This Pound Sterling report will address the factors that are likely to affect GBP exchange rates this week. The table below shows the market movements for a number of currency pairings in the last 30 days:

Currency Pair% ChangeDifference on £200,000
GBP/EUR3.3%€7,000
GBP/USD2.1%$5,400
GBP/CAD3.4%CAD $10,800
narrow win on the brexit vote

Sterling makes significant gains in past 7 days

Over the past seven days, since Sterling plummeted to an 8-year low against the Euro, we have seen a sharp spike for the Pound which has presented a brief respite for any clients looking to buy foreign currency.

The Pound has gained by as much as 1.5% against the single currency in the past week, meaning a property purchase of €200,000 could now cost almost £3,000 less compared to just a few days ago. With the ongoing Brexit uncertainty hanging over the Pound and weighing down on its value whilst there are still so many question marks over how this will actually pan out, acting on these spikes quickly could prove a very good cost saving exercise.

Yesterday for example, we did see some of the Pound’s gains reversed ever so slightly during the morning’s trading, after the UK services sector posted its slowest growth figures in almost a year for August.

In my opinion, the main reason for this slowdown is a direct result of the impact that Brexit uncertainty is having on businesses decisions to spend, as they are concerned as to what the effect mean as to how their business runs and their profits in the years to come.

With the services sector making up around 80% of the UK economy, the warning signals are beginning to sound and if we see a continued fall in the sector due to Brexit jitters, we are likely to see the Pound fall.

Brexit jitters continue to weigh on the Pound long-term

In fact, there have been more question marks raised over the Brexit situation over the past few days, with a top EU official claiming that it was a ‘stupid idea’ and that it could still ‘legally’ be reversed if the UK decided to. The Labour party fanned the flames further earlier this week, with rumours that they will be issuing a three-line whip to their MPs to vote against the Conservative’s EU withdrawal bill next week. There is fresh controversy each week regarding the UK’s negotiations with Europe which all have the propensity to affect the Pound’s value, so stay in touch with your account manager here who can keep you up to speed with all the latest market movements.

Looking further ahead to the end of this week there is a raft of data from the UK that could affect the Pound, with Industrial and Manufacturing Production figures being released at 09:30 on Friday morning. As with yesterday’s services data, if these figures show a knock-on effect from a lack of consumer confidence, we could see further pressure heaped on the Pound. One saving grace for the Pound could come from July’s trade balance figures which are released at the same time, as with the Pound being so cheap to buy for foreign investors, we may have seen a rise in demand for our exported goods.

*Breaking news* - No more free movement of labour?

Late last night a leaked document from the Home Office outlined the UK’s hard-line approach to deter EU migrants, with only ‘highly-skilled EU workers being eligible for a long-term visa post Brext. Most of the Brexit uncertainty has been due to the lack of clarity on what the UK’s position will be, so it will be interesting to see what effect this news has on Sterling and negotiations with the EU going forward. You could argue that this may strengthen the Pound as there is finally some information on the UK’s plans.

For more information on how future data releases could affect your currency requirement, call our currency broker on 0044 1494 725 353 or email me directly at rjh@currencies.co.uk.

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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.