Currency Update from ´Currencies Direct´

  • Pound climbs as UK begins to make progress in Brexit negotiations

    Staying on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for over the next couple of weeks…

    Latest currency news

    Despite experiencing both peaks and troughs, the pound has been able to record gains overall versus the Euro and US dollar over the past fortnight. GBP/EUR hit a low of €1.1138 last week, but is now trending at a high of around €1.1417.

    Meanwhile, GBP/USD exchange rates have risen from lows of €1.3516 to highs of €1.3548 just before the weekend.

    EUR/GBP has fallen to a 20-week low of €0.8758 over the course of the last fortnight, while EUR/USD has been able to make and largely hold some modest gains and currently trends around US$1.1841.

    What’s been happening?

    Pound advances were hampered in mid-November by a series of gloomy economic developments.

    Chancellor Philip Hammond delivered an uneventful budget on the 22nd, but the Office for Budget Responsibility (OBR) followed up by publishing some dire figures for productivity and wage growth.

    Data later in the week showed that consumer confidence had plunged back to the low last seen immediately after the referendum.

    However, Sterling was able to recover at the end of the week after Bank of England (BoE) member Silvana Tenreyro warned that markets had not considered the possibility Brexit may push interest rates higher rather than lower.

    Things continued to improve last week, after it emerged that the UK government was likely to up the amount it was willing to pay for a Brexit divorce bill to around €50 billion.

    Fears over the Irish border remained, however, but these have evaporated today after the UK government agreed to the EU’s terms for keeping the whole of Ireland under single market regulations to prevent the need for a hard customs border between Northern Ireland and Ireland.

    Meanwhile, the euro has been hampered by some disappointing data figures, with Germany’s consumer confidence and inflation data softening the outlook for the Eurozone’s powerhouse economy.

    EUR was dealt a significant blow on Friday when a study found that the euro had failed to deliver the benefits to the economies that had joined it, such as narrowing the extent to which their prosperity diverged.

    Although the US dollar muddled along over the past two weeks on the back of sky-high interest rate hike bets, there were several turbulent moments.

    GDP data last Wednesday showed a better-than-expected rate of growth, while today the US dollar is on strong form after the weekend saw the Senate finally approved a bill for tax reform.

    What do you need to look out for?

    Tomorrow’s UK services PMI will be a big release, given that it chronicles activity in the sector responsible for over 75% of economic growth.

    After that, markets will have to wait until Friday for the next notable UK releases, with a slew of industrial, manufacturing and construction data accompanied by trade figures and followed by a GDP estimate.

    The middle of next week is likely to see severe turbulence on the markets, thanks to the clustering of interest rate meetings and decisions from central banks.

    The US Federal Open Market Committee (FOMC) announces its latest decisions on monetary policy on Wednesday 13th, with the Bank of England (BoE) and European Central Bank (ECB) both publishing their latest policy conclusions on Thursday 14th.

    GBP/EUR and GBP/USD will therefore being under notable pressure throughout the week, and that’s without even taking into consideration the likelihood of more news from the Brexit talks and US tax reform.

    At Currencies Direct we’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news or how it could impact your currency transfers.

    Since 1996 we’ve helped more than 150,000 customers with their currency transfers, just pop into your local Currencies Direct branch or give us a call to find out more.

    For further information please feel free to contact me (Gaynor Procter-Smith on (0034)673 659 580 or