Pound Sterling Forecast – Sterling starts the week on the front foot

Sterling exchange rates have started the week off fairly positively against most major currencies, most notably continuing the strong finish to last week against the Euro, with GBP/EUR now sat above 1.1650.

The reason this pairing in particular has moved in Sterling’s favour more than others is down to the ECB (European Central Bank) interest rate decision and press conference delivered by Christine Lagarde on Thursday.

The ECB did raise interest rates as expected, however there was a slightly dovish tone around this hike, there were suggestions that further hikes would be more data driven than nailed on, and this has led investors and speculators to perhaps hold off on Euro for the time being whilst they wait and see the tone of both the Federal Reserve and Bank of England, both of whom have interest rate decisions due out this week on Wednesday and Thursday respectively.

Expectations are for both to hike by 75 basis points, but as with the ECB meeting it will be the tone in the subsequent statements that will be of most interest to investors assuming there are no great surprises in the decisions later this week.

With the mini-budget being scrapped and a full budget being announced for Thursday 17th November it will be hard for the Bank of England to be able to fully lay out fiscal plans moving forwards as they will not know what the Government are set to do.

It does seem that the markets are seeing some stability back for the UK with Rishi Sunak as PM and Jeremy Hunt as Chancellor, so it wouldn’t surprise me to see the pound have a solid week and in fact a better few weeks ahead, it does seem that despite the circus act we have had over the past few months we do now have a safe pair of hands steering the ship and that the cabinet that is in place are giving the markets a little more confidence.

The Federal Reserve meeting is on Wednesday evening for those with an interest in USD, and the BOE meeting is at midday on Thursday, this could send the pound either way against all majors so it most certainly is one to keep an eye on.

Finally, on Friday we have the Non-Farm payroll data out in the US, you may not think this is of great significance, but it can be a big market mover for all major currencies as it measure the number of people in non-agricultural employment in the US and is taken as a barometer as to the health of the US economy. They take non agricultural measures due to the seasonality that brings so to keep the data  as realistic as possible, and straight after the release it can lead to a flood of money into or out of the Dollar, it also impacts investors and speculators risk appetite so keep a keen eye on this market information early on Friday afternoon.

If you have a currency exchange to make and you would like to get a comparative quote or to discuss your options/the markets with a highly experienced broker then feel free to contact me directly. We make sure we acts as the eyes and ears on the market for our clients which can make a huge difference to the cost of a large purchase overseas or the amount you receive when bringing a large sum back.

Feel free to email me directly on [email protected] or click here to make an enquiry directly on the site and we will be happy to get back to you personally.

Sterling remains stable after ECB interest rate hike

A Rollarcoaster Week for GBP EUR - Weekly Review June 18th 

The European Central Bank (ECB) confirmed yesterday that interest rates in the eurozone would be raised by 75-basis points. Euro sellers would have been hoping for a bounce in rates following the decision, but the single currency softened against a number of major currencies.

It is likely that a 75-basis point hike was already priced into the rates with the figure well reported a couple of weeks ahead of time.

The decision proved positive for GBPEUR, with the pound pushing close to monthly highs. Bar the 17th of October, yesterday’s high was the best level seen for more than 6 weeks.

A transfer of £200,000, is buying €11,000 more which can make a significant difference to costings when purchasing a property overseas.

Now could prove a window of opportunity for sterling sellers as the UK’s economic outlook is not positive. The pound is likely to be impacted once again by decisions made in Westminster. Reports are growing that the government could announce tax hikes during next month’s budget to combat the issues faced with managing public finances.

The UK is already facing a cost-of-living crisis with households spending more on energy, food, and fuel. This has decreased consumers disposable income leading to poor retail sales and a reading of negative growth in August.

Tax hikes would be another squeeze on disposable income which could lead to a deeper and longer recession in the UK.

