The last couple of months have been tough for GBP, as the Brexit deadlock continues, and uncertainty remains surrounding who will succeed Theresa May as UK Prime Minister. This has seen the interbank rate weaken over 6 cents against the EUR and USD over the period.
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Last week, fresh fears of a UK recession fuelled further concerns, as Markit PMI data showed a contraction in both construction and manufacturing sectors. The reports cited that the recent weak economic data has been influenced by the increasing likelihood of a no-deal exit from the EU, come October 31st.
Reports have also suggested that the UK economy has suffered its first successive quarterly contraction in 7 years. If the economy fails to bounce back in the 3rd quarter the UK could slip into a recession, before the Brexit date.
On Wednesday, GDP data for May will be released and current expectations suggest that the figure could show an improvement from the previous with a positive figure of 0.3%. However, any negative indications of a drop-off prior to the release has the potential to damage investor sentiment and could see sterling weaken.
It could therefore be a rocky road ahead for the GBP, so clients anticipating an upcoming transfer may wish to keep up to date with the latest releases by contacting their account manager here at Foreign Currency Direct.
Boris Johnson is currently edging the polls to become Theresa May’s successor as UK Prime Minister. Over the weekend Boris stressed that a ‘no-deal’ exit from the EU could be a distinct possibility under his leadership.
Last week, Finance Minister Phillip Hammond gave the bleak assessment that a ‘no-deal’ scenario could cost the countries public finances £90 billion a year. On Wednesday the House of Lords voted to set up a joint parliamentary committee, to examine the possible impact of a ‘no-deal’ exit scenario.
Either Boris Johnson or Jeremy Hunt will succeed Theresa May later this month and the first task will be to try to break the current impasse in parliament. The hope is to end the Brexit uncertainty over whether, when and how Britain will leave the EU, so as Boris Johnson continues to downplay the potential impacts of a ‘no-deal’ scenario, it will be interesting to see what affect this might have on the currency.
If you would like more information, you can contact our trading floor directly on 01494 725 353 to speak with our team of experienced brokers.
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