Good morning. The Pound has had a fantastic run over the last few weeks, rising to levels against the Euro that have not been seen in 2 or 4 months. The reasons for the gains is renewed optimism that a final withdrawal agreement can soon be reached between the UK and EU. Next week will be very important as to whether the Pound goes up or down against the Euro and other currencies, as we have some important events. Let’s take a look at what to expect next week….
Will the Pound go up or down in October?
This largely depends on two things. The first being a raft of economic data from the UK, details of which I’ll cover shortly. The most important thing however will be the EU summit next week, during which a deal on withdrawal could be agreed. Let’s take a look at what could happen.
How could Sterling react to next week’s EU summit?
Next week the EU have a summit in which a deal on the UK’s withdrawal could be agreed. If so then I would expect the Pound to strengthen significantly against the Euro. If however they kick the can further down the road to November, then it’s likely that much of the recent gains the Pound has seen could evaporate. I think that even if they agree a deal, it’s just going to raise further questions with regards to if it can get through parliament in the UK.
Theresa May is facing significant opposition to her ‘back stop’ deal with regards to the Irish border. The idea of this back stop has been likened to an EU trap, as in effect it would keep the UK tied to Brussels rules indefinitely should a trade deal not be struck in the next few years. This really does mean that the EU would hold all the cards, and it would severely limit the UK’s ability to strike free trade deals with the rest of the world – arguable this would squander the main benefits of leaving the EU. So even if we get progress next week, while it could provide some limited support for Sterling, I would not expect significant gains.
What about economic data?
Economic news is what used to move exchange rates, before Brexit became the main mover of FX rates. It can still have an impact however, and next week there are some significant data releases that could affect the Pound. I’ve outlined some of the main things to watch for. The results of these will already be forecast and priced in to the value of the respective currencies. If the actual release is better than forecast, then the currency concerned with strengthen. Conversely if any release comes in below forecast, then it would weaken the respective currency.
UK – we have the latest unemployment numbers, jobless claims and wage growth data. We’ll also see the latest Retail Sales numbers and inflation figures that can impact interest rates.
EU – There is the EU summit which we’ve already mentioned. In addition we have speeches by ECB members, and inflation numbers
US – Central Bank speeches, Retail Sales, production numbers and inflation figures will all give investors plenty to chew on.
Do you need to exchange currency or make a transfer?
As you can see above, there are lots of things happening at the moment that can affect exchange rates. If you need to move money overseas, to purchase property for example, then you should be speaking to an expert currency broker to understand what effect the above could have on the cost of your currency.
Here at currencyforecasts.co.uk we offer a free consultation to any private or business client that have an exposure to the currency markets. We can help you understand what is moving the rate, which direction it could take, and the options you can consider to protect you against the rate moving against you. We can also offer you a free quote so you can see what rate we could offer; typically our rates are up to 3% better than your bank or existing broker might offer and you could save thousands of Pounds.