Posted by Allison on 31 July 2018, 15:47
As 2018 dawned, the British pound stood at 1.1271 against the euro. There would be little drama in the first week of the New Year, as the pound dipped marginally to close on 1.1250. Just a few days after that, it pushed ahead to reach 1.1328, so there would be some intriguing changes to report on here.
January saw the pound stick around the 1.12 level for some time. However, as the month crawled towards its end, changes began to occur. The week ending 19th January saw the pound finish on 1.1316, yet just a week later it managed to finish trading on 1.1450. This was one of the most encouraging signs thus far that the pound was trading well and could perhaps give the euro a run for its money.
The first half of February belonged to the euro, however, as the British pound was pushed back to 1.1260 by the 16th of the month. Things changed in the second half of the month, as the pound closed things out on 1.1310. Clearly, there was no set pattern here, and we would not know how things would progress as the bumpy road towards Brexit stretched out in front of us.
Fast forward to 23rd March and we can see the pound has made better progress against the European single currency. With a rate of 1.1456 on the cards, it was still difficult to know how things would progress from here.
With that said, few were expecting the new heights the pound would reach come 17th April. At that point, it hit a closing rate for the day of 1.1590. That is some way higher than the opening rate had been on 1st January. It then spent 10 days or so around the 1.14 level before dropping back into 1.13 territory on 30th April, falling to 1.1368 to finish that day.
Moving ahead through the next few months, we saw much the same pattern occurring. However, there was a low point of 1.1180 reached on Friday 20th July. It remains to be seen whether that will be the lowest point of the year, or whether there is still more to occur. At the time of writing, the 30th July closing exchange rate was 1.1227, so we are still some way from the highs seen on 17th April. Will we regain those highs later in the year, or will the journey take us in a different direction?
It looks more likely by the day that the Brexit negotiations could end without a deal. Some would say that is hardly a surprise, while others maintain it is the best scenario. However, it remains to be seen whether the currency markets react in a positive or negative way.