The Pound received a welcome boost once again yesterday, this time in the form of Manufacturing data. It was announced by the CBI (Confederation of British Industry) that the demand for goods manufactured in the UK has risen to a two year high over the course of the last three months. This could be due to the fall in Sterling’s value pushing manufacturers to source their materials locally rather than importing them into the country. This positive Manufacturing release allowed Sterling to regain some of the ground lost last week after retail sales and average earnings figures both showed a decline.
Sterling rallied against both the Euro and US Dollar counterparts, to 1.173 and 1.246 respectively.
The ongoing concern for the UK is that, as the Pound remains lower, prices for goods will be pushed higher as products imported into the UK cost more. You may have already noticed your weekly shop costing a little more, and with wage growth slowing down and higher unemployment figures being announced last week, consumers may need to make cut backs as prices continue to rise. However when imports suffer from the weaker Pound, exports benefit and the continuous demand from overseas should mean that Manufacturing continues along its positive trend.
Bank of England Governor Mark Carney is due to speak this morning at 10am and could provide insights into the BoE’s next moves, taking into account the mixture of data releases seen over the last week. This will be closely followed by Public Sector Net Borrowing figures for January, which shows the total amount of new debt held by the UK Government. This figure is expected to take a sharp turn for the worse and I would expect Sterling to suffer as a result if this decline comes to fruition.
We should also brace ourselves for further potential turbulence tomorrow at 9.30am as UK growth figures for the last quarter of 2016 are released. If we see any downturn from the previous 0.6% this could cause the Pound to weaken once again.
If you are looking to purchase any currency with Pounds over the coming weeks or months, it may be wise to detail your requirements to your account manager on 01494 725 353, who can help you to time your transfer for the best possible returns.
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