Currency markets were relatively quiet on Friday, with the US dollar only finding any support in response to coronavirus jitters.
- Pound set to end the month stronger
- GBP hits multi-month highs vs. EUR, USD, AUD, NZD & CAD
- GBP Monthly lows: €1.16, $1.23, AU$1.64, NZ$1.78, C$1.65
- GBP Monthly highs: €1.19, $1.29, AU$1.73, NZ$1.88, C$1.75
But Prime Minister Theresa May decided to light a firework under the British currency with an unscheduled announcement on April 18th. Speculation about what the Prime Minster would announce was rife – was she resigning? Was it to do with recent US military action against North Korea? Or was there a general election on the cards?
It turned out to be the latter, with May having a rather unexpected change of heart and declaring that she planned to hold a snap election on June 8th despite previous assertions that the next general election wouldn’t take place until 2020.
"Britain is leaving the European Union and there can be no turning back. And as we look to the future, the Government has the right plan for negotiating our new relationship with Europe… At this moment of enormous national significance there should be unity here in Westminster, but instead there is division. The country is coming together, but Westminster is not."
- PM, Theresa May
Although the British public were hardly delighted at the thought of having to go to the polls yet again, the expectation that Theresa May would win by a landslide (increasing the Conservative majority in Parliament and potentially improving May’s hand in Brexit negotiations) meant the pound surged on the news.
Sterling hit a succession of multi-month highs against its main rivals, notably reaching its best levels against the New Zealand dollar since July 2016, and achieving seven-month highs against both GBP/AUD and GBP/CAD. The pound also wormed its way to a 10-month high against the euro before the results of the first round of the French Presidential election gave the common currency a boost towards the end of the month.
Will May be as manic? Possibly. UK election campaigning is likely to take centre stage in the weeks ahead, and as long as May looks set to win the vote comfortably the pound’s uptrend could continue.
That being said, GBP exchange rates could run into trouble if upcoming economic reports from the UK indicate that the nation’s economy is starting to struggle after showing remarkable resilience in the months following the decision to Brexit.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)