This report will examine the factors that could affect exchange rates this week in order to help you stay informed if you need to make a currency transfer. The table below shows the difference you would have received when buying £200,000 for a number of currencies at the high and low points yesterday.

Currency Pair% ChangeDifference on £200,000
GBP/EUR0.45%€1040.00
GBP/USD1.00%$2630.00
GBP/AUD1.58%AUD $5440.00

UK economy could cause problems for Sterling

Economic surveys have been a stark contrast to the disappointing UK economic data of late, however yesterday’s UK survey data highlighted that it now starts to feed through into both surveys and data alike, painting a bleak picture for the UK economy.

Latest surveys from the European commission and from Lloyds banking group found drops in both business and consumer confidence for the month of May. This isn’t welcome news, last week UK GDP figures reported 0.2% growth for the first quarter of 2017, compared to the 0.6% growth in the last quarter of 2016. Manufacturing and construction figures have fallen for the past 3 successive months in the UK.

This has caused a stark drop in the net balance of companies reporting an improvement in business prospects from 60% percent in April to 26% in May. Personally, I think that the fear of Brexit has started to kick in as we approach the crucial negotiation period due after the General Election on the 8th June. For clients with a long term requirement this may be worth bearing in mind, as business confidence and consumer confidence shakes so too does investor confidence and therefore Sterling’s strength.

UK consumer credit could also cause further problems

In addition with yesterday’s disappointing consumer and business surveys, consumer credit spending data also raised concerns. It seems as though the British public are still spending on credit cards, amidst growing costs for the price of everyday items and stagnant wage growth within the UK. This know raises concerns that the spending is unsustainable and could lead to problems further down the line. It will be interesting to see how the Bank of England will approach this in their next meeting on the 15th June.

Rest of the week

I expect the rest of the week to remain dominated by politics in the UK, after the latest YouGov poll which suggested that the general election race next week could be much tighter than expected caused Sterling to drop 0.7% against the dollar and 0.5% against the Euro, highlighting just how sensitive the pound is at the minute to political news and the importance of being in contact with your broker.

Thank you for reading today’s market report, I would be happy to respond directly to any feedback you have. Feel free to e-mail me here.

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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.