The UK is in the financial headlines for the wrong reasons this morning, after the IMF (International Monetary Fund) released a report downgrading the UK’s economic growth prospects.
Of the G7 economies, the UK is the only member whose economy is expected to fall into recession this year. The prediction is for a drop of 0.6% through 2023, which is almost a 1% drop from the previous prediction which was released as recently as October.
The reason for the downgrade is being attributed to increasing interest rates, high energy costs and tighter government spending. Last week within my blog I highlighted that there is little hope that the Chancellor of the Exchequer, Jeremy Hunt will be able to offer many surprises packages or bonuses during the Spring budget.
After a strong year of growth in 2022 the UK is facing quite a sharp correction according to these predictions, and this could impact GBP exchange rates moving forward.
Fortunately for GBP sellers so far this morning the Pound has remained robust, and it remains in the 1.23’s against the US Dollar and the Pound to Euro exchange rate is still testing the 1.1400 level.
The GBP/EUR exchange rate has remained very rangebound over the past few weeks, spending most of the time sitting within the 1.13 to 1.14 range.
This morning’s disappointing forecast from the IMF has done little to impact Sterling exchange rates so far, but there are further updates this week which could influence the Pound’s value.
On Thursday the Bank of England is expected to raise interest rates for the 10th consecutive time. A 0.5% hike is expected which will take the base rate of interest up to 4%.
This will be the highest rate since the 2008 financial crisis which will limit the spending power of the UK public which is likely to have a negative impact on the UK economy.
If you wish to plan around this week’s interest rate change please feel free to get in touch. We’re happy to offer our insight’s and offer competitive exchange rates to try and help you save money when making currency exchanges.
You can contact me directly on [email protected] with an outline of your transfer plans.
