This GBP update looks at the impact of yesterday's UK GDP data, and the continuing Brexit negotiations and discusses the factors that could affect Pound Sterling exchange rates this week. The below table shows the market movements for a number of GBP currency pairings in the last 30 days:

Currency Pair% ChangeDifference on £200,000
GBP/EUR2.8%€6,200
GBP/USD3.1%$8,000
GBP/NZD3.0%$11,040

Small increase in GDP figures

After a fairly slow couple of weeks on the currency markets in terms of exchange rate movement, we did not see any significant movement yesterday either.

Although we did have the release of the GDP figures which came out as expected at 1.7% year on year and 0.3% for the second quarter of 2017.

What is important to bear in mind is that the IMF lowered growth forecast for the U.K and U.S and this result was seen as a small positive, off of the back of this we saw a small rise in Sterling value yesterday morning.

Brexit negotiations hit stumbling block

We have now started the assigned two years of hard Brexit negotiations, with our hand in my opinion being very much weakened by our political unrest. With so much uncertainty surrounding our government I feel this weakens our position around the table and in turn with making trade deals and sensitive issues that need to be addressed more difficult to agree on. All of this is bound to add further pressure to an already sensitive Sterling exchange rate and I feel the days of Sterling to Euro exchange rates at 1.20 are a long way off currently, at the time of writing this report Sterling at sat at the low end of 1.12.

Will we see a further interest rate rise in 2017?

At last month’s Bank of England (BoE) meeting the board voted in favour by 5-3 not to raise interest rates and keep the current rate 0.25%. If there is any further sign over the coming weeks that the BoE are considering lifting interest rates this could provide Sterling with a very much needed spike in the market. In my opinion I do not envisage seeing any future rate rises this year and with ongoing uncertainty surrounding our exit from the Eurozone I do not feel the BoE will make any big decisions anytime soon.

Economic data releases

The rest of this week is pretty quiet in terms of economic data releases which is fairly common for this time of the month, we have consumer confidence figures being released later today. Next week will be very important flurry of data out that will show how the U.K performed in July and in my opinion this will be key as to where we see the rates moving next.

With GBP exchange rates currently so volatile it is a good idea to stay in regular contact with our currency brokers so they can keep your up-to-date with market movements - you can contact our trading floor 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.