This Pound Sterling update will examine the factors that could affect exchange rates this week. The table below shows the difference you would have received when buying £200,000 at the high compared to the low during the last month. For current live exchange rates click here.
|Currency Pair||% Change||Difference on £200,000|
Sterling rates have continued to be under pressure through this month, falling 2% against the Euro. The reason for this fall has been the latest round of economic data released from the UK which has shown a stark warning for the UK; this being that inflation is now higher than wage inflation.
This is a worrying sign as it means consumers have less to spend and that costs may well continue to climb. This was all created as a result of the Brexit vote and the fall in Sterling thereafter making importing raw materials a lot more expensive. This in turn has resulted in Industrial output falling faster than expected, widening the trade deficit. We have also seen UK house sales fall in April to their lowest levels since the EU referendum.
Inflation remains a key economic figure and will continue to drive Sterling’s value moving forward. Traditionally inflation being high results in the central bank looking to raise interest rates. In this case the Bank of England expects inflation to fall back under the 2% target at the end of the year so has suggested it is unlikely to do this. This does not help the Pound and means that many expect inflation data to have a negative impact on the Pound over the coming months.
Tomorrow we have more information on this topic released with an Inflation Report Hearing. Clients with Sterling to sell this month may well want to move before this event to avoid further costs, make sure to contact your broker today if that is the case.
On Thursday of this week we have the latest GDP figures released for the UK. Most expect growth in the UK to remain under pressure and this is again something for Pound sellers to be wary of. I personally see this release to either result in Sterling rates climbing up by a small amount or causing a fall by a much bigger degree. In essence there seems to be a lot more downside than upside.
As a result of this being one of the last big economic events for the month of May now is the time for all to review their situation in the build up to the UK election which is now less than 3 weeks away.
For more information on how future data releases could affect your currency exchange, call our trading floor on 01494 725 353 or email me directly at email@example.com.
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