This Pound Sterling update examines factors that could affect GBP exchange rates this week. The below table shows the market movements for a number of currency pairings in the last 30 days:
|Currency Pair||% Change||Difference on £200,000|
Sterling has recovered from its losses last Thursday when the Bank of England confirmed that it raised interest rates for first time in over a decade. However, the accompanying statement was extremely dovish which caused the Pound to drop by 2% against the Euro at one point.
Since then the market appears to have settled in Sterling’s favour following the over-reaction and at the time of writing the interbank GBPEUR exchange rate is sat at 1.1350.
Yesterday we saw some mixed economic data for the UK. We began the day with a report published by Halifax which showed that in the year to October, prices have risen by 4.5% which is the fastest rate since February. The average house price in the UK is now at a record high of £225,826. As the housing market is such a strong source of revenue for the British economy this is in part the reason why we saw the Pound make gains against all major currencies during yesterday’s trading session.
Indeed, although the Bank of England raised interest rates this is unlikely to have too much of an impact on the economy as we are still historically low when it comes to borrowing rates.
Also published yesterday was the news from the British Retail Consortium which showed that the sales on non-food items had grown at their slowest level since records began. The records began in January 2011 and this could cause concern for retailers if this carries on. However, this was not reflected in the Pound’s value which was likely supported by the strong housing price news.
With just seven weeks to go before Christmas and with Retail Sales such a key factor in the strength of the British economy it will be important to keep a close eye out on this sector in the weeks ahead as if this continues to show a slowdown I think this could ultimately lead to Sterling weakness.
The Budget is due in just two weeks time and Chancellor Philip Hammond could be under pressure when he makes his announcements. With interest rates having been increased recently as well as the ongoing Brexit negotiations, this Budget could cause a lot of volatility for the Pound, which highlights the importance of being kept up to date with what is happening at the markets by using an experienced currency broker. At Foreign Currency Direct our dealers have an average of 8 years experience which is unrivalled in the industry.
For more information on how future data releases could affect exchange rates please call our trading floor on 01494 725 353 or email me directly at email@example.com.
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