This report will address the factors that are likely to affect exchange rates this week if you are purchasing abroad or making a currency transfer.
There are a number of concerns for Sterling exchange rates as we enter the second week of the year. With the Bank of England unlikely to raise interest rates until 2017, a recent downgrade of UK GDP, talks of a Brexit and Services PMI falling things are not looking positive for those holding Sterling.
GBPEUR exchange rates have remained relatively strong during most of 2015 and to me it was a matter of time before the market corrected itself. We have seen a 10 cent fall vs the Euro since the start of December and the British export market has really suffered during the time while Sterling was riding so high.
We are now seeing the negative impact of a strong Pound and therefore such big falls vs both the Euro and US Dollar. The account deficit last year was 5.9% of GDP and with Chancellor George Osborne warning that we are in for a ‘difficult year’ I am not surprised to see the Pound falling since the start of the year.
This week the NIESR reports on the last 3 months for UK GDP. With GDP downgraded by the ONS I think Tuesday’s GDP estimate could cause another fall in the value for Sterling. Industrial production and manufacturing data is also out tomorrow morning and with last month’s figures a 4 year low I expect this to also come out negatively causing losses for the Pound. Overall I expect this week to be tricky for Sterling exchange rates. To keep track of exchange rates please visit our live foreign exchange rates page.
For more information on how future data releases could affect your currency requirement, call any of our currency brokers on 01494 725 353 or email me at email@example.com.
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