Sterling interbank exchange rates have been very range bound over the last few weeks. GBP/EUR rates have stayed within a cent movement over the last 10 days and GBP/USD within a cent and a half over the same 10 day period. Generally, the Pound sits at near 6-month lows as the concerns about the UK's future remain, with a large amount of uncertainty about the future leader of the Government in Westminster and how they will negotiate with Europe.
|Currency Pair||% Change (Month)||Difference on £200,000|
The campaign between Boris Johnson and Jeremy Hunt is in full swing with less than 20 days left before one will enter number 10. The 160,000 Conservative Party members start voting as of next week. Currently Boris is the expected victor but any change in the likelihood of that could well impact the Pound’s value in the short term.
A lot rides on the relationship with the UK and Brussels. Japanese foreign minister Taro Kono has warned the UK against a no-deal Brexit saying it would be “very negative” for Japanese firms in the UK, meaning that many Japanese car factories could be at threat. PSA, owner of the Vauxhall plant in Ellesmere Port, has also said the future of the site is conditional to what UK-EU relationships will look like.
We now start the monthly cycle of economic data as we start July. In June it was reported that even with the higher level of uncertainty UK households are still spending more than they received in income in the first quarter of the year, marking the longest stretch (ten quarters) of net borrowing since records began in 1987. Yesterday PMI data for the construction sector was released and showed a contraction in activity. There was also an update from the Bank of England's head, Mark Carney. He again highlighted the concerns about the prospect of a no deal Brexit on the economy.
PMI data for the Services sector is released later this morning and housing data on Friday. Next week we have Retail figures which will be one to watch as we continue to see more pressure building on the evolving high street.
The chemist store Boots last week confirmed plans to close over 200 stores across the UK over the coming 18 months, which again illustrating the strain on trading conditions on the high street.
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