GBP Supported on Stable UK Unemployment

The Pound has been supported on the back of unemployment data which held steady yesterday at 4.9%. The period covers April to June 2016 and so represents for the most part a pre-referendum period. As such it doesn’t provide us with a true figure post Brexit which would be far more useful. What is particularly interesting though is that the claimant count measure of unemployment for the month of July (post Brexit) actually improved.

The claimant count fell by 8600 to 764,000 which is very welcome news for the British economy and a very different result to what was expected.

Although unemployment is widely expected to start rising in the Autumn, it is clear that it is still too early to see any real change in the numbers to date following Brexit. The fear of a mild recession and general uncertainty over Brexit is likely to see that headline number start climbing in the coming months. This is likely to put added pressure on the pound as it will highlight a negative change to the economy. It is of paramount importance to be in communication with your account manager to take advantage of spikes in the market as it is fair to say that the real effects of Brexit are still likely to be felt.

This morning sees UK retail sales at 09:30 for July. This hard data is in fact for the post Brexit period and has the potential to create considerably more market movement than usual. Last week’s data from the British retail Consortium (BRC) showed online and high street sales rose at their fastest pace in July for six months. It will be interesting to see whether today’s numbers complement last week’s data. A strong number this morning in my view could see a rally for the pound and may present a short term opportunity for buying Euros.

When will Article 50 be invoked?

Brexit means Brexit is the strapline we have heard so many times from the new Prime Minister Theresa May but the question still remains as to when Article 50, the process by which Britain formally begins the process of leaving the EU, will actually be started.

Theresa May has made clear that it should not be started before the end of this year. Whilst a new team of 300 trade negotiators are expected to be in place by the end of the year, this team are unlikely to be ready to fight the battle that awaits. Perhaps more importantly the political elections in both France and Germany next year will play a much larger role in determining when Article 50 is invoked. These two countries are the two key voices as far as Britain is concerned and any change in leadership in either country would considerably change the terms. A strategic decision to wait would at least mean Britain would know who it was negotiating with whilst also allowing more time for the new negotiating team to learn strategy. The plot thickens.

Markets remain volatile and I therefore urge anyone who needs to exchange currency to get in touch with our team today on 01494 725 353.


Read more articles
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.