Sterling exchange rates have climbed and climbed this month. The Pound now sits near a 9 month high against the Euro and the best levels against the US Dollar since the referendum in 2016. We have been inundated with clients looking to take advantage of these rates as buying €200,000 is now £3,000 cheaper in comparison to only a week ago, and $200,000 is £4,000 cheaper.

This table displays market movements for a number of GBP currency pairings over the last month:

Currency Pair% ChangeDifference on £200,000
GBPEUR2.35%€5,300
GBPUSD6.50%$17,500
GBPCHF2.50%CHF 6,500
UK Manufacturing output hits a one-year low

UK Jobless levels improve, Sterling climbs

The reason for this recent climb for the Pound came from Unemployment data which was released yesterday. It confirmed that over 300,000 jobs were created over the last 12 months. UK Unemployment is now at a four-decade low of 4.3%. This data release for the UK economy pushed up demand for the Pound and as a result its value climbed through new levels.

However there are still concern for the UK in the labour market with regards to the impact of inflation on wage growth. Wage growth came out at 2.4% which remains below inflation at 3.0%. Average earnings now stand at £490 a week, up 2.4% compared to the same period last year.

When you consider the higher levels of inflation, in real terms, compared to last year consumers have less disposable income.

A majority of these recent labour figures however include the higher seasonal festive period of December. There is an argument as a result that these better levels may have been propped up due to higher demand for staff. Something to consider moving forward as there seems a fair chance there could be some contraction in the next set of labour data.

UK Retail figures show concerns

The high street in the UK has widely been seen as the modern day factory of the UK economy. The ‘hay-day’ however does seem to be showing signs of a slowdown, especially over the traditional boom times of the festive period.

Data released recently suggested that people now start shopping sooner taking advantage of the Black Friday deals. Shopping habits seem to have changed as well, with many high streets now struggling for retail parks and these themselves are faltering as many move onto the Internet. Last week this was further highlighted as data showed that UK retail sales grew at their slowest rate in five years in 2017, something to watch out for in the future. The next UK retail figures are released on Feb 16th.

GDP figures key for Sterling

The next GDP figures are released on Friday for the UK. This has been expected to show a contraction from 1.7% to 1.5%. The IMF recently also dropped their forecast for growth in the UK citing the ‘Brexit slowdown’ as the reason for the contraction. There does however seem to be rumours that this forecast by the IMF could well have been a political play from Brussels somehow. As a result clients with GBP should watch Friday's release with much interest. Make sure to notify your broker if you are in the market and would like live up to date notifications on its impact.

For more information on how future data releases could affect exchange rates call our currency brokers on 01494 725 353 or email me directly here.

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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.