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You are here: Home / British Sterling / Is there any Basis for the Pound to rally short term?

Is there any Basis for the Pound to rally short term?

August 30, 2017 by Daniel Johnson

Is there any Basis for the Pound to rally short term?

Sterling has had a torrid time of late, falling against the majority of major currencies. We have seen a brief rally for Sterling against the Euro today, but I would not expect this to continue. Political uncertainty historically weakens the currency in question, with a growing number of Conservative MPs pushing for a vote of no confidence in Theresa May it does not bode well for the Pound. Until we have political stability the Pound stands little chance of recovery.

Brexit holding back the Pound

Brexit is an obvious concern for the UK. There is no clarity on the UK’s stance on leaving and until there is I expect the Pound to be susceptible to further losses. The Brexit white papers that are being released to give an indication of what the UK are trying to get from Brexit have the potential to improve certainty, but have had little effect on Sterling value to date. The information currently being released is not sufficient enough to move markets, only dealing with minor issues rather than the major issues that require clarity. It is a shame as I feel this entire situation if it were not for politicians manipulating the public to aid their own political agenda. Mind you, what’s new?

Until we have political stability and clarity on Brexit the Pound could be destined for further losses. The GBP/EUR exchange rate is our most commonly traded pair and I am finding very difficult to find any basis for the Pound to rally. We do have the German general elections next month which could weaken the Euro, but with Angela Merkel currently considerably ahead in the polls I would not be hanging on to make a Euro purchase based on this causing a spike for Sterling.

With HSBC, Morgan Stanley, Citi Bank and JP Morgan predicting parity for GBP/EUR by 2018 it may be wise to purchase your Euros now rather than risk further losses, which could be considerable.

Filed Under: British Sterling Tagged With: Angela Merkel, Brexit, Brexit white papers, Euro strength, GBPEUR, German elections

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About Daniel Johnson

Daniel Johnson works as a Senior Executive Dealer at a UK-based currency exchange specialist. He offers a wealth of knowledge on the currency markets having dealt with thousands of personal currency transfers on a daily basis for many years. Daniel is a regular contributor to a number of financial blogs.

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