Yesterday was a relatively quiet day on the market, although the impact of Tata Steels decision to close down a plant has resulted in potentially 15,000 job losses.
The main headline in a relatively quiet day in the financial markets was news of global manufacturing giant Tata Steel was in conversation with the UK government to potentially shut down their loss making plant in the UK, at Port Talbot.
The potential loss of 15,000 jobs is devastating to the local community, but the point of view which caused Sterling to become less appealing was the lack of long-term confidence from the international business community for commodity prices and UK growth to make a turnaround.
Port Talbot is described as a loss making enterprise because lack of global demand for commodities and secondary raw material such as Steel is falling. A slowing UK economy is combining with this to mean that even the domestic market place isn’t enough for ventures such as Port Talbot to break even. David Cameron actually announced this morning he will be chairing an emergency steel crisis meeting.
The rhetoric that the plant will have to be closed is simply another affirmation that lower growth in the UK is not a short-term feature for the UK. The Pound will likely struggle moving forward as the question mark over the UK economy’s future is enlarged alongside the upcoming Referendum. In the short-term this is one of the reasons why Sterling rates steadily fell across the board yesterday afternoon.
Today the final revision of final quarter growth in the UK will give financial markets a concrete look at how the UK ended 2015, which in turn will advise us all on what to expect in 2016.
However, with this being the final revision of three, it is unlikely to see any change. These are the last tallies from the few pieces of data which were delayed, not the initial estimates themselves. As such we are unlikely to see much movement on Sterling’s exchange rates.
But the figures will paint a stark contrast to how quickly the global downturn has affected UK performance. At this point quarter on quarter growth was at a quicker pace of 0.5%, compared to 0.3% now.
This change will be highlighted by news of February’s mortgage approvals and lending rates today, which are set to contract, and highlight a slowing economy for Sterling with spending habits dwindling.
Though massive movements on Sterling’s value aren’t expected, there is still more likelihood for slight losses over any gains. Anyone with a foreign currency requirement may be wise to contact their broker for a live quote this morning if any imminent transfers are required for you over the next few weeks.
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