The Pound has been at its highest rate all week, but it could drop depending on today’s comments by Mario Draghi, president of the European Central Bank. If Draghi suggests that the central bank is preparing to alter its quantitative easing programme, the Euro will spike, sending the Pound lower.

The US Dollar has dropped against Sterling, which is around $1.29 this morning, after US President Donald Trump’s disappointing tax reform plans were revealed. Investors’ confidence in Trump is fading as his simplistic policies fail to live up to early high expectations. Trump’s U-turn on the NAFTA trade deal, which the US will renegotiate, was also responsible for the Dollar’s fall.

Pound Sterling – UK Markets

Sterling strengthened slightly against the Euro, resulting in a rate of €1.18. However, economic analysts suggest that the Pound to Euro exchange rate is unlikely to get significantly better. The UK’s Lloyds Bank told its customers that the rate is close to what they consider “a fair valuation at the present time”. This might disappoint traders, since the announcement of the UK parliamentary elections only ten days ago, made the Pound spike at a multi-month high at €1.20. 

Credit Suisse’s forecast for the Pound shows that it will fall against the Euro. The bank has recommended customers trade their pounds in order to take advantage of the expected decline. Economists of the Swiss bank believe that the UK’s economy is becoming weaker due to stalled consumer spending and soft investment, while the same indicators in the Eurozone are in positive territory.

Sterling increased its value by 0.4% against the US Dollar, putting the rate up to $1.29. The Pound seems to be consolidating a 3-day rally and is taking advantage of the disappointment from the much-awaited tax reforms plan in the US.

US Dollar – US Markets

The US Dollar to Euro exchange rate remained stable at €0.91. The investors didn’t seem to get inspired by Donald Trump’s long awaited tax reform plan. The historic plan that the US president promised to the taxpayers and companies fits on a single sheet of paper, with a dozen key bullet points. The most important of those was the reduction of the business tax rate from 35% to 15% and the reduction of tax brackets for individuals from 7 to 3. US Treasury Secretary, Steve Mnuchin, who presented the plan to the media failed to give more specific details. Instead of giving answers, Mnuchin repeated that the plan is the biggest tax cut and the biggest tax reform in the history of the US.

The Trump administration also made a U-turn from its initial position of withdrawing from NAFTA. The White House announced that the president discussed with his counterparts of Mexico and Canada and agreed to renegotiate the treaty to the benefit of all three countries.  

The absence of further information on Trump’s planned tax reform pressed the S&P 500 down by 0.05%, despite the earlier gains made on optimistic views on corporate earnings. On Thursday, London’s FTSE 100 and the French CAC 40 suffered minor losses showing that investors were unimpressed by the news from the other side of the Atlantic.

Euro – European Markets 

The Euro dropped from its 5-month high against the US Dollar and currently is at $1.08. The pair has certainly enjoyed a dynamic week. On Monday, the Euro peaked at $1.09 due to the result of the first round of the French elections. The momentum kept the single currency afloat on Tuesday, but a series of events have driven the Euro lower: a French poll, Trump’s taxes and worries about the result of the ECB meeting.

Yesterday, after President Trump announced his intentions to lower corporate tax from 35% to 15%, the news helped the US Dollar, as the Euro slid. 

Additionally, an Opinionway poll showed that Emmanuel Macron is down to 60%, from an initial 80% support, against 40% for Marine Le Pen. Analysts predict that the gap will get smaller and this will keep the markets alert until the night of the French election, 7 May. 

Later today, the ECB will announce whether it intends to continue its multi-billion stimulus programme. Economists predict that the interest rates will remain unchanged and that the monthly bond-buying programme will run until December. According to Bloomberg analysts, if Mario Draghi confirms their expectations, the Euro will stay strong against the major currencies and it would even trade higher through the rest of the year. 

Other Currencies – Highlights

The Swiss Franc has recovered its losses, after it dropped to £1.19 last November, and has slowly, but surely, climbed up to £1.28. Earlier this morning, Switzerland's central bank announced a profit of 7.9 bn CHF for the first quarter of the year, mainly, due to its foreign currency holdings which reached 683.12 bn CHF, a sum bigger than the Swiss GDP. That will steady the Swiss Franc and even drive it higher at £1.30.

The Canadian Dollar has also stabilised, after Donald Trump agreed to continue the North American Free Trade Agreement (NAFTA). The exchange rate of Sterling to Canadian Dollar is still at an 8-month high, reaching 1.74 CAD. However, financial analysts are expecting the Canadian currency to strengthen against the Pound in the near future.

Good times for the New Zealand Dollar. The currency rose after a four-month low against the US Dollar, Australian Dollar and Japanese Yen, following the news about NAFTA. However, the Kiwi remains weak against the Pound. The pair today hit its best levels since August 2016 and Sterling is currently exchanging at 1.86 NZD.