The Pound has been in a sideways range over the past week against the Euro, floating between the 1.1550-1.1620 range. I believe the reason for this is that the market has currently priced in a Conservative majority for this election- which is currently being reflected in a 10 point lead in the polls. The reason why the market sees this as a positive is that this essentially will mean that Brexit will be delivered in the new year and terms will be struck in October.
Sterling should remain rangebound unless we see any polls that show any difference in the above- if Conservatives start to lose their lead then the Pound may weaken, and if we see their lead solidified further then we could see Sterling move to the 1.17-1.18 area.
Moving away from politics, we have a busy week ahead in terms of economic data- which will be a focus for exchange rates following the Bank of England’s dovish message last week. On Monday, we have GDP figures for the UK for Q3, Growth remains sluggish in the UK, but we may see a positive effect from companies stockpiling prior to October 31st in preparation for the Brexit deadline. On Tuesday, the jobs report for September is due out, and we will be watching to see if there has been a continuation of the last few reports which showed decreasing employment- on Wednesday we have inflation data, and retail sales for October are due out on Thursday.
All in all, this is quite a busy week for Sterling, however, it is important to note that the UK Election will trump any data releases- so as much as economic data is important, always keep an eye on the media and opinion polls through this period. In the 2017 snap election- we saw the Pound fall by 5% from when the election was called to the day of the result, if you would like to know more about how you can protect yourself from the volatility in the markets then please don’t hesitate to contact me.