EDITOR’S NOTE: Luke Trevail, a currency exchange specialist at forex brokers TorFX, looks at the factors driving the pound’s exchange rate in the week gone by.
This week the political tug of war in the UK continues as all the political parties poured over each other’s manifestos, and picked holes wherever possible. First the Labour party promised to ‘save the NHS’ and to tax the rich. On the campaign trail, the sums of Diane Abbott have already been brought into question, and the credibility of the opposition has been damaged, leading to more scrutiny of their pledges to lead this country.
Theresa May launched her, sorry, the Conservative party’s manifesto yesterday, and she didn’t hold back. Arguably too candid, Mrs May stated that in order to tackle the ‘giant challenges’ facing Britain in the coming decade, that a ‘declaration of intent’ was needed and she would provide a strong and stable leadership through the Brexit process. Confidence over the future relies, apparently, on Britain getting it right, and being able to work together to carve out our place in the world (post Brexit), and improve our standard of living and future prosperity.
Bold but important claims. Mrs May still remains well ahead in the polls, so a Conservative majority is not a conservative forecast, and it would be a major shock if anything other than the blue flag was flying at Westminster after the 8th June. Perhaps surprisingly the Liberal Democrats named their pledge as ‘Change Britain’s Future’. The headline grabber, and potential vote winner, was the promise to hold a second EU referendum on the Brexit deal that is settled upon after the two-year negotiation between the UK and the remaining members of the bloc. Feasibly, the public could reject deal, and we wouldn’t leave Europe in this event. Key points on Tim Farron’s party agenda are interesting reading, but it’s doubtful that he will mount enough of a charge to challenge Jeremy Corbyn as the official opposition.
During the merry-go-round of modern politics, the market has been well supported by the lowest unemployment rates in 42 years and better than expected retail sales data on Thursday. The pound has foundation and. although the currency markets have been subdued – remaining quite range bound in trading – the future looks better than the past.
For those of you needing to step in and buy euros with pounds, as always be aware of volatility. The Greeks are due to pay IMF €15 Billion over the next three months, and it was their inability to fulfil their debt obligations that led to the slide in the euro two summers ago. Cracks in the Eurozone are beginning to show, and the pound is liking the buzz surrounding the elections, so keep everything crossed and hope for a flirt with €1.20 again soon.
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.