We have seen some huge spikes for Sterling exchange rates during the course of this week with the Pound hitting 18 month highs to buy US Dollars and breaking past pre-referendum highs.

The Pound has also hit the best rate to buy Euros in 9 months as it appears as though the tone surrounding Brexit is looking a lot more positive recently. The phase 2 of the Brexit negotiations are due to begin in March and this time I think we could actually get a little bit close to a resolution and if this does happen I expect the Pound to make gains against all major currencies.

Inflation levels in the UK also remain above the Government’s target and the Bank of England primary objective is to maintain economic growth as well as control inflation levels. Therefore, I think we could also see interest rates on the increase towards the end of the year if the current trend continues.

German Chancellor Angela Merkel has suggested recently that she wants Britain to maintain a close relationship with Germany and the comments from both the Dutch and Spanish finance ministers were also similar which has helped lift the value of the Pound against all major currencies.

However, the Euro has now recovered some of its losses yesterday against the Pound after President of the European Central Bank Mario Draghi left interest rates unchanged at yesterday’s monthly meeting. The general feeling is that the current QE programme will be coming to a close soon and this is in part one of the reasons for the Euro strengthening against the Pound yesterday. Draghi also commented that volatility in the exchange rate is ‘a source of uncertainty’ and that it would ‘require monitoring’.

UK GDP figures are due out at 9:30am this morning so keep a close eye out on the data release as this is likely to have a big impact on Sterling.