Yesterday's GDP figures showed how well the economy was performing prior to Brexit, but provides little insight into the economy after the vote. As a result, Sterling strength was short lived. Keep track of exchange rates here.
Sterling exchange rates continue to hang in the balance, following yesterday’s UK Gross Domestic Product (GDP) figures. The official reading of 0.6% growth came in above market expectation and last month’s figure, which initially gave Sterling a boost in the market.
These gains were short lived however, with GBPEUR, GBPUSD & GBPNZD rates snapping back almost immediately, providing further uncertainty for those clients holding the Pound.
GDP figures are a key barometer for investors in terms of economic outlook and despite this positive figure, the markets remain skeptical regarding the UK economy. Yesterday’s move was a stark reminder of how difficult the current market is to forecast and with so much uncertainty attached to the UK at present, I feel it highly unlikely Sterling will again sustained market support for the time being. Whilst these market Conditions will fluctuate I am not convinced that the Pound can gain sufficient traction to drive it forward considerably, at least until we understand how the political change will help to facilitate our exit from the EU and what economic consequences this will have.
It’s a strange time for those clients holding Sterling, with the initial fallout from the Brexit now digested by the markets. Whilst the Pound had gained some support following the aforementioned political stability in the UK and the Bank of England’s (BoE) decision not to cut interest rates this month, there is still a feeling that we could see further slippage at any time.
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