The dollar gained back some of the ground it lost during Wednesday’s session. GDP came out at 2.6% vs expectations of 0.35%. The US economy is still managing to grow despite the global economic crisis. Initial jobless claims were also lighter than expected.

Positive economic data means the Federal Reserve will not be discouraged to raise interest rates as planned to combat high inflation. A hawkish Fed on Wednesday could push USDEUR and USDGBP back to levels seen earlier this month.

At Lumon, we have several different contract options that can help you minimise risk during uncertain times in the market. We can also set rate alerts and monitor the market for you.

If you have any upcoming requirement involving any currency, and wish to speak with a specialist, please feel free to reach out directly on [email protected]

Will the Pound Continue to Rise as Rishi Soothes Market Nerves?

GBP USD Exchange Rate Falls to Two-Year Low Amid Political Uncertainty 

The pound has been performing near the top of the recent ranges as the new UK Prime Minister Rishi Sunak takes office. Sterling has rebounded back into the 1.15s on GBPEUR and GBPUSD, presenting much improved times to buy a foreign currency when selling the pound.

As Rishi himself has stated, the UK faces some major challenges with inflation running at 10% and fears over stagnation and recession likely to harm the economy ahead. Rising interest rates are going to increase borrowing costs for millions of consumers and also businesses, who will have much less disposable income.

Looking ahead for the pound and the UK economy there are some major challenges that mean sterling is not out of the woods and future GBP weakness cannot be ruled out. By that measure, this latest improvement could be well worth considering, as this current enthusiasm for GBP might not last.

Whilst we cannot ever say exactly what is around the corner in the FX markets, we do know there are some big issues to resolve, that left unchecked could see uncertainty rising once again.

Keir Starmer, the leader of the opposition is still calling for an election, and whilst this does not appear so likely now, were there to be a further deterioration in the UK’s political situation it is a possibility if a vote of no confidence is held.

Sterling has proved quite resilient since the mini-budget fiasco at the end of September that saw the pound majorly sold off. Rising interest rates and intervention by the Bank of England in the gilt markets has restored confidence for now.

There is still no majorly clear direction being established and whilst the pound is higher, you can make a reasonable case for travel in either direction based on different analysis which I would be happy to share with you and discuss in more detail.

For more information on where the pound is headed, and what you can do to mitigate the uncertainty, please feel free to contact me directly on [email protected]

Thank you for reading.

Jonathan

Liz Truss Resigns and the Pound falls in value against the Euro and US Dollar

GBP USD Drops to 1.17 as UK Await Boris Johnson Successor

Liz Truss Stands Down

After what has been the shortest reign in history for a British Prime Minister, Liz Truss finally resigned yesterday afternoon.

The Pound Sterling exchange rate remained relatively stable during yesterday’s trading session as its likely the market had priced in the decision for Liz Truss to step down.

However, as of Friday morning the Pound had really felt the impact of the uncertainty as to who could come and take the leadership in her place.

Boris Johnson has been touted now as one of the favourites to come back which may surprise many of the British public.

Tory MPs have already started to endorse some of the prospective candidates.

The leadership result is due to be announced next Friday and this will hopefully allow enough time for the new Prime Minister to be able to announce the Fiscal Plan due at the end of the month.

Rishi Sunak has also been touted as another contender after failing to beat Truss in the previous round.

Sunak has some senior politicians as his backers including Dominic Raab who has previously deputy Prime Minister under Boris Johnson.

Current Chancellor of the Exchequer Jeremy Hunt has also put his support behind Rishi Sunak claiming support for his integrity.

The impact over the next few days in terms of the currency markets is likely to cause a lot of volatility as we get closer to knowing the result at the end of next week so make sure you’re prepared to act quickly if you’re looking to make a currency transfer.

I have personally worked for one of the UK’s leading currency brokers for over 19 years and I’m confident of being able to offer you bank beating exchange rates.

For a free quote please contact me directly and I look forward to hearing from you.

