Despite the Bank of England (BoE) voting unanimously to hike interest rates less than a week ago, the Pound is continuing to come under pressure. In today's Sterling report we discuss the other factors still impacting the Pound, with an outlook at economic data until the end of the week. The table below shows the range of a number of exchange rates paired with Sterling, showing the importance of timing your transfer and the potential difference in return you could have achieved during the past month.
|Currency Pair||% Change||Difference on £200,000|
Yesterday’s report highlighted that the Pound was the worst performer of the G10 currencies on the first day of the week, and the downward trend has since continued with new Year-To-Date and/or annual lows being hit over the past few days.
So far this year the GBP/EUR rate has been as low as 1.1139, which has actually taken place this morning.
Cable (GBP to USD) has also hit its lowest level so far this year as the pair have broken 1.30, and it only needs to drop by around 2-cents to break its annual low of 1.2775.
These drops come despite the BoE’s Ian McCafferty suggesting just yesterday that its reasonable to expect a couple more rate hikes over the next two years.
The most recent bout of selling off appears to have been driven by the BoE offering a dovish speech after hiking interest rates on the 2nd of this month. Also the over the weekend UK Trade Secretary Liam Fox announced that there is a 60% chance of a ‘No-Deal Brexit’ taking place. Brexit talks have heated up ever since Prime Minister, Theresa May put forward her Brexit plan at her Chequers residence, and her white paper resulted in resignations from Boris Johnson (former Foreign Secretary) and David Davis (former Brexit Secretary).
Further news relating to Brexit could be thin this month as politicians are on their summer recess period until the 4th of September, but if you’re planning an exchange involving the Pound it’s worth making us aware in case of any unexpected announcements.
In the meantime though Boris Johnson is coming under pressure, as calls for him to apologise for an insensitive news article he wrote regarding the burka are picking up. Some are even calling for him to resign which would mean that he would no longer represent the Tory party.
In a quiet week for both economic releases and political discourse, this Friday’s GDP data is likely to be the main potential market mover. There are expectations of a 0.1% growth figure for the 2nd Quarter of this year. This figure is of course very close to being negative and it’s a drop from the previous figure of 0.2%. Personally, I’m expecting to see Sterling drop quite dramatically if the figure falls below expectations.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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