Little in way of key developments for Sterling exchange rates

Last week offered little in way of key developments for Sterling exchange rates. Following a sharp 5% rise at the beginning of October, the pound now finds itself in a consolidation phase with rates trading sideways for the last 4 weeks within a small range. Confirmation of a December election has left markets sat on their hands as outcomes are currently too uncertain to warrant any further speculation at this stage. This however would be fully expected to change as we get closer to the 12th December as markets begin to react to latest polls, which will inevitable be another choppy and uncertain time to be trading in.

For those sending money overseas or buying property, the current rates offer an excellent opportunity to exchange at 6 month highs. GBP/EUR is only a cent away from the best exchange rates seen in over 2 and half years, and 10 cents better than just 2 months ago. Cable is similarly 10 cents up from lows seen in August and the risks of a hung parliament next month is very real, and one that historically has a negative impact on rates. If you are waiting for even further improvements from the current highs, then this is effectively a gamble on a Conservative majority. Any clients that have the appetite for this gamble may wish to consider a split risk approach in case we do not see the further rise you are hoping for, or ask about our STOP LOSS orders that can protect you at worst case rate should the market turn against you.

Election and Brexit aside, this week provided some new UK eco-stats to digest in the background. Manufacturing and Industrial production again contracted last month, however Q3 growth figures indicated that the UK is not in a technical recession with a positive, but worse than expected growth figures of 0.3%. The unemployment rate dropped from 3.9% to 3.8% however average earnings also dropped for another consecutive month. Inflation held at 1.7%, just below the 2% target and Retails Sales contracted by 0.1% in October. Al in all, little to get excited about behind the all the current political distractions.

The week ahead is very much a dead week for data and so focus will continue on political developments. How long until we start getting more reliable polls to increase market volatility? Will more Brexit Party MPs stand down? Will there be a tactical response from opposition parties? If you have an imminent currency requirements, stay in close contact with your currency consultant for the latest insights to help you make the most of your transfer.