By Luke Dyson
Last week having reached the highest point since August 2022 for buying euros, Sterling has managed to retain this position at the top of the current range and repeatedly test the 2022 resistance level. The fact having tested this level and not retraced back to a lower level is a very promising sign. This potentially shows Sterling could be undervalued at present and there could be room for some more movement to be had if GBP can break through this barrier.
The main driving factor for Sterling’s strength at present could be the up and coming General Election, with polls heavily weighted towards to a Labour majority – indicating a stable and consistent 20 point lead which could go on to be the largest seat majority since 1924.
One of the main driving factors for sterling strength is the fact the Labour leadership has stated they will look to improve relations with the European Union, this having weighed heavily on the Pound since Brexit.
Although this does seem very positive for sterling in the next couple of weeks , this is not a done deal and anything can happen which could throw a spanner in the works. Any increase in uncertainty is potentially awful for the pound, and the nearer we get we might start to see some big volatility.
As well in the weeks to come, Thursday the 20th June we have the Bank of England interest rate decision, depending on the outcome of this we could also see some drastic movements.
Given where the rates are at present at the highest they have been for the last 18 months+, many of our clients are taking advantage; there are a lot of factors looking ahead which have the potential to move exchange rates. If you’d rather not take the risk, get in touch with A Place in the Sun Currency to discuss forward contracts, where only a deposit is required to secure a rate, or even buying outright, to get your currency exposure reduced or eliminated.