Following the recent BoE decision to keep interest rates on hold, the Pound has seen some weakness due to a lack of confidence in the future of Sterling with Brexit taken into account. The below report discusses how ongoing political uncertainty is affecting Euro rates of exchange. The table below shows the difference in Sterling you could have achieved when buying £200,000.00 during the high and low points of the past week.
|Currency Pair||% Change||Difference on £200,000|
It’s been a frustrating start to the week for Sterling, with the currency hitting its lowest point against the Dollar since the start of the year and losing most of the ground gained against the Euro last week.
The recent decision to temporarily hold interest rates by The Bank of England, due to poor 1st quarter data has in turn dampened growth predictions and with the general uncertainty surrounding Brexit, market confidence has been bruised to say the least.
There are however two key economic releases to be aware of this week, starting with inflation data this morning at 9:30am, in the form of the Consumer Price Index (CPI) and GDP growth data to be released on Friday. Both are important indicators which will influence the interest rate level set by the Bank of England and therefore will likely affect sterling strength, at least in the short term.
The CPI for April is expected to remain the same or show a slight increase of 0.1%, whilst GDP is expected to show a similar positive improvement of 0.1%.
I personally believe that by the end of this week, there will be a far clearer idea surrounding whether there will be any chance of an interest rate hike in August or November, so sterling buyers or sellers should consider this when timing a potential transfer.
Brexit talks have resumed this week and although PM May’s proposal is yet to be clearly laid out and government officials have largely refused to comment on the matter, talks will likely cover various technical elements of the EU divorce.
Yesterday, the European Council approved trade negotiations to begin with Australia and New Zealand, both commonwealth nations who have been touted as key post-Brexit partners for the UK.
This could be cause for concern for the UK, who are still not truly free to take advantage of Brexit and sign free trade agreements until after March 29, 2019 so both AUD and NZD parings with Sterling, should be watched closely.
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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