Since the middle of April, it’s been a struggle for pound to euro exchange rates. Mid-market exchange rates in the middle of April were 1.15 and at the time of writing this article current mid-market exchange rates are 1.1060.
UK Confirm no Extension to the Brexit Process
One of the reasons the pound has lost value in recent weeks, is that the UK Government has confirmed that they will not seek an extension to Brexit trade talks. The deadline for an extension to be agreed is at the end of June, therefore theoretically in 6 days’ time the UK will either secure a deal with the EU or crash out at the end of the year. In some ways you could argue that this strengthens the UK’s negotiating power as they are prepared to walk away, however it also increases the chances of a crash out Brexit. Over the last 3 years anytime the UK hints towards crashing out, or it becomes a more likely prospect, the pound has lost value against most major currency pairs. For clients that are selling pounds to buy euros throughout the year, this is going to be a major news story to keep an eye on, as major fluctuations could occur when the UK finally finds out its fate.
Like all countries around the globe that have been impacted by the pandemic, the economic numbers have disappointed. For example, Retail Sales were bound to fall when the UK High street was shut as a result of COVID-19 lockdown measures; we saw a fall by just under 20% in April. That number did pick up in May which is positive as it shows people are finding other ways to purchase goods. Other data releases that have disappointed are Inflation, public net borrowing, industrial and manufacturing production, claimant count change, Growth domestic Product (growth), and the list goes on.
However, the UK Prime Minister Boris Johnson has now announced the easing of the lockdown on 4th July which can only be a good thing for the UK economy. Many people will now return to work, and sectors such as hospitality, which had previously been completely shut down, will get back to business. Economic numbers are always released a month behind so we won’t get a full understanding of the impact of reopening the economy until August, however if a V shape recovery occurs this can only be a good thing for the UK, but analysts have said its unlikely.
It’s a quiet finish to the month for UK economic data releases. The Bank of England (BoE) quarterly bulletin is released this afternoon. However as we have already had insight into the Bank of England’s thoughts regarding negative interest rates via their latest meeting minutes, the impact of this on the market could be muted. The key data release to look out for next week is quarterly Gross Domestic Product data. They are set to fall to -2% and any deviation to this number could cause a volatile end to the month.
Are you Buying or Selling a Property in Europe?
For clients that are buying or selling property in Europe, according to the BBC the UK Government are in the final stages of finalising the travel corridors which will mean UK citizens can visit certain European countries but not have to quarantine when they return. Initial reports are suggesting that France, Italy, Spain, Greece, Belgium, Germany, The Netherlands, Turkey and Finland will be in the program. If you are waiting for the quarantine rule to be lifted and have plans to buy or sell property, the currency market will have a major impact on the final figure you pay for the property of the final amount you will repatriate. If you would like assistance with exchange rates and regular market information, feel free to fill in the form below and I will personally get in touch to find out more about your plans moving forward.