This morning we have seen the pound to euro rate increase to a 6 week high, which is great news for our clients that are in the process of purchasing property overseas. Purchasing Manager’s Index (PMI) data has been the main talking point across Europe. Most of the German and French data showed a decline, which weighed on the overall European figure. As for the UK, a slight increase has occurred which is a good sign for the UK economy. If you are looking to purchase euros in the upcoming weeks and months and would like assistance feel free to get in touch by filling out the form below.
UK Inflation Rises, But Why?
Earlier in the week UK inflation rose in the UK to 1%, up 0.4% from the consensus. This is normally a good sign for the economy, however the pound increased in value slightly but failed to hold onto any gains made in the morning trading session. A key contributor for the rise in inflation was clothing and footwear. In July we tend to see sales from UK stores as businesses want to offload their summer stock, in time for the Autumn. However, with the high street being closed for most of the spring and early summer, businesses have held back on the summer sales. In addition, dentists and hairdressers appear to be another key contributor in regards to the inflation rise. Extra PPE and the amount of time spent in the dentist or hairdressers have meant that prices have had to be hiked.
No Breakthrough in Brexit Begotiations
This week UK officials have been in Brussels trying to try and secure a breakthrough in regards to trade negotiations. However as expected, EU officials this morning have announced that there have been no developments, which is a concern for clients selling pounds to buy a foreign currency in the months to come. Both parties have announced that a deal could be reached in September, but time is running out. Market forecasters have made it clear that the pound could devalue sharply if the UK crash out of the EU at the end of the year. Forecasts have even suggested parity on the pound to euro rate.
Data to Look Out For Next Week
With limited data for the UK next week, clients involved in sterling exchange rates should keep a close eye on the other currency they are trading. For example, for clients converting pound to euros, German Gross Domestic Product (GDP) numbers are set to be released Tuesday morning and as Germany is the powerhouse of Europe, German Growth is always watched closely by investors.
For clients that are converting GBPUSD, durable goods orders are released Wednesday afternoon, and this measures the amount of orders placed for goods that should last more than 3 years, cars for example. As these items come with a price tag, this release gives a good indication of consumer spending, which is a key driver in the US. Later in the week GBP will be released and the growth figure is set to show a major decline in the US, which is to be expected because of Covid-19. Nevertheless this could cause the US dollar to devalue across the board.
If you are converting pounds into another currency that I haven’t covered and would like further information regarding data releases, feel free to fill the form in below and I will give you a call to discuss the market and the potential events that will impact your currency exchange.