Sterling has started the week off on the back foot and was the worst performing major currency yesterday losing approximately 2.5% against the G10 currencies. More on the reasoning behing this in today's Sterling report. The table below shows the difference in return you could have achieved in a number of currencies when selling £200,000.00 during the high and low points of the past 30 days.
|Currency Pair||% Change||Difference on £200,000|
The decline in sterling comes after Liam Fox over the weekend warned that he believed there is a 60% chance that the UK will leave the EU without a deal, which has forced investors to sell of their Sterling positions throughout Monday. In addition the trade secretory tried to calm the markets yesterday when he spoke about the Trans-Pacific Partnership (TPP). Since the Chequers proposal, rumours have emerged that the current UK-EU proposal would stop the UK from joining the TPP. Mr Fox stated that he met with Japan’s Prime Minister Shino Abe during his holiday and the Japan PM offered his full support. However the Pound still continued to fall throughout the day.
It’s a fairly quiet week for sterling economic data releases. The important day is Friday when the UK will release their latest quarter2 Gross Domestic Product numbers. Gross Domestic Product also known as GDP measures the growth of the economy. The prediction is for GDP to fall to 0.1% from 0.2% which could force the pound lower against most major currencies.
For clients that are purchasing euros short term for a property purchase, there is a strong argument to think about purchasing your euros sooner rather than later. Last week the Bank of England raised interest rates, and the pound still lost value as the Governor of the Bank of England Mark Carney talked down the pound shortly after. UK GDP remains extremely low in comparison to other leading nations, for example the latest US GDP was released at 2%. Finally Brexit negotiations will continue to weigh on the pounds value until we receive some clarity. With the UK and EU planning to secure a deal by October, I don’t see a deal being reached anytime soon therefore with each negative news article that is released you would expect the pound to fall further.
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.
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