Tom Holian [email protected]

Inflation rises to 10% as the government is under pressure – how will this impact the pound?

GBP USD Exchange Rate Plunges to Lowest Since September 2020

Data released yesterday confirmed inflation in the UK was once again back above 10%. These are highest levels seen in more than 40 years as the cost-of-living crisis intensifies in the UK.

What does this mean for the pound?

The Bank of England are tasked with keeping inflation under control and their target is 2%. With inflation spiraling out of control the bank has been raising interest rates to combat this. The raising of interest rates generally lends support to the value of the currency (the pound).

At the next monetary policy meeting the markets are expecting the bank to raise interest rates aggressively to try and bring inflation under control. If they do, the pound may find support against euro, dollar, and other currencies. However, if the bank raises interest rates by less than the markets expect then we could see sterling weakness.

Another key thing to consider, is the affect high inflation is having on public spending. As consumers’ pockets are squeezed people will have to cut spending in certain areas of the economy. Last week data confirmed the UK economy shrank in August and if consumers continue to spend less, we could see further negative growth. A recession in the UK would almost certainly spell trouble for the pound.

Political uncertainty can influence exchange rates and the UK has seen plenty of this over the last few weeks. Starting with the sacking of Kwasi Kwarteng, following the disastrous mini budget.

Truss claimed she was a ‘fighter and not a quitter’ during PMQs but yesterday, the recently appointed Suella Braverman resigned for using her personal email for ministerial business. Her resignation letter was critical of the government and suggested that time Truss should also acknowledge her mistakes.

There were reports of other resignations, the Chief Whip Wendy Morton, and her deputy. However, late last night the government confirmed they were still in post.

The crisis for Truss will continue today as the country debates which Truss, we will see next, the fighter or the quitter.

At Lumon, we have a number of different contract options that can help you minimise risk during uncertain times in the market. We can also set rate alerts and monitor the market for you.

If you have any upcoming requirement involving the pound, and wish to speak with a specialist, please feel free to reach out directly on [email protected]

Will Liz Truss lead the Tories into the next election and how will this impact the Pound?

GBP USD Exchange Rate Falls to Two-Year Low Amid Political Uncertainty 

Despite being appointed as Prime Minister just over a month ago on the 6th of September 2022, Liz Truss is already coming under pressure and there is speculation regarding her remaining in power already.

The Pound has traded in a more speculative fashion over the past month than it has done for years after a disastrous mini budget which sent shockwaves throughout financial markets, and saw the Pound trade against the lowest level against the US Dollar in recent history.

Truss appointed Kwasi Kwarteng as Chancellor in an ill fated move and he has already been replaced by Jeremy Hunt who has chosen to reverse almost all the tax breaks declared by Kwarteng. The Pound climbed off the back of his announcements and demonstrates the disarray the current government is in, and now Truss is coming under increasing pressure.

In the wake of new Chancellor Jeremy Hunts announcements, Liz Truss apologised for the mistakes that have been made so far.

She also made it clear that she’s not willing to give up and declared that she will lead the Tories into the next election and highlighted that by appointing a new Chancellor, she has restored economic stability.

Moving forward I think there could be further volatility for the Pound relating to speculation regarding the job security of the current PM, especially due to the Tories trailing Labour in the voting intention polls which increases the pressure on the PM. Political instability often has a negative impact on the underlying currency, so if you’re interested in the Pound’s value this is a key topic in my opinion.

Economic data releases today are light so politics will continue to drive the Pounds value today. GBP/EUR has dropped off this morning and lost over 1.5cents since the announcements from Hunt yesterday.

Inflation data will be released early tomorrow morning, so if you wish to plan a transfer around this economic release, please feel free to get in touch. As a currency specialist we have access to a number of different trading options and very competitive exchange rates.

You can contact me directly on [email protected] if you wish to discuss any of today’s topics in further details, and you can also set up rate alerts using our trading systems.

Pound set for another eventful day – Will the Pound rise or fall?

