Pound making progressive gains across the majors

19 January, 2018

Ashley Finill

Sterling has been handed a much-welcomed boost over the past couple of days. On Wednesday the Queens bank Coots gave their forecast on Sterling, they predict that the Pound will gain some much-needed ground on both the Euro and the Dollar in the coming months and off the back of those comments the pound began to rally. Continuing onto Thursday the Pound was given a further push in the right direction as MPC member of the Bank of England Michael Saunders said that UK interest rates will more than likely have to rise faster than markets are currently anticipating in 2018 aiding Sterlings steady rise. However, JP Morgan has given their take on how they think Sterling will perform in 2018. They predict that Sterling will fall to multi-year lows on the Euro, last year we got to levels of 1.08 so should JP Morgan be correct then we could be heading into sub 1.10’s. The Pound has gained nearly 2 cents since the market re-opened on Monday which bring great buying opportunities for Euro buyers.

Great news also for Dollar buyers as we have seen Sterling rally on the greenback in the last few weeks gaining nearly 5 cents. The GBP/USD has now reached highs not seen since 2016. Should you have an imminent requirement to purchase US dollars these rates are not something you should turn your head at and presents a great buying opportunity, for example buying $100k worth of dollars is roughly £2000 cheaper than it was a week ago.

With Sterling at 6-week highs on the Euro and on the Dollar at an 18 month high, should you have a requirement it may be prudent to get something in place sooner rather than later. As we move closer to February the pound may come under some real pressure from the upcoming political affairs. Brexit negotiations are again set to resume in Brussels and as we saw last year the Pound does not bode well once these talks have commenced with investors shying away from supporting Sterling. Furthermore, Germany look set to concluded talks with the SDP to form a coalition government which would more than likely support the Euro. Should you not need your Euros right at this moment but do not want to get caught out from any of these future events then a forward contract may be a great option for you to secure your currency and avoid any potential drop in the GBP/EUR rates.

Only one major data release to take note of, firstly starting in the UK at 9.30am with retail sales to be posted, there is expected to be a contraction to -0.6% from the 1.1% posted last month, should this be correct then expect Sterling to drop off early doors from this release.