Yesterday the pound reached almost 10% stronger than its lowest point in the past year, which was last December.
Rereading the note I sent at that time, in the midst of the Brexit negotiation brinksmanship, I noted that the GBP graphs looked like the pound had fallen off the end of a pier, plummeting 1% in two hours.
The big turnaround since then has been that the government managed to find someone to organise the vaccine programme efficiently and the economy recovered faster than expected. As so often, having the right person in the right position at the right time makes all the difference.
That’s why the Chancellor has more cash to play with today (around £30billion!), than you might expect with a pandemic still raging. That has been one of the forces pushing the pound yet higher.
At 12.30 today a high-spending, “stimulatory” budget would be expected to send the pound higher still, but that may not be what we get. Rishi Sunak could easily disappoint the markets, given that he is generally regarded as a fiscal conservative.
The pound is only one half of the equation, and according to data this morning, German business confidence is far higher than expectations. Could the euro be about to enjoy a resurgence?
For GBP/EUR we are already at the upper limit of most bank’s predictions as outlined in our new currency forecasts. But what were the lower estimates? Read the Quarterly Forecast to be in the know.
To take advantage of today’s rate – the highest of the past 19 months – and lock it in for the year ahead, call your trader on 020 8003 4915.
