The UK has shrugged off the Brexit vote up to now, but how long can economic uncertainty last until it impacts the economy? Today's retail sales could be a turning point.

UK Retail sales set to show a decline

This morning at 9.30am the latest Retail Sale numbers for the UK are set to be released. Retail sales is a measure of the total receipts of retails stores. Monthly and yearly figures are set to show a slight decline therefore the Pound could lose value against its counterparts this morning.

Bank of England Interest rate decision

At midday the Monetary Policy Committee from the Bank of England (BoE) will vote to decide the interest rate for the 30 days. Last month the 9 voting members unanimously voted in favour of cutting rates to record lows of 0.25%. The consensus on the market is that the vote will be 9-0 in favour of keeping rates on hold and the decision itself therefore will be a non-event.

At the recent inflation hearings Governor Mark Carney and a member of the Monetary Policy Committee (MPC) insisted one of the reasons why the UK economy has performed better than many economists predicted since the Brexit vote, is because of the BoE’s decision to act proactively and not wait until the UK were on the brink of recession.

As always Mr Carney will address the public shortly after the interest rate vote. Again I wouldn’t be surprised to see the Governor defend the MPCs decision to cut rates last month however if he insists that the BoE could cut rates further in the future, I expect the Pound could decline in value throughout this afternoons trading period. If my predictions are correct this will be the third consecutive day that the Pound loses ground against most of its counterparts.

Brexit Update

Presently the UK are sitting in limbo as no final decision has been made in regards to invoking Article 50 and actually starting the process of leaving the EU. Yesterday EU Commission President Jean-Claude Juncker stated the UK shouldn’t have full access to the single market. This puts pressure on the UK Prime Minister Theresa May as she has insisted Brexit means Brexit however she still wants the benefits of trading within the bloc. Negotiations will be on going however the uncertainty of the UKs future I believe will continue to have a negative impact on Sterling, therefore exchange rates could continue to fall.

I would recommend any clients buying a foreign currency with the Pound this year or next to speak with your account manager as soon as possible to devise a strategy that works for you. Many clients do not actually realise they have more than one option. Call our trading floor on 01494 725 353 to discuss further.


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