Sterling began to recover against the Euro this afternoon as the GBP/EUR rate moved up towards the 1.13 level, having dropped into the 1.11’s yesterday.
This week data for the UK has suggested that the growth seen at the end of last week looks likely to continue into the New Year, with a number of positive releases this week. However, many economists are of the belief that a Sterling rally is not likely to happen for some time, with a sole focus based on the Brexit talks to determine any future exchange rate movement.
On a marginally more positive note there isn’t expected to be any catastrophic collapse for the Pound as it’s believed nearly all the negative news has already been factored in with the GBP/EUR exchange rate sits in the low teens.
I believe during the early part of this year we could actually see less volatility for Sterling rates, as the currency remains range bound against major pairs. Unless there are some clear decisions in Brexit talks we are unlikely to see many very sharp movements. However, this is unlikely to last with Brexit progress expected through the later part of the 2018.
External Sterling Factors
From the perspective of the GBP/EUR rate and GBP/USD rate there are several key events which could help Sterling’s fate.
In Europe the coalition talks in Germany, elections in Italy and the Catalonian independence situation could all help Sterling gain. Whilst over in the US, Donald Trump is never far from controversy with the latest tell-all book rumoured to reveal a government not far from crisis.
At the moment Sterling looks set to find little support on its own, but confidence in currencies could start to dwindle should uncertainty begin to brew. One thing however that is for sure is that anyone looking to transfer a currency into Sterling now is a brilliant opportunity to complete an exchange.