The Pound still had a hangover last week from the surprise UK general election result. We moved down slowly to the mid 1.13s against the Euro in the interbank market, and 1.26 in the STG/USD market. However, considering the undoubted negativity that surrounded the Pound, it actually held up quite well and even moved higher towards the end of the week.
This happened after two Bank of England committee members voted for a rise in interest rates. This is something that could, in fact, help Sterling as time goes on. Inflation is rising so a rise in rates will curb this, and will probably add a little bit of strength to the Pound. However, sentiment isn’t really changing, and there is so much negativity and uncertainty around at the moment that anything could really happen.
The UK government still has Brexit to negotiate and with a totally, almost non-existent majority, anything will be difficult to get through Parliament. Again, this leads to uncertainty along with the fact that nobody really knows how the BREXIT negotiations will pan out.
So, again nothing changes with the feeling for the Pound. It still feels a little weak, and any gain in the short term should certainly be taken advantage of. The short term high will probably be 1.15; this is just shy of where we were when the election took place. The range in the longer term will probably be more like 1.10-1.15 unless there is any significant reason to cause a breakout either way.
There is no real economic data this week that will have an influence. So just watch for Brexit news, political infighting, rumours, facts and the like!
At least its sunny!
Have a great week.
The Premier FX Team.
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This article was updated on the 19th of June, 2017.