This Sterling report discusses the news that the latest Brexit bill has been passed. It also looks at upcoming data releases and other factors that could affect GBP exchange rates this week. The table below shows the market movements for a number of currency pairings in the last week:
|Currency Pair||% Change||Difference on £200,000|
This victory will no doubt come as a relief to the Prime Minister following recent events such as a leaked immigration plans. Additionally, only 7 Labour MP’s defied Jeremy Corbyn, leader of the Labour Party. Although the uncertainty of Brexit still weighs heavily on the Pound, for now this is a positive sign of progress being made. For any clients wondering what's next for Brexit and the Pound, the Prime Minister now faces the hard task of keeping away the huge list of amendments (which have already made the headlines in the Guardian) before she debates the bill word for word in October. The bill means that EU legislation will be brought into the UK statue books and will also allow them to be changed after 2019.
Theresa may labelled her 326 to 290 win a ‘historic decision to back the will of the British people’ and avoided having to send the bill back for a second reading.
This week sees a raft of important data that has the possibility of moving Sterling exchange rates. The most important of these will be September’s interest rate decision on Thursday. Last month’s decision saw no change to policy, with Ian McCafferty and Michael Saunders voting for an immediate hike, due to economic activity in the UK remaining fairly strong in light of the Referendum result.
This month will mark a first meeting as policy maker for Dave Ramsden, who has previously attended the meetings in the form of a treasury representative. As a newcomer, it is highly unlikely that he will want to ‘rock the boat’ just yet, and will likely vote with the core members. This means that no change is expected from last month’s policy meeting where the vote was 6 – 2 no change.
However, the important information for sterling exchange rates is likely to be after the meeting when Mark Carney answers questions on the UK economy. I would expect for him to remain fairly unadventurous for now, after recent reports that the rates wouldn’t be touched until 2019. I feel as though the Monetary Policy Committee (MPC) won’t be looking at touching rates until the uncertainty surrounding Brexit is clarified, the MPC are unlikely to raise rates out of fear of having to unwind them again at some point.
Before Thursday’s announcement there is a raft of data that has the capability of moving exchange rates. Today’s inflation data will be closely watched as to how the UK’s economy is coping post Brexit. The expectation is for a slight increase to 2.8% from 2.6% following a slump in the Pound's value and is consistent with the Bank of England’s projections, even in light of their target rate being 2%. Any deviation is likely to cause volatility, today would be well worth getting in contact if you have a Sterling based requirement.
Additional data releases this week include Labour market information and retail sales. The Pound's recent charge has helped the GBP/EUR exchange rate break above 1.10 which hasn’t been seen in a month. It may well be worth looking at securing rates at this level if you are looking at buying Euros.
For further information on how future data releases could affect exchange rates please call our team of currency brokers on 01494 725 353.
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