A £200,000 transfer into Euros this morning in comparison to Monday achieves you an extra €3,800 or nearly 2%, just highlighting the opportunity available. The table below shows the change for a number of GBP currency pairings in the last month:
|Currency Pair||% Change||Difference on £200,000|
Today we have the latest update on the state of the UK economy with GDP figures being released. This is the real last big release from the UK before the Bank of England (BOE) interest rate decision in less than 2 weeks’ and could in turn really set the tone for Sterling direction over the next fortnight.
This year there has been a growing speculation on the prospect of interest rates climbing in the UK. Two weeks ago the forecast was for a hike in the bank’s May meeting and a further in November of this year.
The head of the BoE, Mark Carney, however changed this view last week when he was interviewed by the BBC out of hours suggesting that a hike next month was not a certainty. This at the time resulted in a fall in Sterling’s value by over a cent within a few hours really highlighting the importance of this decision on the value of the Pound.
If GDP figures come out higher than expected this morning I expect Sterling’s rates to climb by at most half a cent. However if it shows a poor figure it could really convince the market of no hike next month and cause Sterling rates to potentially drop by over a cent. This could in turn really be exacerbated by the speech by Mark Carney this afternoon at 13:00. Make sure to tune in and manage your exposure before this release as in real terms within the next 7 hours rates could have climbed a little or indeed dropped a lot.
If you are in the market for a currency purchase within the next few weeks today’s release could really set the tone so make sure to keep in close contact with your broker here and make them aware of your exposure levels.
UK data continues to perform well. Wages in the UK rose by 2.8% in the three months running up to February which was the fastest increase since 2015. UK annual inflation fell to 2.5% in March, which is the lowest rate in a year and the reason why there seems to be a change in view on interest rate change timelines.
Consumer spending in the UK however also fell in the first quarter of this year by the largest amount in six years, according to the latest updates from Visa. All of this however has also resulted in the International Monetary Fund (IMF) upgrading its growth forecast for the year to 1.6%.
Next week UK data is released on Tuesday with PMI data for the manufacturing sector, the construction sector on Wednesday and Services sector on Friday. These will all be keenly watched for any indication towards a contraction or expansion which could further fuel the argument by the BoE to change interest rates in the UK in the near future.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me directly at email@example.com.
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