How will the recent UK GDP figures affect Sterling Exchange Rates?

How will the recent UK GDP figures affect Sterling Exchange Rates?   

  • UK GDP Figures
  • European Confidence
  • Sterling Problems
  • Key Data Watch
  • Australian Dollar News
  • Data due this week

Friday’s UK GDP figures for Q4 showed that the UK economy shrank by -0.3% compared to expectations of -0.1% which sent shockwaves through the currency markets and saw Sterling fall by 0.5% across the board during Friday morning.  The figures have fuelled fears that the UK could re-enter recession if the current quarter also sees us in negative growth. Q3 data saw the UK grow by 0.9% but most analysts thought the Olympics were responsible for the positive figures. UK unemployment appears to have been improving over the last few months but with recent announcements that HMW, Jessops and Blockbuster have been faced with administration this could have a negative impact on unemployment figures and could cause further weakening for Sterling over the next few weeks. With GBPEUR exchange rates the lowest since December 2011 it seems that we could see further losses so if you do have a currency requirement coming soon make sure you stay in close contact with a currency broker who can explain the benefits of utilizing stops and limit orders which can help you achieve your desired rate.

 Sterling’s Problems

With GDP lower than expected, a wintry start to the New Year that could impact retails sales and the UK proposes a referendum on the EU the UK has had a difficult start to 2013. Currency markets do not tend to like uncertainty and if the UK does push itself away from Europe we could see our nation isolate itself form the rest of Europe causing investors to put funds elsewhere. It is not only economic data but more importantly in recent time times that political rhetoric is what impacts currency so expect Sterling weakness to continue.

European Confidence

Since the start of the year we have seen the Euro strengthen against Sterling by over 3.5% and confidence appears to be returning to the continent. With Spanish and Italian bond auctions now seemingly under control the global economy also appears to be making a recovery.

Some of the banks in Europe that received loans during the Eurozone debt crisis are now in a position to repay their loans early.  The ECB claims that 278 banks will pay 137bn Euros, which can only be good news for the economic area. Indeed, head of the ECB Mario Draghi said ‘all the indices point to a substantial improvement of financial conditions.’  It could be argued that 2012 was a huge turning point for the single currency and with recovery in sight we could see the Euro continue to remain strong so if you have a requirement to make over the next few weeks make sure you stay in contact with your currency broker during this time

Key Data Watch this week

Tomorrow sees the release of European Consumer Confidence. It is not usually one of major events but personally I think it will provide us with an interseting insight into how Europe is viewing things since the turn of the year.  On Wednesday the Eurozone publishes Q4 GDP figures so if lower than anticipated we see a small fight-back for the Pound.

US Dollar News

With Obama now fully in control for a second term the US Dollar has witnessed a period of strength since the turn of the year against Sterling, The economy is improving and the general feel on Wall Street is one of confidence. GDP figures have remained positive and jobs data has also improved. However, Friday see the release of US Non-Farm Payroll data which is often a big move on the fx markets so if you want to ensure you’re getting the best deal on your foreign exchange make sure you stay in contact with your award winning currency broker who can save you money compared to using your high street bank.

Australian Dollar News

GBPAUD exchange rates are currently close to the lowest level in almost 26 years as Sterling weakens and investors seek more risk appetite with the purchase of Australian Dollars. China recently published manufacturing figures, which showed expansion grew at its fastest pace in over 2 years. Australia is heavily reliant on Chinese growth so if China remains strong this could continue to strengthen the Australian Dollar.

It is important that if you have a currency requirement to use an experienced currency broker so for more in depth analysis and to find out how we can save you money fill in the form or email me directly Tom Holian [email protected]