UK economic data remains mixed following Brexit. BoE's Deputy Governor believes further stimulus may be needed before the new year.
The Pound has tumbled lower following weak mortgage approvals from the Bank of England which have fallen to their lowest level since November 2014. It highlights a slight slowing in the British housing market. Nationwide house prices are released this morning and could result in some market reaction for the Pound. Whilst house price data is not necessarily the most important economic release it is highly topical at the moment as it does represent hard data which is helping to paint the economic picture of Britain post Brexit referendum.
Construction and housing are normally the first to wobble in uncertain times so any negative news here could see the Pound fall further.
The Pound could see an interesting end to the month with the release of UK Gross Domestic Product (GDP) numbers this morning at 09:30. These numbers represent the 3-month period from April to June and hence covers economic growth in the run up the referendum vote. Perhaps more interesting will be next Fridays National Institute for Economic and Social Research (NIESR) GDP forecast which will cover the post Brexit period from July to September.
Despite the better manufacturing outlook in recent months both releases carry risk for the Pound as any weakness in output that can attributed to Brexit could see a deterioration in the economic outlook.
The Pound remains under pressure for other reasons besides Brexit. Bank of England Deputy Governor Minouche Shafik has said this week that more stimulus is likely to be needed this side of Christmas and the bank is ready to act as soon as required if there is any slowdown in economic growth. Although a rate cut is now perhaps less likely to be seen there is a high chance that Quantitative Easing (QE) will still be increased which would be sterling negative.
There could not be more factors driving the currency markets at the moment which is why it is so important to be in contact with your account manager to try and help find those buying opportunities as they happen.
Next week sees another round of Purchasing Managers Index (PMI) data for the manufacturing, construction and services sectors for September. The manufacturing sector is likely to remain healthy as a result of the weak Pound but there are question marks over services and construction on Brexit worries. Anything negative could see a short term wobble for the Pound.
For more information on how future data releases could impact the value of Sterling, call our trading floor on 01494 725 353. Our team of knowledgeable brokers are ready to take your call.
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