Luke Trevail, a currency exchange specialist at forex brokers TorFX, looks at the factors driving the pound’s exchange rate this week.
This weekend brings Theresa May to the White House to meet Donald Trump. Like him or loathe him, it’s an important meeting and an historical fact that the British Prime Minister is the first world leader to meet with the new President.
Trump is a supporter for Brexit and echoes many of the rhetoric that May has been spouting since she took to office. The relationship between the two countries isn’t in the need of any work, but it’s always important to remind the ones closest to you how fond of them you are.
Trump has, perhaps in an anti-Obama stance, disagreed with Britain being that ‘back of the queue’ when it comes to striking a trade agreement with the US after we leave the European Union. The prospect of a trade deal being put in place and the support of the President at such a critical time in the PM’s tenure could give the pound a boost. Yes, he appears to be a great number of things and an incredibly divisive man, but it appears that to be on his side is better than the alternative, just look at Mexico.
The Supreme Court earlier this week did derail Theresa May’s plan slightly to trigger Article 50 at the end of March by voting in favour of the Houses of Parliament to vote on whether the government are allowed to continue as planned. A hurried proposal will be put to both Houses soon, and although the majority of MPs have stated that they will not step in the way of the will of the people and that Brexit means Brexit, any delay to the apparent inevitable will be sterling supportive.
The pound this week has peaked at €1.1830, the best rate this year and indication that with the support of a growing economy and data that continues to impress means sterling has the potential to break away from the shackles that have held it back in the months gone by. The softening of the Hard Brexit position also helps, but we mustn’t get too comfortable.
Clearly there is a lot scope for this market to shift either way depending on the way that comments and meetings are digested. Be positive about the pound, but remain cautious.
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.