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Recent Pound Strength Creating Opportunities

A recent short term strengthening in the pound can be taken advantage of

Posted by ExchangeFair
08 Feb 2017

Recent strength in Sterling has created a number of opportunities in the currency markets. GBP/EUR has rallied from a low of 1.11 in November to over 1.17 in recent days. Sterling has rallied to a similar degree against the USD, moving to several month highs around the 1.26 level strengthening about 3.5% from its lows. The pound though remains firmly in a longer downtrend and recent moves are no more than short term gyrations. Much of the recent sterling strength versus the dollar for example was centred around the unwinding of the "Trump trade" - over Christmas and into his inauguration the markets desired to own dollars as a new president was sworn in promising massive fiscal stimulus to the US economy which was likely to promote both inflation and growth. Sterling will come under pressure as debates in parliament over the Article 50 Bill (needed to trigger the process of leaving the EU) take place from now well into next week. Risks of discord and disunity on the direction of travel over leaving the EU are likely to be high, although the bill itself will pass, Labour for example is expecting a large rebellion by MPs who will ignore party policy and vote against the bill. In short, political wrangling and uncertainty over government policy over leaving the EU will not abate in the weeks or months to come. This will continue to weigh on Sterling in the medium and longer term but for the moment we have seen a short term strengthening offering you more attractive rates to send money into EUR or USD.