Sterling Exchange Rates Under Pressure on Weaker Outlook (James Lovick)

Sterling Boosted on Leaked Reports of a Soft Brexit

The pound has fallen again today as we end the week with rates falling below the psychological 1.10 level for GBP EUR exchange rates. Rates for GBP USD have also slipped marginally with levels now sitting below 1.30 for this pair. The pound continues to remain on the back foot after Bank of England Governor Mark Carney reduced the economic growth outlook for the UK which saw an immediate fall in sterling exchange rates. For anyone selling Euros or dollars there is currently an excellent opportunity to convert now.

Tuesday sees UK Consumer Price Index inflation numbers which could create additional volatility for sterling exchange rates. Inflation has become hugely topical in recent weeks especially after the Bank of England lowered its growth outlook for the British economy. Any pickup in inflation is likely to see gains for the pound against most of the major currencies although the odds of a spike are not favourable. There are concerns that the British economic recovery could falter as a result of a potential slowdown in consumer spending.

The British recovery post Financial crisis 2008 has largely been brought about as a consumer led recovery. The negative mood at present being driven by much of the media is in my view having a damaging impact on sterling. There could however be considerable volatility to be expected in the coming weeks when British politics should return to the fray.

Although parliament returns from the summer recess in September, papers on Brexit are expected to be released in the next week or two. The position from the government should start looking clearer on elements to include a customs agreement, Northern Ireland and the digital economy. A strong reaction should be expected considering that to date there is much uncertainty as to where Brexit will ultimately lead to. If the papers are received well publicly then the pound could rally and make some good gains. For those clients looking to buy Euros then this could provide an opportunity and see sterling rally away from these recent lows.

If you would like further information on Euro Exchange rates or any of the major currencies and to discuss how we can assist then please feel free to contact me on 0044 1494 787 478 and ask one of the team for James. Alternatively, I can be emailed directly on jll@currencies.co.uk