This Pound Sterling update discusses recent news that the International Monetary Fund (IMF) lowered their growth expectations for the UK. It also looks at factors that could affect GBP exchange rates this week. The table below shows the market movements for a number of GBP currency pairings in the last month:
The UK’s economic struggles look set to continue following a report yesterday from the IMF, who have downgraded the UK’s growth forecasts for 2017.
The IMF's findings show that “weaker than expected activity” in the first quarter meant the UK economy would grow by 1.7%, compared with an earlier forecast which had estimated growth of 2%.
Whilst the Pound didn’t dip alarmingly following this announcement, it is unlikely to drive investor confidence and the Pound’s recent struggles look set to continue in the short-term.
These feelings were echoed by a UK Treasury spokesperson, who stated “that the very best Brexit deal” was vitally important to any UK economic growth in the coming years.
The Pound has dropped below 1.12 against the EUR, is just about holding it’s positional around 1.30 against the USD and is marooned below 1.65 against the AUD.
Many clients holding Sterling may be questioning their next move and whilst the current market remains unpredictable, are you prepared to risk further losses to make perhaps, only minimal gains?
Personally, I would be looking to minimise any risk in the current market. Here at Foreign Currency Direct plc we have the tools and contract options to help guide you through this turbulent market.
Looking at Sterling’s current value and which direction it may head next is fundamentally important for any clients looking to make a currency exchange.
Many of the current issues facing the UK economy are a direct result of the uncertainty created by our on-going exit from the EU. Whilst many regular readers may be sick of hearing about Brexit, unfortunately it is likely to drive investor confidence and Sterling’s value for many years to come.
If the current government can find some common ground and a softer exit than many expect is embarked upon, then Sterling could start to find a foothold and a sustainable improvement against the other major currencies is far more likely.
However, with so many unanswered questions about where the UK economy is heading, I would be wary about assuming that the current trend cannot last and an impending improvement is just around the corner.
Looking ahead at key data for the week and much of the markets focus will be on Wednesday’s UK Gross Domestic Product (GDP) figures.
With an improvement in GDP from last month anticipated, expect investors to have priced in the predicted 0.3% growth to Sterling’s current value. Any figures above this level could also help to boost Sterling’s value after yesterday’s negative IMF report.
For more information on how future data releases could affect your currency transfer you can contact me on 01494 725 353 or email me directly at email@example.com.
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