What could affect GBP in the coming weeks?

Good morning. The Pound has steadied a little, after Theresa May has delayed the meaningful vote in parliament until mid-January. This gives her a little more time to try and seek concessions from the EU, in order for Parliament to vote through the deal. If nothing changes, then the deal won’t get through, leaving the options of a ‘No Deal’ brexit or another referendum.

How would a ‘No Deal’ or new referendum affect Sterling?

I think that a No Deal brexit would send the Pound much lower than it is now. I also think that many in parliament think that if they vote down the deal they can force another referendum. There’s no way of knowing how this could affect the Pound. On the one hand another referendum could help the Pound rise due to avoiding a hard brexit. However my view is that it would only make things worse, increasing divisions and uncertainty both politically and in the economy. In any case, what would the question be, and if the result is as close as all the polls suggest, then it wouldn’t change anything anyway.

Ultimately I think that a softer Brexit will be voted through, but we have several months to wait to see if that will be the case. So, until January and more is known about what May can negotiate with the EU, it’s unlikely that we’ll see much progress. This brings us to the other things that move exchange rates, namely economic data releases, of which there are several in the coming days that could move Sterling exchange rates. I’ll list the upcoming data below. If you want to have a chat with an expert about how rates are moving and get a quote, get in touch today.

This weeks economic data releases

Tuesday 18th December 2018 – There’s not much today that could move rates other than German data that has already been released, so in the absence of any Brexit developments, today is likely to be rather quiet for Sterling.

Wednesday 19th December 2018 – At 09:30am this morning we’ll see various UK inflation numbers released which can affect interest rates; a higher than expected reading would help the Pound. The numbers are expected to show CPI at 2.3%.

Elsewhere we have lunchtime data from Canada (Inflation) that could affect GBPCAD. The US this evening releases it’s announcements on interest rates and policy, and this is an important release that can affect all major currencies. If they announce a pause in their interest rate hiking which I think is likely, the USD will weaken pushing GBP/USD up and GBP/EUR down due to the inverse relationship between the Dollar and the Euro.

Thursday 20th December 2018 – Another important day for Sterling, at 09:30am we’ll see the latest UK Retail Sales numbers. This is a good overall barometer of how the economy is performing and so can affect the Pound. Also today we have the BoE interest rate decision. While no change is expected, any comments in the minutes or from the Governor can affect the Pound depending how they are interpreted. Usually when Carney speaks he causes the Pound to fall. The US releases jobless numbers at lunchtime that could affect GBPUSD.

Friday 21st December 2018 – We end the week with UK GDP numbers released at 09:30am. Growth measures often move the Pound higher or lower depending how close they are to forecast. We’ll also see UK Public Sector net borrowing numbers at the same time.

The USA also has it’s GDP numbers today so GBP/USD could also have a choppy day. Other than that, the only release in focus is GDP and Retail Numbers from Canada, which could move Pound/CAD.

Worries about exchange rate volatility?

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