Sterling found further support following yesterday's Manufacturing PMI release. Will the trend continue and could GBPEUR exchange rates crawl back to 1.20?
Yesterday morning Markit Manufacturing PMI data was released at 53.3, far better than July’s reading of 48.3. This is a survey of purchasing managers at over 600 industrial companies in the UK. After the decision was made to leave the EU in June, the Pound weakened heavily which boosted exports, making goods cheaper for overseas buyers, but also meant that goods imported into the UK were more expensive.
Following this positive news, the Pound rose by 1.3% against the Dollar, and 0.9% against the Euro (providing Euro buyers with the best opportunity to do so in 4 weeks), and was the largest month on month increase the survey has seen in 25 years.
There were many predictions before the Referendum that if the UK were to leave the EU, it would be plunged into a sudden Recession. The latest data has proven these predictions to be somewhat far-fetched, and although there is still the possibility of an economic slowdown in the second half of 2016, economists are already predicting a much brighter future for the UK over the coming months.
This morning at 9.30am will give us another insight into the UK economy, this time with PMI Construction data for August. This is also expected to rise from July’s reading, and if this is the case we could see further Sterling strength, potentially even breaking the 1.20 mark.
Looking to next week, we have the latest Inflation Report from the Bank of England released at 10am on Tuesday. Manufacturing and Industrial Production figures are released on Wednesday morning and Consumer Inflation Expectations released by the Bank of England on Friday at 9.30am will offer the percentage change expected by consumers over the next 12 months. If you have Sterling to sell in the near future, it may be wise to speak with your Account Manager here to plan, just in case this week’s run of positive data is short lived.
If you are buying Euros short term, there could be further opportunities ahead before the UK leaves the EU. Call our team today on 01494 725 353 to discuss your currency requirements.
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