On Tuesday of this week the amended Brexit bill will be debated in the house of Commons to try and resolve, one key topic likely to be covered is the Irish border which needs to be resolved before the EU summit on the 28th of June. The Sterling report below looks at the how this could impact GBP exchange rates as the situation develops. The table below shows the difference in a number of currencies you could have achieved when buying £200,000.00 during the high and low points of the past 30 days.

Currency Pair% ChangeDifference on £200,000
GBP/EUR2.2%€5,050
GBP/USD4.1%$10,060
GBP/AUD2.5%AUD$8,640
bill to withdraw from the EU

EU Withdrawal Bill 

We begin the week with a number of UK economic data releases with Industrial and Manufacturing Production data as well as UK Trade Balance all due out at 09:30am. The figures have previously come out lower than expected owing to the ongoing uncertainty caused by Brexit and if we see another poor round of data this could start the Pound off in a negative direction.

After struggling to agree terms concerning the backstop deal last week it appears as though David Davis and Theresa May are now working together. However, as of tomorrow the House of Commons will be debating the terms of the EU withdrawal bill which had previously suffered 15 defeats in the House of Lords recently.

The UK will want to get things in place prior to the EU summit taking place on 28th June as the topic will likely include the Northern Ireland border issue which still remain unresolved. MPs will have 2 days to debate the bill with the talks to end by Wednesday evening and the bill is aimed at repealing the 1972 European Communities Act.

The aim is to copy all EU law into British law in order to avoid a huge problem on the day when we officially leave the European Union. The problem that the UK faces is that if there is not a majority this could cause a big headache for the government.  

Could UK Average Earnings and Unemployment help the Pound? 

UK Average Earnings and Unemployment data is due out tomorrow morning and both have been performing very well during the last few months. Indeed, with average earnings outpacing inflation recently this has led to some arguments in favour of hiking interest rates in the UK.

Unemployment is also close to its lowest level in over 30 years at just 4.2% so another positive announcement could see the Pound hold firm.

Brexit to dominate the Pound exchange rates

UK Inflation and the Bank of England

UK Inflation data is also due out this week on Wednesday with expectations for 2.4% year on year which is still above the target set by the Bank of England but is slowly coming down. There are currently reasons for both sides of the interest rate argument as with average earnings and unemployment performing well it shows that the economy is doing rather well.

However, with growth forecasts having been downgraded at last month’s BoE meeting and UK Retail Sales due out on Thursday if they disappoint it could put an interest rate hike back further into the future.

Combined with the uncertainty of the Brexit talks over the next few months even if the economy starts to show consistent positive data I think the central bank will remain cautious with monetary policy so any gains for the Pound could be rather limited so if you’re waiting for some big movements this week with economic data this could be eroded by what is happening politically.

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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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.