This Pound Sterling report discusses the impact of Philip Hammond's Spring Statement, which was well received. We also look at other events and economic data that could impact Sterling exchange rate during the rest of the week.

The table below shows the change for a number of GBP currency pairings and the difference between the high and the low when transferring £200,000 yesterday. If you would like to keep track of live rates please visit our live currency rates page.

Currency Pair% ChangeDifference on £200,000
GBPEUR0.60%€1352.83
GBPUSD0.65%$1816.91
GBPCAD1.35%CAD $4877.65
UK Manufacturing output hits a one-year low

UK economy at a turning point?  

The Chancellor of the Exchequer, Philip Hammond gave his Spring Statement yesterday afternoon and it was met well by the currency markets. Sterling gained across the board of major currency pairs as there were no shocks and plenty of upgrades to the UK economy as financial markets had expected.

The main points to take from his short speech are that predictions of economic growth this year have been upgraded to 1.5% by the Office for Budget Responsibility (OBR), which is 0.1% higher than their predictions back in November. He also announced that national debt would fall as a share of GDP (economic output) in 2018-19 which will be the ‘first sustained fall in debt in 17 years’.

We now know that UK expects to pay exactly £37.1bn to leave the EU. However, markets remained unchanged after this announcement as similar figures have been discussed before.

Will Sterling benefit from a positive UK economic outlook?

Although Sterling continues to remain range-bound against the majority of major currency pairs, I believe we’re likely to see a stronger Pound as the year progresses.

UK unemployment recently fell to the lowest levels since the mid 1970’s at 4.3%. The UK’s manufacturing sector has grown for nine consecutive months which is its longest period of expansion since records began in 1968. 

With national debt predicted to decline along with the problematic wage growth expected to catch up with UK inflation levels and become positive in the first quarter of 2019, I think that Sterling will be stronger towards the end of the year than now, even if only slightly.

One factor that could dent Sterling’s hopes longer term is that UK growth is predicted to be towards the bottom end of the G20, as Brexit uncertainties continue to weigh on the UK. Also, predictions of 1.5% growth are now becoming the new normal, whereas since WW2 the UK has been used to figures of 2.5%. Lower growth means lower taxes and therefore, lower public funds which may hold the UK back which could limit GBP’s upside longer term.

Theresa May’s cabinet meeting at Chequers today

Upcoming events and economic data to be aware of

Despite the bullish comments from Hammond yesterday, it’s worth noting that the UK is benefitting from an improved global outlook especially within its manufacturing sector. A global downturn is likely to impact the UK to a greater extent than some more resilient economies such as Germany’s and Sterling sellers should be aware of this.

I would also expect to see a softening to the Pound’s value medium term if wage growth stalls and struggles to keep up with the 1% above target inflation levels.

From a shorter-term perspective, the UK-EU transitional agreement is expected to be arranged before the EU’s summit in Brussels on the 22/23rd of this month. This is perhaps a key potential market mover for Sterling exchange rates this month so do make your broker aware if you wish to plan around this event.

There’s a very quiet end to the week for economic data, but that doesn’t mean there won’t be movement instigated by data elsewhere. If you’re planning a GBP transfer this week, do make us aware in case of any potential major moves.

Could the Russian spy scandal impact the UK economy?

Russia failed to meet the UK’s deadline last night and hasn’t commented on the poisoning of Sergei Skripal and his daughter in Salisbury. Whilst there has been no reaction in the currency markets yet I wouldn’t rule it out should sanctions be implemented. It’s certainly worth knowing that BP owns 20% of Russia’s most valuable company Rosneft, an oil and gas giant.

For more information on how future data releases could affect your currency requirement you can call our currnecy brokers on 01494 725 353 or email me directly at jxw@currencies.co.uk.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.