The Pound has been trading in a more volatile fashion this week than in preceding weeks, which coincides with the increased price movement within global stock markets.
Despite increasing in value today the Pound has been coming under pressure recently, after some disappointing Purchasing Managers Index (PMI) figures were released last week and early this week.
Hopes of an interest rate hike from the Bank of England (BoE) sometime this year had increased off the back of the strong economic figures for growth etc. out of the UK last year, especially after it emerged that the UK economy outperformed all expectations last year. However, these hopes of a rate hike from the BoE have now softened which can be seen in the exchange rates as the Pound has lost a lot of value recently.
I think a lot rests on tomorrow’s interest rate decision and the talks afterwards, as although no changes to the rate are expected if there are any hints regarding future monetary policy, I think there could be a major move for the Pound.
Where do the experts expect to see Sterling trading this year?
Prior to last year’s strong performance for the UK economy, many economists and major banks had predicted that exchange rates such as the GBP/EUR rate would drop to parity due to the uncertainty created by the Brexit vote.
These predictions appear to have passed as the Brexit bill has been agreed with details surrounding the transitional agreement set to be agreed on within the next 7 weeks. Some banks are now beginning to outline higher price targets for GBP exchange rates, with Coutts Bank announcing that part of their investment plan this year rest on the Pound gaining against the US Dollar, Euro and the Japanese Yen.
Analysts at major high-street lender, RBS believe that the Bank of England will adopt a hawkish approach tomorrow which is likely to result in GBP strength, but who knows what will be said, I just think those following GBP exchange rates should monitor the markets around lunchtime tomorrow when the announcements will be made.