This update examines factors that could affect GBP exchange rates this week, including GDP figures on Wednesday, Brexit news and negative news from the UK car industry. The table below shows the market movements for a number of GBP currency pair during the last month:
|Currency Pair||% Change||Difference on £200,000|
Sterling was seen trading in positive territory across of the board of major currency pairs yesterday, after a number of positive Brexit comments late last week after the EU summit weren’t forgotten.
I also think that the Pound has been oversold recently, mostly on Brexit fears and interest rate hike uncertainty so it’s not unusual to see traders buy currencies they think are cheap (GBP/USD hit a 2 week-low last week).
Many may have expected to see Sterling fall yesterday after a number of negative updates, particularly regarding the car industry within the UK.
Pendragon, which is a UK-based car dealership and one of the biggest in Europe running the likes of Evans Halshaw and the Stratstone outlets across the country, yesterday saw its share price drop by 20%, after already under pressure sales dropped dramatically in the last quarter.
The profit figures were around £15m below analysts’ expectations, with Pendragon expecting to see the sector continue to struggle as consumer demand continues to fall, despite some manufacturers continuing to force new vehicles into the market.
This news surfaced on the same day London introduced a new levy on old and the most polluting cars entering the city centre, doubling the cost to drive into London for many motorists.
Whilst the move had been welcomed by those hoping for a greener London, critics have called it an attack of the city’s poorest and business as many will now need to change cars or pay even higher fees to enter the congestion zone.
I personally think there could be a negative impact on the City’s construction sector, as many small businesses within this sector will now struggle, which could negatively impact an already under pressure property market.
Those hoping to see the UK economy recover and to see the Pound recover its post-Brexit loses should be aware that Pendragon announced a profit warning immediately after their results, and this is 75th from a UK-listed company in the last quarter, up from 45 between April and June. It appears that the uncertainties covered earlier are beginning to impact businesses within the UK, so seeing the Pound continue to come under pressure wouldn’t surprise me in the current climate.
In terms of economic data it’s expected to be quiet this week for the UK and therefore the Pound, although Wednesday is certainly the day to look out for. At 9:30am GDP figures, which cover economic output on a monthly and annually basis will be released. The Pound is likely to react to the data depending on whether the figures meet expectations or not, so feel free to get in touch if you wish to discuss analysts’ expectations along with how you can benefit through our service should there be a move in your favour.
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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