UK GDP Hits 0.6%

It has been confirmed this morning that in the first announcement of quarter 2’s Gross Domestic Product (GDP) figures for the UK that the economy grew by 0.6% which is exactly what had been predicted. This is a very positive figure, double quarter 1’s GDP figure and comes thanks to a spate of positive economic data for the UK which has all helped to support Sterling. However, as the figure was as expected there has been very little currency market movement this morning, as with all economic data releases it is often not what the actual figure is but how it compares to the predicted figure and on this occasion the prediction was spot on and so the market had already priced in the currency movement prior to the announcement resulting in very little movement this morning.

However, despite the lack of short term movement this figure does go to support my recent posts where I have talked about an improving economic picture for the UK. The fact that GDP is up and we have seen a good amount of positive data recently is very promising for the end of the year and the start of 2014 for Sterling exchange rates. As previously mentioned I still find it hard to believe that we will see GBP exchange rates rocketing up over the coming months but instead as the economic data continues to show improvements and if GDP continues in its current trend (and I see no imminent reason for it to not continue to show continued growth, although I doubt it will continue at a rate of doubling every quarter!) then we will see GBP exchange rates appreciate against the major currencies over the course of the next twleve months. Of course, as with all things in the currency markets this can change very quickly and we may see more defaults in Europe, banking problems or even more major high street names falling into administration which could change this outlook.

In the short term for Sterling exchange rates I do not expect to see any major movements as it seems the currency pair has found its natural trading range although all we need to see is some negative economic data from Europe to give GBPEUR and shot in the arm or alternatively some negative data in the UK to counteract all the positive momentum we have recently seen. Personally I would not be surprised if we see Sterling hold reasonably steady against both the Euro and the US Dollar until next month’s discussion and speculation surrounding interest rates and Quantitative Easing starts again (this will be around the first week of August). Past this August can sometimes be a slightly quieter month as politicians and most of Europe takes holiday meaning we can sometimes see fewer announcements than usual. However, this can mean we see a busy month in September.

So, with this in mind if you need to transfer funds internationally and you would like to discuss your currency requirements and the different options available to you contact one of our experienced currency brokers today. You can call us for free on 0800 328 5884 or if calling from abroad 0044 1494 725353 or alternatively email me on trh@currencies.co.uk.