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25 Eastcheap 2nd Floor
London EC3M 1DE
United Kingdom

+44 (0) 20 3880 0575

help@privalgo.co.uk

Office Hours
Monday - Friday
8:00am - 5:30pm

The last week has been an interesting one for foreign exchange. Inflation, worse-than-anticipated data releases and the Delta variant have weighed heavy on the euro, the dollar and the pound.

With June 21st fast approaching, the question now is whether the UK will be able to continue its reopening agenda as planned. And what impact will the Delta virus have in the weeks to come? 

Our currency experts discuss this and more in this week’s article.  

If you’d like to discuss how you or your business is affected by the markets, please feel free to get in touch. Each of our currency specialists’ contact details is shown below.

John Hallahan
Business Development Manager

Many pound sellers have been worrying about the end of the furlough scheme.   

Much of the positive sentiment surrounding the pound in the last month has been from May’s job report. UK unemployment dropped to 4.8%, lifting the pound-to-dollar rate three weeks ago.  

However, many onlookers couldn’t shake the feeling that the stats were skewed by the fact many were still on furlough. Employed in name but not actually working. 

But recent figures have shown that furlough may not end as severely as we feared. Administrative data tells us that the number of jobs supported by the furlough scheme dropped by a million in April alone.  

The majority of those people returned to old jobs or found new ones, with a relatively small number losing work. 

This suggests that, as predicted, the UK’s reopening agenda is having a positive effect on people getting back to work. And that if June 21st goes ahead (here’s hoping), then UK employment would be the better for it. 

This is, I believe, yet another reason to be bullish about sterling. We should see further gains to come.

JHallahan@privalgo.co.uk
+442039221738

Patrick Oakley
Business Development Manager

As a 25-to-30-year-old (I won’t tell you which end of the spectrum), I’m now able to book my vaccine. And it’s only June. I never thought it would come this quick. 

It really goes to show the success of the UK’s vaccine program. Yes, the government did a good job but much of it is down to hard-working volunteers. 

Now, it’s the vaccine vs the variant. Cases of the delta variant have increased by over 50% in the last week, but the number of hospitalisations has remained low. Only a handful of those suffering from the Delta variant has been admitted to hospital. 

Bear in mind that one of the main reasons we went into lockdown in the first place was so the NHS wouldn’t become overwhelmed with COVID-19 patients. I’m fairly positive that even if June 21st isn’t ‘freedom day’, we’re not far off it. 

Good news for pound sellers. Once everything goes back to normality, the UK will be high on the list of foreign investment. And as such, I’m bullish about sterling value in the near future.

POakley@privalgo.co.uk
+442081326561

Harrison Hickey
Business Development Manager

Last Friday’s US employment report came in below expected. Figures show Nonfarm Payrolls increased 559,000 in May, below the 671,000 that was estimated.

Although it shows that the US economy is still flying pretty high, it also suggests it’s not able to say goodbye to the global pandemic just yet.

Interestingly, the data release had a twofold effect. The equity markets had a field day. Stock market futures actually rose. Investors bet that the worse-than-anticipated figures would keep the Federal Reserve from raising interest rates.

But what’s good for the stock market isn’t always good for the currency markets. Dollar sellers have been wanting tighter monetary policy, especially surrounding interest rates.

On midday Friday, GBP/USD pushed up from 1.141 to just shy of 1.42, only to level out again at the beginning of the week.

hhickey@privalgo.co.uk

Brendan Leonard
Business Development Manager

Many of my clients cannot decide whether to be bullish or not about sterling in the second half of 2021.

The date that’s on everybody’s mind is fast approaching. Now the question is: will the 21st June be the ‘freedom day’ we’ve been looking forward to? Or will it be delayed?

If it goes ahead as planned, then the UK’s further reopening will facilitate more business, improve employment figures and, in turn, garner more positive investor sentiment in sterling.

It could be argued that if it’s delayed, then it could weigh heavy on the pound, especially against the USD. The US is quickly shaking off the economic downfall of the pandemic.

Then again, maybe it doesn’t matter either way. After all, the majority of businesses that were blighted by coronavirus are back to operating as normal, and recent figures suggest the furlough scheme is easing off nicely — people are getting back to work.

Whether the 21st June happens or not, I still predict upside in GBP as the year goes on.

If you’re selling pounds and would like to chat about currencies, get in touch.

bleonard@privalgo.co.uk

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