Strong week for Sterling but for how long
27 January, 2017
This week has been very eventful on the currency market, and as a result, Sterling made considerable gains on its main competitors. Sterling clawed back over 2 cents on both the Euro and the Dollar. Aiding the Pounds strongest rally since the US election back in November was the Supreme court’s ruling that parliament needs to be consulted before Article 50 can be triggered to begin the process of exiting the EU.
Comments throughout the week from President Trump have also helped the Pound. Since coming to office Trump has been very bullish with what he wants to achieve in his term and this has bought uncertainty amongst investors and in turn, has weakened the Dollar off.
However, from all the gains the pound has made, the GDP figure which was released yesterday came in 0.5%, the same figure as last month but better than expected. This data would usually provide sterling strength but did not. Sterling fell later in the afternoon by over half a cent on both majors, could this a be a sign that Sterling’s current rally is running out of steam?
Today Theresa May flew to America to meet Donald Trump for the first time today to discuss terms on a trade deal between the UK and the USA. It is expected, should this deal be made, Sterling will continue to gain on both the Euro and the greenback. However, it is not definite that a deal will be struck, as we know Donald Trump has the tendency to be somewhat unpredictable.
Should that be the case that a deal is not agreed then there is a possibility that the Pound could suffer from this and lose the gains that it has made. Staying in the US on the data front, their GDP figure will be announced at 13.30pm; the number is expected to come in better than last month’s reading of 1.4%. Durable goods order will also follow at the same time which again is supposed to read a better figure than last month.
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