This currency report offers some insights into the latest Brexit news and how Sterling is being affected. It also looks at key UK economic data that we are expecting later today. The below table displays market movements for a number of GBP currency pairings over the last month:
|Currency Pair||% Change||Difference on £200,000|
Since the beginning of March, the Pound has struggled to make any major inroads against the Euro, with Interbank levels remaining range bound between 1.115 and 1.127. It has been a relatively quiet week for UK economic data releases and Brexit continues to weigh heavily on the value of the Pound.
It was announced on Wednesday that US Investment bank Goldman Sachs have put plans into place to relocate teams working on German accounts to its base in Frankfurt by the end of June, with some already signing German contracts of employment.
This is one of the first major signs of concern within the financial sector in London, and although Philip Hammond is currently trying to defend the UK’s position on this matter, it may not be enough to calm other major investment companies for now.
The financial sector is imperative to the health of the UK economy, accounting for 11% of UK tax receipts, therefore if any more financial firms follow in the same footsteps as Goldman Sachs, I would expect this to have a highly negative impact on Sterling exchange rates.
This morning at 9.30am Manufacturing and Industrial Production figures will be released and analysts are predicting for expansion in productivity for both sectors, with a rise from 0% to 1.9% for Industrial sector and from 1.4% to 2.8% for the Manufacturing sector. NIESR (National Institute of Social and Economic Research) will also release their GDP estimate readings for the last 3 months leading up to February at 1pm, which are expected to fall from 0.5% to 0.3%. If this is the case we could see Sterling weakness this afternoon, and clients looking to sell Pounds in the short term may benefit from moving ahead of this release.
Growth figures are a large contributor to deciding future monetary policy. The Bank of England will decide whether or not to raise Interest Rates next on 22nd March, and if these figures are lower as expected, this would likely push back any hiking of rates further into the year. Many economists are now predicting the next hike to occur in May following from various signals from Bank of England policymakers.
For more information on how upcoming events could affect exchange rates call our team of currency brokers on 01494 725 353.
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