Is there justification for a Sterling rally?
The Pound remains fragile. Lack of clarity on Brexit and poor economic data is keeping the pound anchored to current buoyancy levels. We have recently had a fall in manufacturing data which proved to be the biggest drop since October 2012. GDP came in below expectations at 0.2% and average earnings has fallen to 2.5%.
EURO FX RATES TODAY
EURO = 0.8625
STG = 1.1125
FOR LARGER AMOUNTS CALL US ON 02871374213.
Some economists are still optimistic and are predicting a rate hike from the Bank of England (BOE) in the coming months. I think there is little justification for one this year.
The point of contention in Brexit talks at present is the Irish border deal, unfortunately Theresa May and David Davis are currently having trouble even agreeing a back up plan. They do hope to have something in place before the EU summit on 28th June.
This does not bode well for the Pound. In order to see the Pound make any significant gains we will need real progress in talks, which at the moment doesn’t seem likely to happen anytime soon.
GBP/EUR – The ECB meeting is today and if there is a cut to the QE program we could see significant Euro strength, although I am not convinced this will occur, it will probably happen later in the year.