Last week was particularly quiet within currency markets and this was reflected within Sterling exchange rates, as we didn’t really see many if any spikes in Sterling’s value when compared with other major currency pairs, even if we are witnessing the currency gradually decline. 1.16, an important level for GBP/EUR as its been acting as a support level since the Brexit, was breached on Friday with the pair trading as low as 1.1578 at the low of the day, with Sterling giving little in the way of a fightback.
Cable (GBP/USD) is performing in a similar fashion with the pair trading as low as 1.2937, below the psychological level of 1.30.
Both figures are now inching closer to their 52 week lows of 1.2775 and 1.1556 retrospectively, and let’s not forget that this year’s low for cable is also the 31 year low for the pairing.
The Pound has been declining since the 4th of August when the Bank of England’s Monetary Policy Committee cut the base rate down to 0.25%, and announced the implementation of its most recent Quantitative Easing program.
The Pound was softening anyway, as markets were beginning to digest the additional £80bn more than expected, government bond buying scheme. Then news broke last week that the BoE ran into issues purchasing their planned amounts as there were not enough GILT sellers, and then subsequently came out the following day (Wednesday) to release a statement to calm markets.
Other noteworthy updates regarding the Pound and the UK economy are that house prices in the UK are rising at their slowest pace in 3 years. The NIESR think-tank believes that UK GDP has fallen to 0.3%, down from 0.6% the previous month and 0.1% below expectation. Norway may block the UK from joining the European Free Trade Association, and consumer confidence has fallen to a 2 year low.
Personally, I’m finding it hard to be optimistic regarding Sterling exchange rates moving forward. News out of the UK covering economic performance in its new post-brexit environment is being heavily scrutinised, with any disappointing data being the catalyst for further falls, as investors are easily spooked in the current market conditions.
With that being said, there has been some positive news released over the weekend for the UK economy. Sterlings sudden drop in value has triggered a UK-wide tourism boom and the government has announced that they will match the £6bn worth of annual payments to British farmers, academic researchers and poorer regions once the UK leaves the EU.
This week’s major events for the Pound are Tuesdays CPI Core figures for both the year and month, which come out at 9.30am and will offer us an insight into the movement of the overall cost of living in the UK.
Average Weekly Earnings figures and Unemployment data will be released at 9.30am on Wednesday, and then on Thursday there will be Retail Sales figures released once again, at 9.30am.
Stay in touch with your assigned broker for updates on these key events, and feel free to contact us early in the week if you wish to remove the risk of further falls from your upcoming currency requirement involving the Pound.
For more information on todays market reports, or if you have questions regarding a currency transfer, why not call us on 01494 725 353, one of our brokers will be available to take your call.
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