Last week saw GBP/EUR top a near 2 year high at 1.2040, before falling back to the bottom of the range throughout Friday’s trading session. Poor retail sales data released for the UK on Friday was what flipped the script for the pound; throughout December sales recorded were worse-than-expected in what is a crucial period around Christmas. Cable fared much worse throughout the course of the week however, falling for 4 of the 5 trading days of the week, leaving the dollar price treading water in the mid 1.35 range.
This week’s main headline for the UK will however be away from the data calendar. An investigation ordered into the alleged parties, held at Downing Street during Covid lockdowns, will see Prime Minister Boris Johnson face a crucial week. The report, being complete by civil servant Sue Gray, does not have an official release date, findings are reportedly expected this week. Ms Gray and her team are interviewing past and present staff members over a reported 16 parties held and whether the Government failed to follow Covid guidelines. At present, 6 MPs have declared no confidence in the PM, but for a leadership vote would only be triggered by 54 letters submitted to Sir Graham Brady, chairman of the backbench 1922 committee.
Any political uncertainty is normally negative for a currency, so as further developments come from Westminster and the story unfolds it could be a bumpy ride for sterling.
Have a great day.
Author: Jack Nicholls, Senior Relationship Manager.
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