Luke Trevail, a currency exchange specialist at forex brokers TorFX, looks at the factors driving the pound’s exchange rate this week.
The week started fearing the words of one leader and will end with another becoming the most powerful man in the world.
Donald Trump becomes the leader of the free world, the Commander in Chief, the 45th President of the United States of America. While many shudder at the thought of the host of the US Apprentice taking up the biggest job in the world, others wait in anticipation. Yes he’s divisive but are we discounting what he can bring to international politics before he’s warned the seat at the oval office? During the EU referendum campaign Barack Obama said the UK ‘would be at the back of the queue’ when it comes to striking a trade agreement with the States. Just this week Trump said that he would strike a deal ‘as early as possible’, following up with ‘Brexit is great for Great Britain’. Fickle perhaps but having friends in high places doesn’t tend to be a bad thing.
We wait to see what Donald Trump will bring to the party but it’s sure to be an enjoyable watch regardless.
The beginning of the week saw the pound incredibly nervous over the pending speech from Theresa May about the government’s plans for Brexit. The rates dropped to around €1.12 with the fears of a hard-Brexit being the dominant factor, underlining Mrs May’s position from late last year. The notion that the UK would not have access to the single market was the main fear factor which the currency market was wary of.
Enter stage left, the Prime Minister. Mrs May set out a 12 point plan regarding the government’s stance on Brexit. She did wield the sword and confirm that the UK would cease in its inclusion of the European Single Market, but did suggest that she admires parts of it and will want to adopt certain aspects of this when the negotiations begin in earnest. A ‘Global Britain’ and a country that works for its people was the message. She went someway to calm the markets by suggesting that at the end of the negotiations with Europe, any decision that they reach will go to the Houses of Parliament to vote on. It appears that this has left the door open slightly and didn’t collapse sterling in the way that we all feared.
The message from me is similar to every week. The developments in world politics will change the direction of the markets on a daily basis. Trump has promised to change the world, part of me thinks that he will. Brexit too is an ever changing beast that has a sting in the tail for market traders, and customers alike. As it stands, we’re closing the week trading pretty much where we left it last week. €1.15+ in the current climate does seem like a good deal. Remember that we’ve been far lower very recently and no one really can predict it, so proceed with caution and keep your fingers crossed.
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.