The Pound has come under pressure during the early part of the trading week, following a run of poor UK economic data and renewed concerns over how Brexit negotiations are progressing.
UK Manufacturing & Services figures released over the past few days came out below market expectation and this immediately put the Pound on the back foot.
GBP/EUR rates have fallen back below 1.13, whilst GBP/USD rates are back below 1.40.
Despite the Pound finding some support following yesterday’s sharp decline, it’s positive run seems to have come to an abrupt end.
One of the reasons the Pound had performed well of late was due to an improved economic outlook, with growth forecasts raised in line with an upturn in the global markets. Add to this talk of prospective trade deals with the US & China post Brexit and this helped boost investor confidence in the UK economy, with the Pound benefiting as a result.
These contributing factors have led investors to believe that the downturn the UK economy was likely to encounter due to Brexit, would at least to some extent, be offset by the upturn in global productivity.
Yesterday’s stock market crash may now dampen those expectations, with the US, European & Asian markets losing considerable value as investors dumped their shares, causing the value on the Dow Jones to tumble by 4.6%. Whilst there is no direct correlation between the stock markets and currency exchange rates, any shift in global financial conditions can have knock on effects for an economy and ultimately this will impact the value of their currency.
Any clients with a Sterling currency requirement are now looking towards tomorrow’s Bank of England (BoE) meeting with hope rather than expectations, as it is very unlikely that we will see a shift in stance by the central bank. It is likely they will keep interest rates on hold and the current monetary policy stimulus unchanged.
What investors will be looking for is any significant comments made by BoE governor Mark Carney regarding the current state of the UK economy and its outlook. Personally, I believe with inflation levels rising again and Carney seemingly against any rate hikes in the short-term to help counter this issue, it is unlikely that his comments are going to be overly bullish.
If you have an upcoming Sterling currency transfers to make, you can contact me directly on 01494 787 478. We can help guide you through this turbulent market and as a company we have over eighteen years’ experience, in helping our clients achieve the very best exchange rates on any given market.
Our award inning rates can be accessed very easily over the phone and I can keep you posted with key market developments ahead of any prospective exchange you need to make.
Feel free to email me directly on email@example.com to find out all the options available to you ahead of your currency transfer.