Signs that the UK economy is still struggling came out yesterday in the form of multiple negative data releases which created further pressure for the Pound. This Sterling report below discusses how this is likely to affect the Pound as the negative data releases can no longer be attributed to the bad weather seen in March. The table below shows the differnce in a number or currencies you could have achieved when buying £200,000.00 during the high and low points of the last month.
|Currency Pair||% Change||Difference on £200,000|
The UK economy and therefore Sterling suffered yet another blow yesterday when a host of poor economic data releases disappointed investors who had been hoping for a ‘bounce back’ for the British economy. Severe weather conditions in the UK in March had been put down as one of the main reasons why the economy had showed signs of such a slowdown, as the Manufacturing and Construction industries naturally showed the largest fall in activity.
However, the latest set of data has warned economists that the economy is still struggling to regain its momentum, most notably in the Manufacturing sector, long after the poor weather conditions have passed.
Manufacturing Production figures fell by 1.4% in April, which was the largest monthly drop seen since October 2012 when production fell by 1.8%, and 9 out of the 13 subsectors noted weakness.
UK Trade Balance figures also showed a widening trade deficit by £1.9bn to £9.7bn from February to April, which was put down to a reduction in exports of UK goods including machinery, pharmaceuticals and aircraft, and services. Finally, GDP (Gross Domestic Product) figures released by NIESR for the last three months (March to May) were released at 0.2%, below expectation of 0.3% but also revised down Growth readings for the first quarter of this year to 0.1%.
GBP/EUR exchange rates fell by almost half a percent after these releases and meant that a €200,000 currency transfer became £770 more expensive compared to just hours before. The Bank of England hinted just last month that they may look to raise Interest Rates if the growth figures improve, therefore the latest blow may have reduced the chances of the BoE hiking rates in August even further. Clients looking to buy another currency with Sterling may be wise to detail requirements to your account manager here, who can help you to capitalise on any spikes when they happen.
In the meantime, there are a number of factors to impact Sterling exchange rates over the next couple of days. Average Earnings and Unemployment figures will be released at 9.30am today, and seeing as both areas have been performing well in recent months, any negative releases here could tip GBP/EUR back into the €1.12 territory.
Inflation figures will then be released on Wednesday at 9.30am and could provide another opportunity for clients selling Sterling as the expectation is for a slight improvement from 2.4% to 2.5%. Any deviation from this however could cause swings on GBP exchange rates.
Today also brings the start of the House of Commons debate of the EU Withdrawal Bill amendments as covered in yesterday’s report by Tom Holian, which could drastically change how Brexit proceeds. With so much happening all at once, any clients with a Sterling requirement may be wise to detail requirements to your account manager here, who can help you to capitalise on any spikes when they happen.
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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The service was effortless to use and I was kept up to date all the way through the process with courtesy calls and advice from the same contact in the selling of my home abroad and returning the funds back to the UK. I would highly recommend this service to friends and colleagues in the future.
Efficient service and good rates. My currency reached my overseas bank same day!
I find the process to be efficient, uncomplicated, and very good value – the exchange rates used are unbeatable, and the fixed service charge is insignificant when sending a large-ish sum.