The pound has been under some real pressure this week with fresh struggles over Brexit and also concerns over economic data. The UK is currently experiencing one of the biggest political challenges in decades and the path ahead is filled with uncertainty. What Brexit ultimately looks like will remain a mystery but whether it is good or bad, the lack of certainty is continuing to spook investors.
There is an ongoing debate surrounding the Customs Union arrangements with a distinct lack of understanding of the real issues at hear. We also have a House of Commons debate today regarding the passage of the EU Withdrawal Bill which had been rejected by the Lords. There doesn’t seem to much appetite to completely overrule the House of Commons and administer a defeat for Theresa May, should she lose power the next candidate could lead to the Tories losing power.
Economic data is also a concern with the latest GDP (Gross Domestic Product) data highlighting the UK economy is not growing as fast as hoped, coming in at 0.2% versus the 0.3% expected. GDP was a key reason for the Bank of England to not raise interest rates in May and this lower data underscores that decision and makes it even more tricky to expect higher interest rates in the future, and therefore, a stronger pound.
This Wednesday is the US Interest rate decision, Thursday is the European Central Bank decision and then next Thursday is the Bank of England decision. We also have the latest EU Summit at the end of the month, this is bound to be a market mover.
Clients looking to buy or sell the pound at a better rate of exchange should be making careful plans around these events to try and help to maximise the position. For more information at absolutely no cost or obligation please contact myself Jonathan Watson by emailing firstname.lastname@example.org.
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