This Pound Sterling article discusses the IMF's recent UK growth revision and also Brexit news and how it could affect GBP exchange rates over the coming weeks.
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The table above shows the movement for a number of GBP currency pairs during the last month. To keep track of interbank rates visit our live exchange rates page.
The Pound has remained relatively unchanged this week, as economic data out of the UK has remained thin. Despite the lack of movement Sterling and the UK economy have been in the headlines, with the IMF (International Monetary Fund) offering their opinion on the UK earlier this week.
Whilst upgrading their growth outlook for the global economy to 3.7% this year, up from 3.2% last year, the IMF expects the UK to be the exception and has predicted that the British economy will trail Greece’s over the next 5-years as the negative effects of Brexit begin. The UK’s annual growth was downgraded to 1.7% from 1.9% previously, and I think the pessimistic outlook from analysts could begin to manifest itself into a weaker Pound as sentiment wanes towards the UK. The Pound to Euro exchange rate has dropped around 3 cents from its August highs, which was caused by Bank of England governor Mark Carney’s bullish comments suggesting the BoE could raise interest rates as soon as November. The credit rating agency, Standard & Poor’s were quick to question whether the UK could withstand a rate hike, which leads me to believe the BoE may have been trying to boost GBP’s value after seeing it hit an 8-year low vs the Euro.
It will be interesting to see what happens next month but I think, if there is no hike the Pound will drop, as the hike has been priced in to a certain extent.
Whilst no economic data aside from a BoE Credit Conditions Survey today at 9:30am is scheduled for release this week, I wouldn’t rule out any comments or headlines causing Sterling to move.
The topic of a ‘No Deal’ Brexit outcome is being discussed more often now that the 5th round of Brexit negotiations are taking place and the EU’s negotiating team remain frustrated at the UK’s lack of clarity.
Both UK PM, Theresa May and Philip Hammond, the Chancellor of the Exchequer have commented on this subject this week. Hammond is the first Cabinet minister to admit that ‘No Deal’ could result in the UK not being able to fly planes outside of the UK’s aerial territory, and the issue of sharing information with other nations has also been mentioned due to security concerns. No figures of being mentioned as of yet should the UK go down this route, but I think it’s fair to assume that similar talk is likely to result in a weakening of Sterling so those with a currency requirement involving the Pound should follow how this Brexit issue unfolds.
Yesterday afternoon Lord Karan Bilimoria, the founder of Cobra Beer voiced his concerns about the ‘No Deal’ outcome from Brexit negotiations, stating that it would be a terrible blow and the worst possible outcome.
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