GBP Exchange Rates Receive Another Boost
The British Chambers of Commerce (BCC) have forecasted that next year the UK economy will surpass their pre recession levels. The UK’s economy was at its peak back in 2008 but then spectacularly crashed with the the housing market, retailers and the banks some of the main areas of suffering. As the UK economy has started improving there is a concern that the there could be another housing market crash which could spark further UK economic weakness and bring back the threat of recession. However, should the BCC be right and the powers that be in the UK have learnt from the mistakes of 2008 then it may mean we see a boost for the UK economy and therefore for Sterling exchange rates.
The actual prediction from the BCC for UK economic growth next year is of growth of 2.7% which is a large increase on the previous estimate. However, as mentioned in yesterdays currency blog there is still a concern that some of the Governments austerity measures are still to kick in and this could have a negative effect on the economy. On top of this the Bank of England have stated that when unemployment falls to below 7% they will consider raising interest rates which could be a real positive for Sterling but will be interesting to see how it impacts upon the housing market and the overall economy. There is even an argument that the Bank of England could raise interest rates sooner in order to slow down the current fast paced rise of UK house prices, however with the economy in a precarious, albeit a fairly positive, position it would be a bold move to change interest rates early.
Sterling was recently at some of the highest levels against the Euro for a year, the US Dollar, Australian and Canadian Dollar for 4 years howver has recently weakened following the news that the US had agreed a budget deal preventing the risk of a US default. With the UK economy expected to continue on its upwards trend though we may see Sterling continue its push back up against a number of the major currencies, so if you need to transfer funds internationally and would like to discuss the currency market outlook or the options available to you please contact us today on 0800 328 5884 or if calling from abroad on 0044 1494 725353 alternatively email me on firstname.lastname@example.org