Three months on from the EU Referendum Dayle Littlejohn looks at how the Brexit vote has impacted the UK economy so far and what this has meant for Pound Sterling exchange rates.
Before the Brexit vote many economists including the Governor of the Bank of England Mark Carney, predicted that the UK economy would come under severe pressure and grind to a halt if the UK voted out of the EU and consequently the UK would enter recession. However it appears that many economists could have got it wrong. So far the Bank of England have cut interest rates and have initiated a quantitative easing program to keep people spending and therefore the economy stimulated.
As for economic data July’s and August’s figures have been a mixed bag however a lot better than economists were predicting.
Next week the Office for National Statistics (ONS) are set to release post Brexit figures for the service sector. It’s been reported by the ONS that service figures so far have not reflected the fall in confidence. In fact August’s figures showed a record rise. The reason why the service data releases are so important is because the sector makes up 80% of the UK economy. If the ONS are correct next week we could see the Pound decline.
Other data releases to look out for next week is Mortgage approvals Thursday morning at 9.30am, which gives a good indication to the health of the housing market. Since the Brexit vote there has been evidence that the UK public have been put off purchasing due to the media hype that house prices would fall. However the Royal Institution of Chartered Surveyors (Rics) expect prices to fall for the next 3 months and rise over the next 12 months. I wouldn’t be surprised to see this data release disappoint and therefore the pound could lose value.
At the end of the week Gross Domestic Product (GDP) numbers are set to be released at 9.30am. GDP is a measure of the total value of goods and services produced by the UK and is a key indicator to the strength of the UK economy. With the ONS predicting falls in the near future and the service sector makes up 80% of GDP in my opinion it’s only a matter of time until GDP starts to sharply fall. The questions is could this occur this month or next?
If you are buying a foreign currency with the Pound I would recommend getting in touch as soon as possible to discuss your options - you can contact any of our currency brokers on 01494 725353. Alternatively, please feel free to email me directly at firstname.lastname@example.org.
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