'Hindsight'

As we approach the end of May and look forward to the long hoped for lifting of all legal limits on social contact from 21 June in the UK, the Pound remains trading around the 50% month to date trading line and within its 2 cent trading range in May but is still 5 cents better than at the beginning of the year against the Euro.

Against the US Dollar, we have seen a 4 cent trading range in May. Currently, the Pound is trading around the 80% trading line and is also 5 cents better than at the beginning of the year against the greenback.

We have seen an incredible 5 cent trading range just in May for the Pound against the Aussie, a sure sign of the volatility in the markets with growing inflationary fears and the massive turbulence in the crypto market. For the year, the Pound remains some 5 cents better than at the start of January and is currently trading on its 80% trading line.

Of interest, against two major currencies heavily influenced by rising commodity prices, the Pound is down 3 cents since the start of the year against the Canadian Dollar (oil prices that have shot up over 33% since December) and one cent down against the South African Rand over the same period on Gold prices which are back up to the level they started the year at.

Pound sellers might be forgiven for thinking that the Pound should be trading even higher given the success of the vaccine roll-out in the UK and the stellar UK economic data releases of late.

The latest statistics show that over 72% in the UK have received one jab with 43.5% have now received both, a total just shy of 61 million vaccines having been administered in the UK so far.

The UK economy continues to rebound strongly, echoing the words of the Bank of England Chief economist Andy Haldane who stated back in February that the UK economy is 'poised like a coiled spring to bounce back after lockdown'.

This includes the immediate transition for the economy after the 31 December Brexit departure. The latest statistics show that 5 months later, the UK is now trading more with the rest of the World, that is non-EU countries than with its former EU partners.  

Even neutral Switzerland seems to be following suit, this week cancelling the ratification of its framework trade agreement with the EU citing EU intransigence and lack of good will in its negotiating stance. 

Yet the 'Captain Hindsight's' in the UK political establishment and the on-going debate as to whether this or that variant will force the government to delay the lifting of all legal limits past 21 June is having a negative effect on sentiment around the Pound. 

Logic would seem to suggest that for those client who can wait for the possible 'better times ahead' should do so.

However, time and again the currency markets, like all financial markets show that sentiment and politics play just as important a part in the relative value of currency A against currency B than logic and economic fundamentals.

At Cosmos Currency Exchange, we provide each and every client with a bespoke tailor-made service to your own individual currency needs wholly based on our holistic approach. We value our long term relationships, not simply the individual transaction.

Please call us on 0044 (0)1202 804733 or email us at [email protected] 

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