Sterling has had a good start to the week, rising to €1.1420 against the Euro and $1.4071 against the US Dollar. It is also up against most other major currencies.
Why has the Pound risen against the Euro and US Dollar?
The reason for the Pound rising is news that the UK and EU have agreed to a transition deal for the period after March 2019. There is a press conference this afternoon when chief negotiator Michel Barnier and UK Brexit secretary David Davis will speak. This could shed more light on what progress has been made. It will be interesting to see what compromises have been made to get to this point, and to see if the EU side have made any, something they have been unwilling to do until now.
It will be interesting to see if the Pound can hold on to these gains. Since last summer, we have seen GBP/EUR reach the €1.14/€1.15 mark 5 or 6 times, but previously the gains have been short lived, as uncertainty drags the Pound lower again. Will this time be different? Only time will tell, but the rate has risen from €1.1150 to €1.1425 in the last few weeks, and given that we’re now very close to the best Pound/Euro rates we’ve seen since last summer, it’s certainly worth considering locking in a rate while better levels are available. If you would like a free quote to see what rate we can offer you, click here.
What else could move the Pound this week?
It’s quite a busy week in terms of data releases. We have UK Retail Sales and inflation numbers tomorrow, Unemployment and wage growth figures on Wednesday, the Bank of England announces it’s latest policy statement and decision on interest rates on Thursday, and a Quarterly bulletin is released by the BoE on Friday.
Lots then that could affect the Pound. The key events will be the wage growth numbers mid-week, and any gains here could increase the likelihood of the BoE raising interest rates. While we don’t expect the BoE to raise rates at their next meeting this Thursday, and hints in the press conference afterwards that they intent to do so soon, could help the Pound stay above the key €1.14 mark which it has struggled to do over the last 6 months.
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