Yesterday the week started how it ended the last, Sterling falling again. Last week brought 6 week highs to the GBP/EUR rate peaking at just above 1.29. However as the week moved on GDP data revealed the UK only grew 0.4% in the first quarter of the year, which was a slowdown from the previous 0.6% in the quarter before. This coupled with a new report from the Organisation for Economic Co-Operation and Development (OECD) emphasising the dangers of a successful Brexit vote saw the rate drop to the 1.27’s.
The OECD, International Monetary Fund and The London School of Economics have all now produced reports which have suggested that a Leave victory would almost certainly not result in the gaining of the £350m a week the UK supposedly lose whilst being part of the EU. But in fact we would just invite more borrowing creating a larger debt with the OECD bravely predicting that the UK tax receipts by 2030 would be between £20bn and £45bn lower.
This week is significant for the race as the money behind each campaign is identified. Whilst both campaigns are granted £7m from the electoral commission they are able to take private donations. It’s expected that the list will reveal both campaigns have received 7 figure sums from individuals. Any business or person who has donated over £7,500 will be made public in the coming days. Interestingly the most notable name so far is Lord Sainsbury, the supermarket founder has apparently given over £1 million to the Remain campaign.
The list may create a significant amount of volatility, especially when you think back to when Boris Johnson declared his allegiance. If popular well respected businesses or individuals enter into the debate public perception can be easily swayed having an impact on the potential outcome, which in turn affects the markets. I believe the recent strength for Sterling is coming to an end and as we enter the main run-up to the vote I believe the GBP/EUR rate will fall back towards 1.20. If you are looking to purchase Euro’s we have already lost 2 cent from the highs last week, so make sure you don’t miss out further.
This week is fairly quiet for data releases in the UK with the Markit Manufacturing PMI today and Halifax Housing Prices along with Markit Services PMI on Thursday. I am of the opinion unless something drastic is released there is likely to be little movement off the back of this data.
For more news on economic releases that could affect your currency transfer please call our trading floor on 01494 725 353 or email me directly at firstname.lastname@example.org. You can view our full Brexit article for predictions on exchange rates and more here.
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