The UK economy received another welcome boost yesterday after Retail Sales figures, released by the Office for National Statistics, rose by 0.7% in July, bringing the total increase to 3.5% for the year to date. The Sterling report below looks into the factors with the potential to support the Pound in what has been a lacklustre period, you will see in the table the range of exchange rates throughought the past month showing the difference in return you could have achieved when selling £200,000.00 during the high and low points.

Currency Pair% ChangeDifference on £200,000
GBPEUR1.9%€4,230
GBPUSD4.2%$10,690
GBPAUD3%AUD $10,330

The Quarterly figure from May to July was published at 2.1% which was the strongest quarter since early 2015 and all readings were ahead of expectations. Much of this rise was put down to the World Cup, encouraging consumers to spend more on food, drink and clothing - although online purchases were much higher than high street sales which was due to the hot weather conditions in July.

So far this week we have seen excellent Unemployment figures highlighting the lowest levels seen in 40 years, and better than expected Inflation figures released on Wednesday, which had helped the Pound strengthen slightly against the Euro. However, the reaction to this data release was subdued and the Pound struggled to make any significant gains following this positive news.

Positivity surrounding the UK economy fails to result in Sterling strength

Prospect of No Deal Brexit continues to stifle the Pound

The concern is that, as wage growth continues its decline, and inflation continues to increase, the Bank of England will have little appetite to hike Interest Rates at any point in the near future. Couple this with the ever increasing prospect of a No-Deal Brexit, the future for the UK economy and therefore the Pound is currently looking somewhat bleak, unless we see any significant developments surrounding the above issues.

Although the UK Government are on their Summer break until 4th September, Brexit negotiations between the EU and UK resumed yesterday due to the worries of a No Deal Brexit increasing.

Reports suggest that Michel Barnier, the EU’s chief negotiator, may hold a press conference later today which would be keenly watched out for by investors, and any positive news from this would almost certainly help the Pound to surge. Clients with a Sterling requirement would likely benefit from keeping a close eye on any developments.

Data for the week ahead is relatively light with the exception of UK Inflation Report Hearings released on Wednesday morning. This release could be key as Inflation is one of the issues the UK economy is trying to juggle, and will therefore likely be a key mover for Sterling exchange rates.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.

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.