Today's Sterling forecast looks at why investor’s ‘profit taking’ has weakened the Pound, as well as discussing UK growth ahead of GDP data which is due tomorrow. The table below shows the market movements for a number of GBP pairings in the last month:

Currency Pair% ChangeDifference on £200,000
GBPEUR3.1%€6,930 EUR
GBPUSD3.8%$10,342 USD
GBPCAD4.4%$15,404 CAD
GBP Falls From Recent Yearly Highs

Why has investor’s ‘profit taking’ weakened the Pound?

The Pound was the worst performing currency yesterday morning, falling back down to 1.136, and as there were no major Brexit headlines or poor economic data to contribute towards this, the likely reason behind this was due to Investors selling their positions ahead of the Easter weekend. The Pound has had an excellent run this month after a Transitional Brexit Agreement was reached, with GBP/EUR reaching highs of 1.15 not seen since June 2017, and as a result of the long weekend and month end approaching, investors took advantage of profits made which in turn weakened the Pound.

A report released by The Migration Advisory Committee yesterday demonstrated the concern many UK businesses have surrounding life after Brexit, from a migration perspective. The report showed that workers from the European Economic Area (EEA) are generally more reliable, more willing to work longer, less sociable hours, and typically for less money than workers from the UK. The main concern is that, as migration levels into the UK reduce, this could have a knock on effect on UK Growth, which would in turn weaken the value of the Pound.

UK GDP Data Lower Than Initial Forecasts

How does UK growth compare to other economies?

The next key data release for the UK will be on Thursday at 9.30am, when Gross Domestic Product (GDP) figures for the final quarter of 2017 will be published. The expectation is for a slight rise in growth from 1.4% to 1.5%, however if there is any deviation to this figure we could see swings in Sterling’s value. The UK economy is starting to show signs of weakness compared to other major economies around the globe. The German economy grew by 2.2% in 2017, the French economy by 1.9% and the US economy by 2.3%, compared to the UK’s overall growth rate in 2017 of 1.7%.

The Office for Budget Responsibility predicted within the Spring Budget that Growth is expected to fall to a low of 1.3% in 2019, therefore if Thursday’s data disappoints we could see GBP/EUR fall back towards the 1.12’s. Clients with a Sterling requirement could be wise to detail any currency requirements to their Account Manager here ahead of this announcement, so that we can help you to trade as any spikes occur.

For more information on how future data releases could affect your currency requirement, call our team of currency brokers on 01494 725 353.

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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.