30/04 – Politics still weighing on sterling

30/04 – Politics still weighing on sterling

GBP: Big risks for sterling next week

EUR: Showing a lot more resilience

USD: Still looking at weakness through summer


It’s disappointing that sterling didn’t manage to get to and hold the 1.40 mark against the USD yesterday, especially given the weak US GDP numbers. A lot of the UK recovery is already shown in the sterling price, limiting the opportunity for a fresh run higher purely on the current positive sentiment; something new has to happen.

Next Thursday’s calendar is chock full of event risk with both the Bank of England meeting and the local elections taking place. Both have the power to move sterling by a couple of per cent with outsized moves possible should the Scottish independence movement garner a lot of support or should the Bank of England hint at the possibility of lowering the level of stimulus its currently providing to the UK economy.

If the current levels in sterling are amenable for your needs, it may be best to action something sooner rather than later; next week could see them taken away.


Like sterling, the euro didn’t manage to sustain its gains against the USD yesterday. The euro however is a lot better supported than it was back in January and February and should be able to hold its head up a lot more successfully against a stronger USD.

Stronger earnings from European businesses announced this morning should offer the euro a little support today as well.

US dollar

While the Q1 GDP report from the US showed a stonking 6.4% growth rate in the first quarter of the year it missed analyst’s expectations. Higher US bond yields helped the USD strengthen yesterday despite the relatively quiet Fed meeting on Wednesday evening. It remains our belief that the USD will weaken in the coming months but higher US bond yields remain a stumbling block to this call.


JPY has rebounded well from a two-week low overnight on slight haven demand seen in Asian markets. We are worried about the longer-term prospects for the Japanese yen given the wider recovery for global businesses and consumers.

Market rates

Today’s interbank rates at 09:12 against sterling. Movement vs yesterday.

Euro€1.149 ↓
US dollar$1.391 ↑
Australian dollar$1.791 ↓
South African randR20.00 ↑
Japanese yen¥151.4 ↓

Have a great day and a wonderful weekend.

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Jeremy Thomson-Cook

Jeremy Thomson-Cook

Jeremy has over 13 years experience working in the FX industry. As a specialist in political risk mitigation and currency hedging, he regularly advises clients on the day-to-day moves of the markets and the implications of fiscal and monetary policy on international businesses.