The Pound welcomed some respite in Friday’s afternoon trading after what has been a torrid month for Sterling exchange rates. Rates hits a 3 and half month low during June and an exceptionally strong US Dollar saw cable rates drop to 7-month lows, with clients asking themselves where next for Sterling exchange rates? The Sterling report below looks into the reasoning behind the improvement seen by the Pound towards the end of last week; the table shows the range of exchange rates during the past month for a number of currencies, showing the difference you could have achieved when selling £200,000.00.

Currency Pair% ChangeDifference on £200,000

A new month will bring fresh Data for economists to gauge and Friday helped the pound start on the right foot. Gross Domestic Product (GDP) figures released by the Office for National Statistics were upgraded and showed the UK economy grew by 0.1% more than originally thought in the 3 months up to the end of March, which was severely affected by unusual bad weather for that time of year in the UK. This revision helped to reverse some of the losses the pound had experienced throughout the week. According to reports, April grew at 0.3%, suggesting that the economy started to perform in the second quarter. This data meant that the Monetary Policy Committee are likely to raise interest rates at their next meeting on the 2nd August.

Sterling Continues to make headway against basket of currencies

Brexit update:  UK EU ‘no progress on most difficult issues’ to keep the Pound under pressure

The other side of the two-edged sword at the minute is Brexit. The EU summit concluded on Friday and the result did little to help investors. The European Council said that the ‘most difficult’ issues were left unresolved. Theresa May was unable to comment on issues as her cabinet are yet to agree on the UK’s future relationship with the EU should look like.

This Friday, Theresa May is expected to publish a White Paper which will examine what the UK EU deal will look like in the future.

Theresa May is currently in between a rock and hard place within her cabinet and has had to compromise on key issues ultimately causing a rift in cabinet between those who want a hard Brexit and those who want a soft Brexit. This Friday has been labelled as make or break and she could face a vote of no confidence if talks don’t go to plan, which would be Sterling negative.

What to look out for this week

This week sees a host of economic data for the UK released, starting with Manufacturing Purchasing Managers Index (PMI) data today, construction on Tuesday and the important services data on Wednesday. Services counts for around 80% of GDP in the UK so this figure could create volatility on Sterling exchange rates.

Mark Carney will be speaking on Tuesday and could provide us with some insight into the Bank of England’s thinking. However, I’d expect Friday’s Chequer Cabinet meeting to overshadow the data and Mark Carney’s speech. If Theresa May can get what she wants, I’d expect Sterling to push higher against its currency counterparts, whilst a fail in talks would likely see Sterling fall through the door.

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.

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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.