GBP/EUR hits monthly high of €1.19

Gradual pound gains seem to be the theme of the week, with Sterling spending Tuesday sneaking its way higher against the majors.

GBP/EUR advanced to a May high of €1.1921, GBP/USD tiptoed to an eight-month high of $1.2981, GBP/AUD surged from AU$1.7557 to AU$1.7649, GBP/NZD closed the day above NZ$1.8800 and GBP/CAD recovered from C$1.7673 to C$1.7816.

With ‘Super Thursday’ looming, what can we expect from the pound? Keep scrolling to find out…

What’s been happening?

It’s been a pretty good week for the pound so far, with the currency quickly shaking off a slightly sluggish start and managing to achieve its best levels for months against several of its rivals.

Positive UK news came in the form of an impressive like-for-like sales report from the British Retail Consortium (BRC). Like-for-like sales had only been expected to increase 0.5% so the actual result of 5.6% was well received.

Meanwhile, the euro’s post-election rally stalled, the Australian dollar was weakened by a concerning slump in domestic retail sales, the Canadian dollar was pressured lower by sliding crude oil prices and the New Zealand dollar softened ahead of the Reserve Bank of New Zealand (RBNZ) interest rate decision.

What’s coming up?

With another quiet day for UK data ahead, the pound may be on pause ahead of tomorrow’s ‘Super Thursday’ of Bank of England (BoE) announcements.

Given that the UK general election is just weeks away, the BoE is highly unlikely to make any changes to monetary policy, but the attitude of policymakers towards future adjustments will be key to how the pound ends the week.

If the Monetary Policy Committee (MPC) is still split on whether interest rates should rise, the pound may hit new multi-month highs against the majors.

However, if the MPC is united in its belief that policy should remain accommodative despite spiking inflation we could see Sterling give up this week’s gains.

The BoE will also be publishing its inflation report. Upwardly revised inflation forecasts could boost the odds of the central bank increasing interest rates in the near future and would therefore be pound-supportive.

The Reserve Bank of New Zealand (RBNZ) will be delivering its latest interest rate decision later today. If the RBNZ takes a cautious stance, GBP/NZD could be driven to new post-Brexit highs.

We’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news or how it could impact your currency transfers.

Phil McHugh,
Trading Floor Manager

Phil provides dealing and hedging services whilst also helping to manage Currencies Direct overall market exposure.