The Pound is set for a fairly volatile trading day again today, with politics being firmly in focus over the course of the day.

The latest Chancellor Jeremy Hunt is due to release an emergency statement on the mini budget at roughly 11am today, which may involve further U-turns, tax hikes and changes to the plans laid out by Kwasi Kwarteng merely a few weeks ago.

That mini-budget sent the markets into turmoil and dented the pounds value significantly, his exit and a U-turn recently have given the pound a bounce back.

All eyes and ears will be on Hunt’s statement, and depending on the contents and messaging it is likely investors and speculators will be ready to move so the pound could see some swift volatility just before, during and after the statement.

Economic stability and political certainty are two of the key components of the value of a currency, and it is pretty fair to say both have been pretty tragic for the UK in recent weeks.

Today will no doubt be key for both where the pound heads next but also for Prime Minister Liz Truss, it looks on the face of it that she is clinging on to power however most of the press have expectations that it will be unlikely she survives past the end of the year.

Clearly, another change at the top would lead to further uncertainty, so it is key that the messaging today lands right. There is a huge black hole in the UK economy and questions need to be answered to settle the markets, Hunt is seen as a safer pair of hands, so should he put together a statement and plan that is taken well by investors and speculators then the Pound could have a really good day.

On the contrary, another poor day for the Conservative party and not only could it be curtains for the Prime Minister, but it could also be a challenging day for Sterling exchange rates too.

Jeremy Hunt speaks in the commons mid afternoon and will also face questions on his plans, so we have plenty of opportunities for pound sterling volatility today.

If you have a currency transfer coming up involving buying or selling the pound, and you would like our assistance, then we can help in terms of rates and also being your eyes and ears on the market.

Feel free to email me directly on [email protected] and I will be happy to get back to you to discuss your transaction personally.

 

Pound Sterling stages comeback following Bailey comments but remains fragile

Pound to Euro Gains After Weaker German Retail Sales

The pound enjoyed a positive session yesterday with gains against every major currency. However, the gains only brought sterling exchange rates back to similar ranges seen for the last few days. Sterling opens the day slightly softer across the board. 

Governor of the Bank of England Andrew Bailey prompted a sterling sell-off late into Tuesday’s session. He stated that the bank would remove its current emergency support for the UK bond market on Friday and that pension funds heavily invested in UK government bonds (known as gilts) had three days to get their act together. 

The banks initial intervention in the gilts market provided respite for sterling exchange rates after the pound hit all-time lows against the dollar and multi-year lows against the euro, therefore, the removal of the current intervention is seen as negative for the pound and could cause more volatility. 

A number of bankers reported yesterday that they believe the BoE will adapt a more flexible approach to allow pension companies more time to re-organise their portfolio’s risk. This is likely why the pound recovered yesterday with traders calling the banks bluff.  

It would be wise to expect more volatility for the pound towards the close this week as we discover whether the bank will stick to Baileys indication on Tuesday. Markets remain susceptible to any commentary that could be seen as negative for the UK’s economic outlook. 

GDP figures show that the UK economy shrunk in August by 0.3% which adds further speculation that the UK is heading for a recession. Sterling fell to 1.05 against the euro the last time the UK was in a recession. 

Questions remain over the government’s ability to pay for the billions of pounds worth of tax cuts that were announced in the mini-budget. Liz Truss confirmed yesterday that the government would not cut public spending. These comments will do little to support the value of the pound. 

What to expect from today’s session? 

BoE member Mann will be speaking around midday and the markets will look to decipher any commentary on policy that could impact the pound. There are also some key data releases in the US (Consumer Price Index and Jobless claims) that could cause volatility for cable rates (GBPUSD) and USDEUR. 

If you have an upcoming currency requirement and are interested in hearing about how the current volatility could affect you, please feel free to reach out to me directly via [email protected].

Will the pound strengthen in the future? Don’t bet against the Bank of England!

