Since the Bank of England meeting last week, it seems many analysts have begun to change their forecasts for the pound moving forward. Many were previously optimistic about the performance of the UK economy and the direction of Brexit, but it seems this is no longer the case. Many analysts seem to be certain that Theresa May will have to push for a "Hard Brexit" and leave the single market, which will weaken the pound. I do see the logic in these predictions, but as we all know, the process of leaving the EU will take some time and I don't think the government is even sure if they are pushing for a "Hard" or "Soft" Brexit.
It does seem that between now and March, politics will take the stage again and will control the markets, with Article 50 yet to be triggered and elections beginning in France it seems that we are in for a very interesting time moving forward. If you are currently in the process of having to sell sterling to purchase foreign currency, my personal belief is that the current levels we are at are pretty fair, (5% above the lows of last year, and only around 2.5% from the recent highs we have seen), and for this reason, I would urge clients not to gamble on the markets. The markets are in a very big state of uncertainty at the moment, and I do not feel it wise to wait around for political decisions to happen to see if they can improve the exchange rates.
The direction of the pound moving forward really does depend on how the UK government decides to act with the EU, alongside the economic figures in the UK. I will also point out that when selling one currency to purchase another, it is important to analyse both currencies to gather a clearer picture, though we are not expecting higher GBP/EUR rates just yet (until we have election results and Article 50), we are expecting better opportunities with GBP/USD exchange rates due to the uncertainty of President Trump and his weakening of the U.S dollar.
This week we are not expecting much in regards to economic data until Friday, when the UK will release figures for Trade Balance, alongside industrial and manufacturing production. So far this data is expected to come out mixed, so in reality we are not expecting to see much change within the markets, but with that said, if the data does come out differently, then that would be something that could move the market.