Pound improves but for how long?

2 November, 2018

Grace Rae

Grace Rae

Yesterday the markets finally saw some improvement for the Pound following the Bank of England’s latest monetary policy statement and inflation report. The MPC voted 9-0 to leave interest rates unchanged at 0.75%  as anticipated and the Governor hinted towards his expectations for the UK, saying we could see interest rates increase should we see a smooth Brexit transition.

Sterling surprised the market making gains over the Euro, Dollar and most major currencies. Pushing up to a two week high against the Euro and a one week high against the Dollar –gaining back over two cents over the course of the day. The rates began to improve on Wednesday afternoon following Brexit negotiation rumours and further speculation that some form of a Brexit deal may be on the cards. With this improvement in rates, it is very easy to believe the increases will continue, and those with a larger currency requirement may be tempted to hold off and see how far the rate goes. However it is important to remember that at this stage these reports are just speculation, and these gains could quickly be reversed. Until we hear any clear confirmations from either Theresa May or Michel Barnier about the topic regarding the Irish borders and a final relationship, we are likely to see a continued volatility.

Of the little UK data out yesterday, the results fell below the mark. UK Manufacturing data slipped beneath expectations of 53.0, posting 51.1, down from Septembers figure of 53.6. the report suggesting that Brexit uncertainty and trade tensions were responsible. We end the week’s data with Eurozone Manufacturing PMI this morning at 09:00 swiftly followed by UK Construction PMI at 09:30 which is also expected to drop from the previous month. Then at lunchtime the US post-Average Earnings, Unemployment Rate, Trade Balance and Nonfarm Payrolls all at 12:30, followed by Canada’s Net Change in Employment and Unemployment rate.

If you do have a currency requirement it could be wise to buy your requirement on the rumors while the rate is up and avoid any potential loss if the ongoing rumors loose steam. Get in touch with one of the team today to discuss your options and find out how we can help you save money on your overseas transfers.