Last week was a particularly volatile week for the Pound after Brexit came heavily back into the spotlight once again, and this is likely to continue with the UK Parliament coming back into office after its summer recess tomorrow. To put last week’s movements into monetary terms, a €200,000 purchase became over £3,000 cheaper if timed at the end of the week compared to the lows seen earlier in the week, the range of exchange rates for the past month is displayed in the table below showing the importance of timing your currency transfer. The factors that impact this are discussed in the Sterling report below.
|Currency Pair||% Change||Difference on £200,000|
Brexit secretary Dominic Raab and EU Chief Negotiator Michel Barnier met in Brussels on Friday to continue with Brexit negotiations and appeared to make some progress, as Raab told reporters afterwards that he was ‘stubbornly optimistic that a deal is within our reach’, but that the 17th October deadline could be missed slightly. The two sides claim that 80% of the withdrawal agreement has been agreed, but that the Irish border remains one of the key stumbling blocks in negotiations and a deal cannot be agreed until a resolution is found.
However in an interview published in a German newspaper on Sunday, Michel Barnier said that he ‘strongly opposed’ Theresa May’s latest proposals on future trade, calling them illegal and that they would never be agreed as it could spark the end of the single market altogether, if other countries insisted on the same benefits. If a deal is not reached, Barnier warned that this could be extremely damaging to the UK car manufacturing sector (which provides employment to 186,000 people in the UK), as European carmakers will need to use far less materials from the UK in order to continue enjoying low tariffs on imports, as stated in the EU-Korea agreement. This news over the weekend has meant that the Pound has started the trading week lower against a basket of major currencies including the Euro, and I would expect this to continue to weigh on the Pound's value as we continue through the week.
Other driving factors for GBP exchange rates this week will include Manufacturing Purchasing Managers Index (PMI) for August released this morning at 9.30am, which is expected to show a slight improvement compared to the previous month. This is followed by Construction PMI on Tuesday and services PMI data on Wednesday. These will all help to give an overview of the UK economy’s performance last month, and will therefore be keenly watched by investors.
Inflation Report Hearings will also be published on Tuesday at 1.15pm and Bank of England Governor Mark Carney, along with 3 other members of the Monetary Policy Committee, will give their reasons behind raising Interest Rates at their last meeting in August. Clients could benefit from getting in touch with us before these announcements so that we can help you to put a plan in place for any upcoming currency requirements.
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.
It was efficient, felt very secure with the checks made along the line and a very good rate of exchange.
Excellent service. Contacted in the morning transferred funds. My bank in Spain received money the following morning. Brilliant.
We always use foreign currency direct. Completely happy with the service, fast and friendly.
Very good. Very efficient. Excellent rate.