Luke Trevail, a currency exchange specialist at forex brokers TorFX, looks at the factors driving the pound’s exchange rate this week.
As Christmas is upon us, it’s a good idea to look back and reflect on what has gone before us this year. To be thankful might be a step too far, but as the markets wind down the pound does seem to have found some common ground finally.
Although the markets do open over the Christmas period, there is little in the way of fundamental data releases that will move the market significantly. At the time of writing, the pound has reached €1.1930 which is near to the average price we’ve seen this week. As the mistletoe is being dangled, sterling has flirted with €1.20 a couple of times already and next week could see us break above this significant level once again. This would provide a massive opportunity for you to take advantage with an early Christmas present.
This week has been light in the respect of new releases, but inflation data on Tuesday did impress and posted a figure representing the highest we’ve seen since October 2014. The Bank of England have linked a rise of inflation with when they are looking to raise interest rates again. This would strengthen the pound. Although we’ve a long way to go until Mark Carney and the rest hike rates, inflation being where it is should mean that they are satisfied with the progress that the economy is making and ensuring that we’re moving further and further away from an interest rate cut, something we weren’t so confident of in the months immediately after the referendum.
Just a short update this week, as the market is doing the talking in lieu of any significant data. Looking ahead however, be mindful of the scope for change on Europe and confident in the resilience of the pound to dig in when the times are tough and give some of you a modicum of festive cheer with the promise of prosperous 2017.
This article is written by a foreign-currency broker working for TorFX, a forex broker established in 2004 to provide foreign exchange and international payments to both individuals and companies. TorFX is authorised by the Financial Conduct Authority under the Payment Service Regulations 2009 for the provision of payment services. Their FCA number is 517320. To verify their authorisation, you can visit the Financial Services Register and search the register using their FCA number. SPI is not responsible for the opinions of guest contributors.