Recent positive economic data releases from the UK have had seemingly little affect as markets await certainty surrounding Brexit, which remains the main impactor for Sterling rates at the moment. The Sterling report below looks at the medium term outlook for the Pound, taking into account the data releases seen this week. The table below shows the difference in a number of currencies you could have achieved when buying £200,000.00 during the high and low opints of the past 4 weeks.
|Currency Pair||% Change||Difference on £200,000|
It has been a mixed start to the month for the pound with sterling exchange rates proving insensitive to the latest economic releases in the build up to the next Brexit outbreak.
Having struggled during the first quarter as a result of the poor weather conditions, many were holding out for a fairly limited posting in British construction levels during yesterday’s trading. The markets were positively surprised however with a steady release at 52.5% which supported the general view that the first quarter was a blip in form from the UK economy and more positive readings should gradually filter through into the forecasts during the second quarter.
Construction data is often used by investors as a means to gauge future growth as it is one of the first sectors to react to a shift in trend. So despite the limited reaction from the markets, the shift will no doubt have been picked up and could ignite long term strength to the pound moving forward.
Short term however Brexit uncertainty remains the main focus for the markets. The latest business confidence survey by Markit highlighted the collective fear of the unknown within the UK economy at present is holding back growth potential and business investment continues to be chocked as a result.
I feel this was reflected in the Pound’s lack of responsiveness during yesterday’s trading and suggests to me that the markets are holding out for more clarity from the UK government before investors begin to back the pound once again. For this reason I feel sterling gains will likely be hard to come by short term, those looking to buy foreign currency might want to consider their options.
It was confirmed yesterday evening that the EU withdrawal bill will go back to the House of Commons on the 12 of June for crunch votes following the multiple defeats the proposed legislation suffered in the house of Lords last month.
This brings some much needed urgency to May’s cabinet to provide key solutions in time for the government to debate the final points before facing EU negotiators. One of the PM’s spokesmen has already confirmed there were multiple Lord amendments that the government will dispute, paving the way for plenty of toing and throwing over the next week or so and real volatility on Sterling exchange rates as a result.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.