As we step into Q2 of 2018, we have seen an extremely volatile Pound as Brexit negotiations have dictated how Sterling has moved over the last few months. It seems that now Europe and the UK have agreed upon a transitional deal which should allow the UK to start talking trade with the EU and other nations. The UK economy seems to be performing well for now, with inflation slowly easing off and wages beginning to grow, the concern in the background is the London housing market beginning to ease with prices falling, it is yet to be seen if this is something that is affecting the country as a whole or just the capital.  With the first quarter out of the way, what is now expected over the next 3 months that could affect the exchange rates?

Bank of England Interest Rate Decision (June)- Traders are pricing in an interest rate hike from the BoE in June, as inflation has begun to come back down and wages have started to go up, it seems the BoE are pretty hawkish about another rate hike, whether this is a good move for the economy is yet to be seen, but this will be a pretty bullish move for Sterling if this goes ahead.

Fed Interest Rate Hike– The Fed has already had a bullish start to the year with one interest rate hike, with another expected this quarter, GBPUSD is a good buy around the 1.40 area and above, but the next few hikes could drive the rate lower if the U.S economy is Bullish.

ECB- The ECB has had pretty strong meetings with good figures coming out of the Eurozone economy recently, we could see an interest rate hike from the ECB, whether it happens this quarter or later this year is unknown, however it is worth keeping an eye on this as it could be very bullish for the Euro.

Local Elections (3rd May)– For those of you who have been following the Pound exchange rate, you’ll be well aware that Political events have a large effect on the markets, and the local elections will be no different, especially with the Labour party expected to sweep these elections- a large enough vote could strike a leadership challenge where Corbyn could potentially replace Theresa May (It is a possibility!)- which is why Corbyn is sitting in every single EU meeting with the PM, incase this situation does occur.

Economic Data- Economic Data is always a large driver for exchange rates, with the UK, Eurozone & the U.S all showing resilience, it will come down to the one which slips in its numbers which could set the tone for exchange rates, it seems the UK still isn’t out of the woods yet, so Traders are still betting on the UK to fall further.

If you have an upcoming transaction to make, or if you would like to speak with me about your situation and would like me to make a strategy for you, then please don’t hesitate to contact me directly.