This GBP report looks at the impact of business investment sentimnent in the UK, along with credit card spending for June and some key factors that could affect Sterling exchange rates this week. The table here shows the market movements for a number of GBP currency pair in the last month:

Currency Pair% ChangeDifference on £200,000
GBP/EUR1.67%€3,800
GBP/USD3.35%$8,700
GBP/CAD3.5%$12,000
When will the Bank of England raise rates?

Sterling weakens on falling business optimism

The Pound took yet another tumble yesterday following reports that major businesses have halted their investment plans in the UK and that consumer spending on credit cards had been cut dramatically.

Deloitte, the accountancy firm, surveyed Chief Financial Officers in large British companies and found that business optimism among these companies had fallen sharply in the second quarter of 2017, which was made worse by the outcome of the UK snap election last month. The survey showed that 72% of those questioned thought that business conditions in the UK would be worse after the UK’s divorce from the EU, which was the largest percentage since Deloitte began asking the question over a year ago.

This leads us to the question, how will this affect the chances of the Bank of England raising interest rates in the near future?

It was only last week that Michael Saunders, one of the members of the Monetary Policy Committee (MPC), said that he was confident that if exports and investments continued to improve, this would help to offset the slowdown in consumer spending, pointing towards the possibility of a rate hike in the near future.

This morning two more of the MPC members Haldane and Broadbent will be speaking at 10 and 11am, and taking into account the latest run of disappointing data, any signs of a more negative tone could cause GBP to weaken further.

Credit Card spending at lowest point in four years

Credit Card company Visa have also reported that spending on cards fell in June, providing them with their weakest quarter in four years. Consumer spending is lower across the board as confidence has been quashed, inflation is rising and wage growth continues to remain stagnant.

Average earnings figures released tomorrow at 9:30am will give a clearer idea of exactly how wage growth has been affected in May, and anything less than the 1.8% predicted could result in further Sterling weakness.

Tomorrow will also provide an insight into the latest Unemployment rate for the UK, released at the same time. This has been declining steadily since mid-2013, however in the current economic climate it is not out of the question for unemployment levels to buck the trend. The consensus is for rates to remain at 4.6% however anything higher than this, and GBP/EUR rates could fall further, potentially into the 1.11’s.

Detailing any short term requirements to your Account Manager here can help them to put a plan in place, to help you to trade at the best time for you. You can contact any of our currency brokers here on 0044 1494 725353.

News

Read more articles
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.