Theresa May hosts first Parliamentary question time

July 20, 2016 by Rob Lloyd

As it happens, Theresa May has opened her first round of question time against Labour leader Jeremy Corbyn, with questions surrounding living costs, inequality and Trident, the UK’s nuclear deterrent programme.

As previous home secretary, May is not new to topics such as immigration and injustice, and confidently addressed Corbyn’s questions without hesitation.

In regards to the UK’s renewal of Trident, yesterday when asked if she would kill 100,000 people with a nuclear bomb if necessary, she responded ‘yes’.

What we have seen of Theresa May so far looks positive for Pound Sterling, she has a clear view and direction for the UK which could be vital when it comes to negotiations with the EU.

Theresa May to meet Angela Merkel and Francois Hollande this week

Theresa May will meet with Angela Merkel today to potentially secure deals with Germany post-Brexit, although it’s unlikely that any deals will be discussed until Article 50 is triggered. This will be May’s first meeting with the German Chancellor as Prime Minister and could be vital in the success of Britain’s withdrawal from the EU.

What comes out of these discussions could be important for Pound Sterling, her handling of post-Brexit negotiations will play an important part in the shaping of Sterling as we head deeper into uncertain territory.

Following on from her meeting with Merkel she will be attending discussions with French Prime Minister Francois Hollande tomorrow, echoing similar discussions with the German Chancellor, as well as the discussions surrounding the attacks in Nice last week.

Pound to Euro forecast – which way will the rates go?

Given Theresa May’s clear direction for the UK, I am confident that she will be able to secure the best deal post-Brexit, even if she does decide to go for the ‘hard’ Brexit option.

Australia have already pledged their support for the UK by offering them a trade agreement, it was also announced over the weekend that 12 other nations are interested in securing deals with the UK.

And with positive inflationary figures released yesterday, it looks as though the UK could be well supported throughout Brexit and I predict Pound to strengthen here onwards.

Thursday’s ECB monetary Policy could hint at how the Eurozone is dealing with post-Brexit shock and if Draghi supports further stimulus of some kind, it could be viewed negatively for the single market.

What’s not clear yet is whether the UK or EU has been hit harder by Brexit, although problems in Italy have surfaced adding further headaches to the conflict.

There are a number of signs that now put Pound Sterling in pole position.

Pound Sterling may recover significantly this week

July 19, 2016 by Rob Lloyd

Brexit uncertainty diminishes
UK inflationary figures showing improvement
ECB Interest decision on Thursday
UK not to withdraw from the EU this year

This morning’s breaking news follows a government lawyer telling London’s High court that Article 50 will not be triggered this year. Whilst this news does prolong elements of uncertainty its becoming more apparent that Theresa May could be looking at a ‘hard’ Brexit. Hard being a complete withdrawal from the EU and any form of membership, and a return to trade agreements elsewhere. Australia are the first country to put forward their support for the UK by offering a trade agreement. How long will it be until the rest follow suit?

The Brexit is looking less and less doom and gloom and this morning’s inflationary figures provide hope to the UK economy in a time of complete disarray. CPI figures this morning came in at 0.5%, 0.1% higher than anticipated although it could well be too early to determine the fate of the British economy.

Mark Carney’s decision to keep interest rates on hold may well be his most tactical move yet, his ‘wait and see’ approach has left Mario Draghi with very little manoeuvring capabilities. His Quantitative Easing programme has had very little impact on the economy as of yet, and with interest rates at 0%, the option of negative rates could be on the table.

How will this impact GBP/EUR exchange rates this week?

Thursday’s ECB interest rate decision and monetary policy update will be watched with scrutiny off the back of Mark Carney’s interest rate decision. Will the ECB cut rates into negative territory? It’s unlikely they will, biding time will likely be their agenda. But how will Draghi react to the issues in Italy? Will he turn a blind eye to the economic concerns in the EU?

I suspect it won’t be long until the ECB need further stimulus for the economy, inflation has been almost stagnant in the single market and the fallout of Brexit will not likely aid the situation in months to come.

Pay close attention to the Euro monetary policy update on Thursday, any signs of further stimulus or rate cuts will likely have negative implications on the Euro. We may see GBP/EUR exchange rates hit the 1.22-1.23 mark.

Big week in store for the Australian Dollar

February 29, 2016 by Joe Wright

Will the RBA change monetary policy moving forward?

The Australian Dollar has had a strong run as of late, especially against the British pound as we’re currently seeing the Aussie trade at a 9 month high of £1.92.

This week could be critical for both AUD investors and anyone else considering a currency exchange involving the AUD as this Tuesday the RBA (The Reserve Bank of Australia) will meet to discuss monetary policy moving forward, and with the currency heavily gaining in value against the likes of Sterling as of late I think it’s possible that the RBA could look to intervene in future.

Looking back at a 3 month chart AUD has also seen a lot of volatility when paired with the strengthening US dollar, and with US Non-Farm payroll figures out this Friday I’m expecting further volatility between the pair adding to the potential swings in the value of AUD this week. Last Friday saw a key support level broken with AUDUSD having its biggest drop in 4 weeks and with the crucial data releases due this week I think we could see further big moves between the pair.

Wednesday see’s Australian GDP data released and some analysts have suggested that the figure could come out just below the RBA’s annual 2.5% target, therefore those with a currency requirement involving Australian dollars could consider making the conversion earlier in the week as opposed to later, with data releases from down under along with Non-farm payroll and unemployment data coming out of the US on Friday leading the way for a hectic week the Australian Dollar.