This Sterling report will examine the factors that could affect exchange rates this week in order to help you stay informed if you need to make a currency transfer. The table below shows the difference you would have received when buying £200,000 at the high compared to the low during the past week.
|Currency Pair||% Change||Difference on £200,000|
We knew the good news for the Pound was unlikely to last long and so this week has proved. After Sterling spiked against all currencies on interest rate expectations last month, economic and political reality has set in. Just like Theresa May’s Premiership the Pound has been bravely fighting on but political and economic reality is harming the pound once again. The continued uncertainty and difficulties over one of the UK’s biggest political, legal and social changes in decades has seen Sterling lose ground and the more immediate prognosis is not good news. Those looking to purchase currency with the Pound should not be resting on the laurels of a possible UK rate hike. Instead I believe they should be making contingency plans for a complex series of obstacles for the Pound to navigate.
Whilst UK services data outperformed yesterday, worse Construction and Manufacturing PMI, and worse GDP data last week has all seen Sterling under perform. Reports this morning that the Office of Budget Responsibility (OBR) will downgrade UK growth next week has also helped the negative tones. This is against the high expectations set by Carney and his team last month. Against the back drop of Brexit which is only going to keep sterling weaker for now, the main driver is UK interest rates and the likelihood of them rising. Predictions of a rate hike in November seem more and more unlikely to me.
Bank of England Chief Economist Andy Haldane is scheduled to speak later today 1pm. As a more vocal proponent of raising interest rates his rhetoric might trigger some rises in the value of the Pound. However my opinion on the issue is that whilst the arguments for a rate hike to undo last year’s small cut have weight, ultimately the case is losing ground by the day.
Recent economic data shows the UK economy is struggling and with plenty of uncertainty ahead the Bank of England should remain as accommodative as possible to ease the UK economy through the Brexit transition. Inflation at such levels is perhaps a price worth paying, rather than the possibility of a recession if a small hike was to lead to a slide in the UK’s already low growth.
Key news will be UK Inflation data on the 17th October. However with the vultures circling on Theresa May and sterling retreating as markets become more fearful there will be no hike, waiting to find out could be an expensive option for clients buying a foreign currency with the pound. If you need to look at any transfer buying or selling the pound, the UK’s political and economic situation remains fragile so make the most of your contact here who can be your eyes and ears in the market. I'd be more than happy to assist with any of your currency queries, please feel free to get in touch on 01494 725 353 or email me here.
Jonathan Watson as ever, ensures a smooth, reliable and trustworthy transaction for the second time of service! Delightful to deal with – efficiency personified. Thank you Jonathan. Would recommend highly – 5Star.
Excellent initial guidance, and during the transaction regular communication and updates. Dealing with Jonathan Watson was a pleasure. Very reassuring.
Jonathan Watson provided very helpful advice throughout the process, as well as immediate responses to our inquiries. He and his team were patient and thoroughly professional, which helped us through some stressful moments following the sale of our property in France.