Steady As She Goes For Sterling

23.01.17

The Pound did rather well last week considering Monday's opener in the late 1.13s. It's a welcome 'leg up' after perceived bullish speeches from Prime Minister Theresa May regarding the UK’s exit from Europe. Now, we can expect a liberal sprinkling of exchange rate sound bites until clarity prevails - so brace yourselves for Sterling volatility over the coming months.

As to longer-term predictions for the pound? It's a difficult call - but industry experts are showing a bias towards 1.13 - yet not for a few months. Some commentators see light at the end of tunnel. Although Abode wouldn't counter this viewpoint, we see more potential on the upside for GBP/USD over GBP/EUR currency play. A weak USD could well be the key as the year rolls out and the Trump administration shows its hand - who knows whether its dynamo Donald blueprint will be a shot in the arm for the economy.

In the short term meanwhile, we could potentially start to see Sterling move a bit higher against the Euro. Not to the heady heights of 1.20, but perhaps back to 1.17. As we reported previously, these are steady but sure levels - once hit - it's possible we may move all the way back down again. The move up, if it happens, will be a slow process; so look to take advantage.

We need to pay heed too, to event risk. No prizes for guessing that Brexit will, for now, continue to be the primary influencer affecting exchange rates. Dare I say it - but roll on Article 50...

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