The main event of last week was the highly anticipated speech from UK PM Theresa May where she was expected to speak about the plans for Brexit moving forward. Many believed that this would be positive for the Pound, however, it turned out to be quite the opposite. Throughout the week, the Pound began to weaken as each Brexit headline only spelled out negative news for the UK, and Friday’s speech delivered the final blow. The reason why Sterling weakened is that EU officials have stated that the UK cannot “cherry pick” a deal with the EU, and as the UK rejected the first Brexit bill on Wednesday and continued to “cherry pick” in Friday’s speech, the markets seem to believe Brexit talks aren’t headed anywhere positive currently.
As I always say on this blog, when it comes to Brexit headlines and speeches, it is worth staying well clear of them during your transaction process, it is impossible to predict what will be said and how it will be perceived, it is a lot easier to just hedge yourself using market orders and then see how the market plays out.
Moving onto this week, the first event will be the Italian elections on Monday- so far it is looking to be a non-event as far as exchange rates are concerned, but as always with politics, it is worth being hedged just in case something out of the ordinary happens- politics around the world has been notoriously unpredictable as of recent. Also on Monday the UK will release services PMI data which is expected to come in slightly stronger than last month, which could add a much-needed boost to the Pound.
The next main event will be Thursday’s ECB interest rate decision. There is no change expected just yet in interest rates, but I feel the ECB will be gearing up towards a rate hike soon this year so anything said that is bullish for the Euro could have a long-lasting effect. This is a key day for those of you trading GBPEUR & EURUSD.
Finally, on Friday the UK is expected to release strong Manufacturing and industrial production numbers alongside stronger trade balance data. This could have a strong impact on the Pound providing it comes out as expected, however, it is worth taking note that if it is expected, then it may already be priced in so we may not see a great movement following this release.
The Pound is definitely on the back foot again following the Prime Minister’s speech, so if you have a transaction to make with the Pound please don’t hesitate to contact me for further analysis so we can work together on achieving the most for your money in your time frame.