This Sterling exchange rate update discusses factors that could impact GBP rates today and into next week – following up on a run of poor data for the UK economy, and looking ahead to next week’s interest rate decision.
Yesterday was dubbed ‘Super Thursday’ as voters took to the polls for over 120 councils in the UK, Police and Crime Commissioners in England and Wales, and new Mayors for London, Bristol, Salford and Liverpool. Results for these elections will be released throughout the day today.
Markit Services PMI data was released during yesterday’s trading session, providing an insight into the economic situation within the services sector.
This figure came out worse than last month at 52.3, growing at its slowest pace in three years. This combined with recent falling manufacturing output, slowed construction activity, and the uncertainty surrounding a possible Brexit does not bode well for the UK economy.
Considering this data was so disappointing, Sterling actually made gains against the Euro during yesterday’s trading session, and this was most likely to be due to USD strength following from continued positive US unemployment data. As the USD is the world’s most traded currency, any positive US data can have an unexpected impact on other currencies. This highlights just how unpredictable the currency markets can be, and how important it is for anyone with currency requirements to keep in close contact with their broker to take advantage of any peaks as they occur.
The next set of Manufacturing and Industrial Production figures will be announced on Wednesday at 8:30am followed by NIESR (National Institute of Economic and Social Research) GDP Estimate, which is an estimate of UK growth over the last 3 months, a month before the official GDP release. As the recent data has been mostly negative of late, we could see a low estimate resulting in potential GBP weakness.
Thursday is likely to be the most important day for Sterling exchange rates next week when the Bank of England Monetary Policy Committee (MPC) will vote on whether to cut, raise or keep interest rates on hold.
Throughout the last three months, all 9 members of the MPC have voted to keep the rates unchanged at 0.5%, however with yesterday’s disappointing Services data, it is possible that members could change their stance and vote for a interest rate cut this year, causing further Pound Sterling weakness.
For further news on how upcoming data releases could impact your currency transfer call our currency brokers on 0044 1494 725 353 or email me directly at firstname.lastname@example.org.
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