The pound strengthened across the board yesterday afternoon, following comments by Bank of England Monetary Policy Committee (MPC) member Gertjan Vlieghe that UK interest rates could rise earlier than expected if the economy picks up faster than the Bank of England (BoE) currently expects.
It was an instant corrective to any potential drop in sterling following Dominic Cumming’s blistering testimony on the competence of the Johnson government.
The pound’s weakness earlier in the week was more attributable to two causes: the rise in Covid-19 cases – albeit among the less at risk younger population – and warnings from EU Commission president Ursula von der Leyen’s insistence on fully implementing the Northern Ireland protocols. These issues could reassert themselves in the weeks ahead.
France has tipped into recession, but overall the signs are positive for a stronger euro as the pandemic retreats there while the Indian variant gets a foothold in the UK, threatening the 21st June’s “big release”.
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