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You are here: Home / British Sterling / Sterling buoyed by rumours that Spain and the Netherlands were open to a soft Brexit

Sterling buoyed by rumours that Spain and the Netherlands were open to a soft Brexit

January 12, 2018 by Lewis Edmonds

Sterling buoyed by rumours that Spain and the Netherlands were open to a soft Brexit

According to reports today, sources are claiming that the Foreign Ministers from each country had independently agreed to work with each other to maintain a deal that would benefit both the UK and EU. Despite these positive rumours the Euro remained strong against Sterling following reports that the European Central Bank (ECB) was ready to unwind it’s Quantitative Easing (QE) program this year and was also further strengthened by the news that after months of political uncertainty Germany had finalized a coalition deal to form a Goverment.

Despite not making too much headway against the Euro, Sterling did manage a positive run against the US Dollar. US Producer Price Index data released this afternoon revealed that inflation may not pick up as suggested and was further compounded when Federal Reserve member Bostic said he cannot see the Federal Reserve raising interest rates three times in 2018. This has helped to boost GBP/USD exchange rates to pre-referendum levels.

What to look out for next week

Given that Sterling has been driven by international affairs for the majority of this week, attention now turns to domestic data once more. Next week’s primary focus will be December’s Consumer Price Index report and Retail Sales data, which give a detailed insight into consumer spending and household income levels.

Inflation in the UK is currently sat at 3.1%, overshooting the Bank of England’s target of 2%. These figures are likely to be heavily scrutinised, as policymakers are likely to get uncomfortable if the current level of inflation in the UK stays at this level for too long.

Despite a busy and influential week for data next week, the biggest mover of GBP exchange rates will remain to be Brexit. As the bill makes it way through Parliament I would expect key figures to have their say which will ultimately move Sterling. Interesting times for anyone currently holding Sterling.

Filed Under: British Sterling Tagged With: Brexit, Brexit negotiations, Coalition Government, Consumer Price Index, GBPEUR, Germany, Inflation, Pound Sterling strength, Retail Sales Data

The information on this website is provided for information purposes only. It does not constitute advice to any person on any matter. Every reasonable effort is made to ensure that the information is accurate and complete but we assume no responsibility for and offer no warranty with regard to the same.

About Lewis Edmonds

When he is not offering insights into the what is happening on the currency markets Lewis manages key relationships for an authorised payment institution in the UK.

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