UK economy remains fragile despite Sterling improvement

The Pound has found life extremely tough going of late, with losses against most of the major currencies. This has been particularly apparent against the Euro, US Dollar and Australian Dollar, with the Pound losing value in line with the current uncertainty surrounding the UK economy.

However, despite these losses it is not all doom and gloom for those clients holding GBP, as Tuesday’s positive spike for the Pound proved.

Currency does not move in a straight line and therefore we will see opportunities for those clients holding GBP to take advantage of, even if a sustainable Pound recovery is unlikely in the short-term.

As touched on, Sterling received a welcome boost during Tuesday afternoon trading, following a host of inflation data, which came out above market expectation. Whilst this spike cooled during yesterday’s trading, the Pound was holding its position against the EUR & USD following the latest UK employment data and official Unemployment rate.

Whilst the official figure of 4.9% came in as expected, average earnings were up and this should help to support Sterling’s position ahead of some key economic data releases over the coming days.

We have the latest European Central Bank (ECB) interest rate decision and subsequent monetary policy statement, which is likely to have a big impact on GBP/EUR rates. This alongside UK Retail Sales figures are considered key economic releases by investors, so expect additional market volatility for Sterling as we head towards the end of the trading week.

Where next for Sterling exchange rates?

My overall feeling at the moment is that the Pound is suffering due to the unique situation the UK finds itself in and the uncertainty that corresponds with this. We will no doubt find out more information about how we will facilitate our Brexit and the trade deals that may be acquired and as each facet of this uncertainty is removed, the Pound is far more likely to gain enough support to drive its value up.

In my opinion the markets have now, to some extent, factored in the UK’s decision to exit the EU and this will be integrated into the current GBP/EUR exchange rates. Whilst the Pound is clearly fighting an uphill battle, UK Prime minster Theresa May has laid her cards on the table and therefore there is an argument to be made that the only way is up for Sterling?

However, whilst we are in this positon of economic limbo it would be wise to protect any Sterling positons and avoid the current market uncertainty sapping any more value from your Pounds.

For more information on how Pound Sterling exchange rates and how to transfer money overseas, call our trading floor on 01494 725 353 or email me directly at mtv@currencies.co.uk.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.