This GBP update examines what is currently impacting Sterling exchange rates and discusses factors that could affect Sterling exchange rates in the near future. The table below displays the market movements for a number of GBP currency pairings in the last month:
|Currency Pair||% Change||Difference on £200,000|
Sterling rates of exchange have been quite subdued this week with most currencies trading within a fairly narrow range. It seems with the holiday season starting and the risk of any outspoken political news with regards to Brexit fallen significantly, the Pound’s value has stayed steady. Theresa May is now away for the next 2 weeks on a hiking holiday and the next Brexit negotiations are not scheduled to take place until August.
GBPEUR rates have moved this week by over 1% and GBPUSD by 1.5%. This may not sound like much, however on a well-timed £200,000 transfer it results in a gain of over €2,500 or $4,000 highlighting the importance of using a proactive broker like ourselves.
Pound Sterling exchange rates are currently towards the highest levels we have seen for the last 14 days against both the Euro and the US Dollar representing a good buying opportunity. This gain was really seen following the UK GDP figures which were released on Wednesday. They confirmed the expansion of the economy in the UK was higher than expected following the IMF’s (International Monetary Fund) cut to growth forecasts last weekend.
What is worth very much noting is that the UK is now growing at a slower pace than both France and Germany.
It seems as the Brexit negotiations continue the Pound will remain under pressure. I for one have not seen one economic report or forecast from the financial industry suggesting that leaving the single market will have a positive impact on the UK economy in the medium term. Moody’s only this week suggested that the probability that the UK will fail to reach a suitable trade deal with the EU is ‘substantial’ and could cause ‘significant’ disruption to the UK economy.
Citigroup and Deutsche Bank have confirmed their move to Frankfurt and the Bank of America to Dublin after the Brexit, taking jobs and revenue away from UK plc. As this continues to become a reality I can really see this negative, or perhaps apprehensive view be mirrored in the currency market with the Pound falling.
The UK housing market, which has been one of the building blocks of the economy has remained under pressure. There seems to be a lack of appetite to buy and a definite shortage in stock of properties for sale in the UK. Only yesterday two of the leading estate agents in the UK; Foxtons and Countrywide, reported a significant loss in profits. Foxtons saw profits fall by 64% and Countrywide by 98%, worrying news for the UK Treasury as these property transactions historically have provided a significant amount of taxable revenue in the form of stamp duties collected on each sale.
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