Over the Christmas period the pound settled at a level around €1.12, and the New Year hangover seems to have lasted a little longer than mine.
Variable retail sales data from the high street this week was a cause for concern rather than positive support as Debenhams share price fell heavily on Thursday following a poor Christmas trading period. Despite the shop Next posting good results the previous day, the pessimistic and nervous pound is fearful of pressure and unable, it seems, to deal particularly well with the added worry that the usually stable retail sector brings to the UK economy.
Parliamentarians come back from their Christmas break next week and it’s highly likely that Brexit will flood the agenda with the second phase of European negotiations to be brought into focus. Quite how the market will digest this and what the fairly range bound currency will do remains to be seen. Quiet optimism can be forgiven as December was on the whole a positive month considering the progress that had been made, but just when we expect to see the pound do well, it does have a habit of tripping us in our stride.
More insight on this should be available next week, but looking ahead to this year it is I’m sure a case of more of the same as with last year’s uncertainty with the rates clinging heavily to the rollercoaster that is Brexit housed within the theme park named Westminster!
My advice is to tread carefully The pound seems to be on the edge here, and a change of direction is likely. For most we’ll hope this will rate will improve and get higher, the truth is it could go lower, so care and consideration as a 2018 resolution is advised.
By Luke Trevail, Senior Currency Trader