UK economic data showed poor performance last week

Last week we started to see signs of economic performance in the U.K appear to be dropping off, with average earnings and Retail Sales figures being the main two concerns.

On Wednesday, we had the release of unemployment figures, and although the unemployment rate remained at 4.8%, average earnings figures dropped off a little from 2.7% to 2.6%.

Although this isn’t a huge drop off it isn’t a great sign, as it suggests that people are earning a little less and with talks of price hikes coming to U.K consumers from lots of large corporations we may start to see this cause a problem. From Marmite to chocolate to Sonos speakers, we are hearing of upcoming rises every day.

On Tuesday of last week, although we didn’t see core inflation rise, PPI (Producer Price Index) did rise across the board which suggests products are become more expensive to make and slowly that will filter through to core inflation and a lot of products that we buy will no doubt become more expensive.

This creates a problem for the Bank of England, as if people have less residual money it makes it extremely hard to raise interest rates as homeowners may be struggling already in the coming months, let alone have more to pay on their variable mortgages.

Retail Sales figures rounded off the poor showing last week and had dropped significantly, which again adds to the worries above. The Pound had a fairly poor week across the board last week and until we get past these Brexit worries there may be more banana skins on the way.

Will the Pound now weaken further?

All the signs are now there that Sterling exchange rates may have a bit of a dip in the next month or two, and we have key growth figures due out for the U.K on Wednesday. Should these figures show any drop off from the expectation of 0.6% then a further drop into the 1.15s would not be out of the question.

It is extremely easy in this market to find excuses to wait for a boost for the Pound, for the Euro to be knocked for six or for Donald Trump to weaken theUS Dollar with something ridiculous but this is a dangerous strategy to take.

From my ten years of experience at this company it is rare that hope does move the markets, and at the moment any large Sterling spikes will be reliant on a surprise rather than cold hard facts showing us that it is imminent.

If you have a foreign currency to purchase with the Pound then it is key that you contact us here today so that we can explain the various options available to you, inclusive of forward contracts and limit orders, both of these fantastic market tools can help you protect your exchange rate in these volatile times.

You can call our trading floor on 01494 725353 and one of our experienced and knowledgeable traders will be more than happy to tailor a plan of action for your specific situation.

UBS hold their prediction of GBP/EUR parity by the end of 2017

UBS have recently confirmed that their expectations for GBP/EUR and indeed the Pound in general still is in for a great fall throughout 2017.

So far, the Pound has remained resilient throughout the ‘Brexit’ process and economic data has been holding firm, but as mentioned previously in my report there are a few cracks starting to appear.

Personally, I feel that parity may be a step too far but the fact that large institutions such as UBS are still willing to hold this stance on Sterling exchange rates is a slight worry and does suggest that we may not be out of the woods yet following the referendum decision.

With Government expected to begin the process of exiting the EU within the next month, you may wish to consider securing your rate of exchange before we enter this huge period of uncertainty. Call us on 01494 725 353 or email me here to find out more.

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