The most recent update from the Brexit talks was focused on the Irish border issue and as yet it appears to be unresolved. This is a key point to take things forward and this has caused the Pound to drop slightly from its recent best rate to buy Euros since May 2017. Brexit Secretary David Davis has been much more positive in recent times and has suggested that talks are looking much better between the European Union and the UK.
The Pound rose up to 1.15 against the Euro after the Bank of England voted 7-2 in favour of keeping interest rates on hold, but it appears as though there is clearly a growing appetite for an interest rate hike coming in the UK. Indeed, the chances are approximately 75% in favour of a rate hike when the Bank of England meet in May and as the UK economy has been performing very well, as proved by wage growth, which outpaced inflation this month I think the central bank are well within their rights for a small interest rate hike.
However, there appears to be a big problem on the high street and although Retail Sales have remained very strong the issue is that some high street stores have been closing recently such as New Look and Toys R Us. More recently Select fashion has come under a lot of pressure with potentially 2,000 jobs at risk.
We end the week with UK GDP figures for the final quarter of 2017 on Friday morning. The expectation is for 1.5% for the final quarter so any change could cause a lot of volatility for Sterling exchange rates at the end of this week. Also, Thursday is the final day of the month and the first quarter so we could see some end of month flows which can often have a big effect on the Pound’s value against a number of different currencies.