Pound holds its ground

By Ashley Finill

This week has been a positive steady week for the Pound which saw the currency gain back some ground on the euro from the slight drop off at the end of last week. Sterling/euro has been range bound for most of 2023 and trading within 2/3 cent swing with Sterling currently finding itself at the top of that range against the Euro, trading at a 6-month high. With Sterling at the top of this resistance level it’s tested to breakout but has so far struggled to break into greater territory. As we have seen over the last 2 weeks, it brings the possibility or even probability that the pound could drop and see these gains reversed. As we have seen over the past few weeks Sterling is very sensitive to UK economic data releases so next month could be a pivotal moment for the pound as we have the new inflation figure to be released, along with the Bank of England’s interest rate decision and plans going forward. Should inflation not fall at the pace expected, then we could see Sterling drop off against the Euro over the coming weeks. As mentioned, the pound is currently trading at 6-month highs which presents a great buying opportunity and as we have seen only last week, these gains can be short lived. Purchasing €100k today is roughly saving you £1,500 on your property purchase from where we were only a couple of weeks ago. It may be prudent to speak to your currency consultant today to discuss your options to mitigate your risk and maximise your currency saving on your property purchase.

Sunak Strikes Japan Deal to Help Boost UK Economy

Rishi Sunak has been on his travels this week ahead of the G7 summit meeting in Japan. Yesterday he met the Japanese prime minster Fumio Kishida in Hiroshima, where It has been reported that leading Japanese businesses have committed to invest a record £17.7 billion into businesses and projects across the UK which will create further jobs helping to boost the economy as the UK continues to battle the high level of inflation in the country. Whilst this trade deal goes through the Brexit UK/EU trade deal continues to come under scrutiny. This week, labour leader Kier Starmer has said that he would revisit the Brexit trade deal and try and get an improved deal if he was to become the next prime minister of the UK. He has warned that some manufacturing sectors have paid a heavy price since leaving the European Union with a lot of trade coming from the region. With new terms in place, costs have gone up for UK businesses trading in the EU with the Brexit deal being cited as the problem for these price increases which are being passed onto the consumer, which of course affects the economy in the UK and as result contributes to the levels of inflation we are currently experiencing. Starmer said he would seek to get a better deal to further boost the economy; the elections in the UK are held in autumn next year so we can expect more rhetoric like this from the opposition over the coming months. As we have seen in the past, anything Brexit sensitive breeds uncertainty for Sterling, with record lows recorded for the pound against the majors within the last 5 years, so hopefully any negativity surrounding Brexit again can be avoided.

Data remaining this week

Not too much to note on the data front as we close out the week. The only notable release is retail sales figures from Canada at 1.30pm. There are a few speeches going on across the day from monetary policy committee members from both the Federal Reserve and European Central Bank. Fed chair Jerome Powell also speaks at 4pm, he is likely to touch on their stance on interest rates in the US which could see some movement late on in the day. As always, stay ahead of the curve by staying in contact with your currency consultant today for any helpful and friendly guidance.