Despite little to no new news to report in the UK the pound experienced another tough day in the markets. The pound fell to a 23 month low against the euro and a 31 month low against the USD.
With the summer recess now in full swing for most politicians, no significant Brexit progress is expected until MP’s are fully back to work in September. Some had hoped that no news could prove to be good news for sterling over the quiet summer period and maybe give the troubled currency a chance to regain some of its losses, despite the increased fears that Boris Johnson’s new government is driving the UK towards the nearest EU exit and potentially through the sign post displayed ‘No-Deal’.
As the no deal Brexit rhetoric has increased, sterling has experienced a fall in value against the euro and US dollar, experiencing a 1.19% & 2.4% slide of its value respectively on the interbank exchange since 22nd July – the day before Boris Johnson became Prime Minister.
The drop partly reflects the markets belief that a hard Brexit would be an act of economic vandalism that could tip the UK into a recession and lower the UK’s long-run of growth potential said Kallum Pickering – economist at Berenberg Bank in London. Berenberg Bank believes the odds of a hard Brexit have now increased to 40%.
Other factors hampering sterling’s value is the uncertainty about how Brexit will be resolved. Expectations for a snap General Election before the end of the year has risen sharply now the Government have a majority of just 1 seat in parliament. A General Election adds more uncertainty for the UK which will undoubtedly weigh on the pounds value, especially as the result of another election is less clear with possible prospects including Conservative-Brexit Party coalition, a Labour-led coalition with far-left party leader Jeremy Corbyn taking over as the 4th Prime Minster since 2016’s referendum vote, among the potential resulting scenarios.
With no major events due in the coming weeks, sterling could still prove volatile as the markets hang on Boris Johnson’s every word concerning Brexit. To stay up to date with the latest developments you may wish to get in touch with your account manager.
Thursday sees no key data release for the UK. Friday is a busier day in the UK economic calendar with a flurry of data due out including GDP numbers forecasted to show a year on year growth of 1.4%. Manufacturing Production and Industrial Production forecasted numbers are -1.1% and - 0.2% year on year respectively.
If the actual numbers can beat the markets forecasted figures this could provide the pound with some much welcome support, however if the numbers fail to match forecast or even fall short it may likely add pressure on the already struggling pound.
Simple, fast, great rate. Speedy uncomplicated transaction with no commission and very good exchange rate. Friendly service
We have been using Foreign Currency Direct for more than 10 years. They are very competitive and customer service is excellent.
Excellent friendly service always. We have used Foreign Currencies Direct for many years and always get an excellent rate and service. Can’t fault them.
Everything was managed perfectly. I felt secure in my transaction with foreign currency direct. Nothing was too much trouble and I would certainly recommend their services.