Pound to Dollar Rate Pushed Higher by Falling Covid Cases and Weak Dollar

The pound has been trading lower in the last 24 hours, as markets become fearful that the Bank of England will withdraw it’s market interventions. The Bank of England has been ripping up the rule book once again with less than standard procedures, with the emergency bond-buying program.

Expectations over just what the Bank of England will do next have seen the pound rising and falling, as the market tries to second guess what happens next.

Let us rewind two weeks, to the crash on the 26th September, following the mini-budget from the new Chancellor Kwasi Kwarteng. We soon saw the pound falling as investors confidence in the outlook for the British economy collapsed.

There was notably a very quick recovery that week, with the Bank of England’s pledge to buy ‘gilts’ or UK Government debt, helping to shore up confidence. The pound rose as investors became confident the BoE would step in, and there was also the prospect that the BoE would be needing to raise interest rates much higher, thereby supporting further the pound.

The twist this week, is that the BoE are now threatening to withdraw this support, and this has had the knock-on effect of seeing the pound lose value, with GBPUSD back towards the 1.10 level, and GBPEUR in the 1.12s.

The key question is do we believe the Bank of England will no longer intervene again in the bond markets? In underpinning the pound, and confidence at home and abroad, the BoE plays a fundamental role in monetary policy, and in painting themselves into a corner, do run the risk of potentially have to back track in the future, thereby losing credibility in the process.

FX markets were buoyed by the expectation the BoE would stand firm to support the pound and volatility, if they are now using that steadfastness to sit out of any future events that require their input, the confidence their prior approach helped to instil, could easily come crashing down.

If you need to make an FX transaction or international payment, understanding the latest trends and forecasts can be very useful in the planning and management of your transfer. As specialist FX brokers, we can help to provide insight, strategy and information regarding your options, to help you make an informed decision.

For more information or to ask any questions please email me Jonathan on [email protected]

Thank you

 

Will Sterling continue to lose value despite the Bank of England’s efforts?

GBP AUD Moves Higher with a UK GDP Boost 

Sterling exchange rates have begun the week on the back foot despite efforts from the Bank of England to support the currency and the UK economy as whole.

After hitting an all-time low against the US Dollar two weeks ago, and an over 18-month low against the Euro at the same time, the Pound begun a fightback thanks to some backtracking by Chancellor of the Exchequer Kwasi Kwarteng after a disastrous first mini-budget.

Those of our readers hoping for a stronger Pound will also be aware that the Bank of England has waded into the UK’s inflation issues and aimed to boost the struggling Pound over the past week. Yesterday morning the Pound saw a slight boost after the Bank of England announced that it intends to step up measures to buy long term debt and protect pension funds from further strain.

There were rumours that large pension funds were at risk which applied additional pressure on the Pound two weeks ago.

Despite these efforts, and a strong recovery for the Pound against the Euro last week and also for cable (GBP/USD) to a certain extent, Sterling weakened yesterday afternoon and this downward trend has continued this morning.

Data released this morning from the Office for National Statistics (ONS) shows that UK workers have suffered an almost 3% hit to real wages owing to increasing inflation. Negative economic updates could put further pressure on the Pound as it’s under heavy focus at the moment after such a volatile few weeks of trading.

Moving forward, tomorrow’s GBP estimate (11am) could result in further market movement for the Pound so do feel free to register your interest with us if you wish to be updated regarding market movement for the Pound.

You can set up rate alerts if you wish to be updated regarding the Pounds value, and if you would like a free quote when planning on making a currency exchange please feel free to get in touch directly on [email protected]

Recent Posts

None of the information contained in this website constitutes, nor should be construed as financial advice. It should not be interpreted as a solicitation to offer to buy or sell any currency or as a recommendation to trade.

Where interbank exchange rates are referenced within the website these should only be used as a guide on the performance of a market. These rates are not indicative of our exchange rates – please contact us for a quote.