Friday’s heavy economic data setting the trend

It has been a difficult start to month for Sterling having been forced to surrender it’s spectacular gains during February, as Brexit pressure continues to mount and the consistent stream of negative economic data further compounding GBP holders’ woes.

Last week’s toing and throwing in the house of Lords and the resurrection of talks of a second Scottish referendum initiated the downward spiral forcing the Pound to seven week lows against it’s major currency counterparts.

However, Friday’s dubious economic data releases from the UK’s Manufacturing and Services sectors may well set the tone for continued Sterling weakness over the course of the week.

Service PMI came in at 53.3, well below January’s 54.5 reading, suggesting there has been a considerable slowdown in UK GDP growth. As a result, Sterling now finds itself marooned at muti month lows of 1.22 and 1.15 against the US Dollar and the Euro respectively.

Spring budget release could be pivotal

Those disappointing releases may well bring added importance to the UK’s Spring budget release on Wednesday. Investors will be keeping an eye on just how the government plan to curb the mounting Brexit pressure and reignite growth within the economy. Following Phllip Hammond’s interview yesterday, I believe the markets could react in one of two ways:

Investor’s may be put off by the Chancellor’s words having suggested the government will look at servicing the UK’s growing debt before considering to increase spending in a bid to drive the economy out of it’s negative trend. If this is the case, I expect to see the Pound drop to the low 1.15’s against the Euro before the end of the week.

If however investors take comfort in the constructive promises shared by Mr Hammond with regards to the reallocation of funds to drive a more dynamic and competitive work force in the UK we could see the start of some much needed long term Sterling strength. His optimistic and quite bullish stance with regards to the UK’s negotiating position with the EU may well tip the balance and wet investor’s appetite for the Pound.

If you have a Sterling requirement in the next couple of days, it may well be worth getting in touch with your account manager here at FCD to discuss how the pending Spring budget release could affect your transfer and help you limit your exposure should the markets drive against you.

Other economic data to consider

Before Wednesday though, deputy governor Charlotte Hogg is expected to cover the Bank of England’s view on the UK GDP’s slowdown in a speech this morning at 11:30. Retail sales and Real estate prices are to be released on Tuesday. Why not open a free account just in case we see similar market movement to the heavy drops we saw last week?

Wednesday's Spring budget from the Chancellor may put further pressure on the Pound, and clients with a foreign currency requirement may look to protect their position in the event of further down turn. Call us on 01494 725 353 or email Ben Small at to learn more.


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