Following the worst GDP figure released in 5 years, coming out at 0.1%, the widely predicted interest rate hike from the Bank of England didn't come to fruition. This could also have reduced the likelihood of a rate hike at all this year. The Sterling report below looks at the way this could affect GBP exchange rates in the coming months. The table below shows the difference in Sterling you could have achieved when buying £200,000.00 during the high and low points on Tuesday this week.
|Currency Pair||% Change||Difference on £200,000|
Sterling has lost significant value of late against the majority of major currencies. GBP/USD was close to 1.45 and now has lost more than ten cents, GBP/AUD has lost nearly ten cents down from 1.85 an GBP/EUR only remains in current buoyancy levels due to the uncertainty surrounding the Italian elections.
A rate hike from the Bank of England (BOE) was widely predicted last month, but never took place following a host of poor economic releases including GDP which arrived at 0.1%, the worst figures for five years. I now would be surprised to see a hike this year.
The uncertainty surrounding Brexit is still holding back the pound. The Irish border situation is a particularly controversial subject and it is proving very difficult to find a solution.
There is hope this can be resolved this month, but I am not convinced. If there is resolution however this could benefit the pound.
It is a very difficult period for Sterling sellers and there is no doubt it will be difficult to maximise your return. It would be wise to stay in close contact with your broker so you can be made aware of any movements in your favour. The pound is fragile and any spike is likely to be a small window of opportunity.
Manufacturing Purchase Mangers Index (PMI) is released today and it captures the business conditions in the manufacturing sector. It is an indication as to the health of the UK economy. There is expected to be a fall from 53.9 to 53.5 (figures above 50 demonstrates growth). If the figures arrive away from expectations there could be change in Sterling value.
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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