EDITOR’S NOTE: The pound rose against the euro this week, but we are likely to see more volatility until the UK’s EU referendum in June is out the way. Foreign currency exchange specialist Luke Trevail explains.
The pound has enjoyed a week off in the Spring sunshine, as economic data has been fairly light and the EU referendum stayed away from the front pages for now at least.
A reprieve for those who suffered the two year lows last week has allowed buyers to get in at around €1.2580, some 3 cents better than where we were. Looking ahead the pressure on the pound will likely continue as the spectre of the uncertain referendum looms large and will certainly dominate the markets for some weeks to come.
Both the stay and leave camps are ramping up their campaigns with the early polls suggesting that the leave advocates are slightly ahead but the undecided voters are where the momentum may swing one way or another. We’d expect the market to move in line with the voters sentiment, thus remaining uncertain over the next few weeks, that is likely to change daily and erratically. Any people looking to secure rates are well placed to try and protect their positions and not second guess things.
The week ahead sees Bank of England Governor Mark Carney speak in front of the House of Lords Economic Affairs Committee. His comments are always closely watched and his normally positive stance on the state of the UK economy can aid the pound. Fundamental data of unemployment figures as well as retails sales could also give the pound some support. Remember however the referendum shaped shadow looming over the UK could easily bring some showers to the April sunshine.