact the economic recovery and slow the pace considerably.
Although currently we have not seen the number of deaths rise accordingly these can be a delay from the rise in cases to deaths, so quite rightly the Government and scientific advisors are concerned and I would not be surprised to see further restrictions coming into place in the coming weeks.
Should this be the case then you may see a slightly weaker pound, especially if the restrictions are severe and will clearly impact the economy, but it is also important to realise that this is not a localised situation for the U.K and many other areas around the world are facing similar issues too.
Economic Data to Round off the Week
As mentioned above the main focal point for the week will likely be any news from the latest and final round of Brexit talks, but tomorrow there is the release of Non-farm payroll data over in the U.S which can impact all major currencies.
Non-farm payroll data records the number of people in non-agricultural employment (due to seasonality) over in the U.S and this release can impact global attitude to risk, which may lead to volatility for all major currencies.
It will be an important release to watch if you have a large currency exchange to carry out in the near future and the release is at 13:30pm tomorrow.
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