Sterling rises against the Euro before Brexit summit

Last week was relatively positive for Sterling exchange rates after surpassing 1.34 against the U.S Dollar and 1.13 against the Euro.

The main reasons for this were instability in the U.S in reference to the new Tax bill by Trump and positive news from Brexit negotiations.

The markets reacted positively to the U.K deciding on the final sum for the “Brexit Bill”- however, the Irish border now poses concerns for negotiations with Europe. Theresa May will be meeting with EU negotiators on Monday, and though there are concerns over the Irish Border, it doesn’t seem realistic that this will have to be solved prior to trade talks- and the sooner we get to trade talks, the better for the Pound.

One main point I would like to highlight is that trade talks will also take some time and will be as turbulent as these negotiations so far have been, so even though the Pound will strengthen on the news that the talks begin, whether it will last is yet to be seen.

The outlook for GBPEUR is still pretty bearish with market expectations to be around 1.11, so if you are looking to purchase Euros, current rates at 1.13 should be something worth considering to hedge yourself- similarly with the U.S Dollar, the highest we have seen is 1.35-1.36 this year, so prices above 1.34 is something worth considering if you are looking to hedge yourself short term.

As far as economic data is concerned- There are a couple of releases that are pinnacle for the Pound, Tuesday’s UK services data is expected to come in lower than last month- and as the UK is a service-based economy- this could deliver a blow to the Pound’s recent strength.

Friday also looks to be an important day this week with the UK releasing Industrial & Manufacturing production (Both expected strong due to the weak Pound)- if this does come out as expected, this could give the Pound an extra push upwards.

The U.S will also be releasing their Non-Farm Payrolls data which is always notoriously unpredictable, so expect to see some volatility on the U.S Dollar on Friday afternoon.

If you are looking to make an exchange over the coming months, or are looking to hedge your business transactions or even protect a property purchase/sale- please don’t hesitate to contact us, We tailor make strategies for my clients to ensure they are protected from market movements at no extra cost- feel free to ask any questions you may have, remember, we are here to help you get the most for your money!

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