Sterling starts the week clinging to the gains it made on the US dollar last week and well above the average of the past year. Against the euro it has barely moved over the past nine months and is right on the post-Brexit average.
But is that stability about to end?
In the event you were about to complete a move or property purchase in Hungary the news overnight of prime minister Orban’s election loss means that your pounds, dollars or euros will suddenly buy you 2.5% fewer forints. Political change is risky for exchange rates.
This weekend the bank JP Morgan was warning of a similar shock after the May local elections in the UK in three weeks. They said: “the political situation is about to heat up with Rayner waiting in the wings” – a more leftward lean would tend to spook the markets.
Speaking of large global banks, have you downloaded our new Quarterly Forecast yet? It gathers all such predictions and combines them with superb analysis in a very readable document. Download your free copy here.
Most of those highly-qualified analysts making the predictions have no more idea than you do on what will come out on Truth Social this week. This is limiting the impact of the Middle East crisis on exchange rates. Why would any investor take a position based on Trump’s interjections?
With this background it has rarely seemed more appealing to take a safety-first attitude and lock in your exchange rate if committed to a transaction overseas. You can do that with a chat with your account manager on 020 8003 4915.
Coming up this week, central bankers are taking to the airwaves and the comments from Andrew Bailey of the Bank of England and Christine Lagarde of the European Central Bank all have the potential to move the market. So does the GDP (Gross Domestic Product) result on Thursday, as a “sniper’s alley” of high-profile data hoves into view.
