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Rise and falls for the pound because of Brexit negotiations (Dayle Littlejohn)
Governor of the Bank of England Mark Carney in a speech at Thomas Reuters in London on Friday voiced his opinion and insisted the UK and EU have an open financial system that allows money to flow in and out of the UK and Europe and not go down the route of protectionism of banking rules.
If this was the case the Government would be trying to protect the UK banking system and in particular London by restricting and restraining Europe however the Governor has warned this would not benefit either party and would actually have the complete opposite impact and jobs would be lost. In my opinion you only have to look at firms such as Insurers Lloyds of London, Royal London investment banks JP Morgan and Citigroup who are already making plans elsewhere, whilst HSBC have confirmed they are likely to switch 1000 jobs out of London to Paris to see that the UK need to tread carefully around this matter.
Over the next two years I believe the strength of the pound will have a direct correlation to Brexit negotiations. Went negotiations are going well an improvement in the pounds value is likely whereas stumbling blocks will cause falls. It’s key to note Mark Carney also made it clear Europe need the UK as much as the UK need Europe as he believes and I quote the UK is “Europe’s investment banker”. Therefore I am feeling optimistic that a deal will be reached that benefit both parties, however only time will tell.
Economic data past and future
Industrial and Manufacturing production numbers showed another decline Friday. The Office for National Statistics reported the reason why Industrial output numbers fell was due to the surprisingly pleasant whether in the UK which has meant the UK public have used less gas and electricity. Furthermore manufacturing numbers dropped for a second consecutive month which shows the UK has had a slow start to 2017 and this could have an impact on the latest set of GDP numbers. Certainly one to keep your eye on.
Looking ahead with a four day trading week due the Easter Bank Holiday, data releases are thin this week. The important release to look out for is Tuesday morning when inflation is set to be released. The month on month figures are set to show an improvement however the important yearly figures are set to show a slight decline. The decline is to 1.9% therefore I don’t think this will have a major impact on sterling. However if the consensus is wrong and inflation has risen again, all eyes will turn to the bank of England and if they will act and hint towards raising interest rates anytime soon.
I feel that with the pound fluctuating in the upcoming months, it is going to be crucial to analyse the other currency you are trading before making a decision. For example if you are buying a property in Europe will the French election have a positive or negative impact on exchange rates? Feel free to email me the currency pair you are trading (GBPUSD, GBPAUD, GBPCHF etc) the reason for your trade (company invoice, buying a property) and I will email you with my forecast for the currency pair [email protected].
My area of expertise is property purchases and sales. Therefore if you need to purchase a foreign currency or you are about to complete on a sale abroad, today is the day to get in touch to discuss your options and to get an understanding of how we can save you as much money as possible.
** If you are already using a brokerage and would like to know if you are receiving the best rates possible email me with the exact figures and I will reply with our live price. This will take you minutes and in the past I have saved clients thousands! **
Source: http://www.poundsterlingforecast.com/2017/04/09/rise-and-falls-for-the-pound-because-of-brexit-negotiations-dayle-littlejohn/
