Brexit, car manufacturing hurts pound

31 July, 2018

Paul Newfield

The pound continued on its downward trajectory yesterday; this despite positive numbers from consumer credit, net spending and mortgage approvals, all beating expectations yesterday morning. In the last 24 hours GBP-EUR has dropped another half-cent and with an increased likelihood of a “no deal” with he Brexit, the pound could be destined to drop several cents lower in the build-up to the deadline at the end of March next year. This drop was further exacerbated by the UK car production down 5.5% and a huge 47% for the UK market in June, although the governing body SMMT says this was just an “anomaly”.

For those of you who are buying a property in the EU and are most likely not completing until after March next year, you may wish to lock in the exchange rate and get today’s rate for next year and guarantee to fix your property cost in pounds, whatever the price in euros.

There is little to no data of note from the UK over the next couple of days, so with nothing to prop up sterling until the bank of England interest rate decision, vote, minutes and quarterly report on Thursday, we could see the pound slip further until Thursday lunchtime. It is expected that the hike will be 0.25% up to 0.75%. This expectation has been somewhat priced into the GBP-EUR rate especially. Should the expectation be realised we should see a small spike up. However, if the hike fails to occur we could see a somewhat large drop off in the rate – if you are not content with gambling on what exchange rate you get, particularly for large sums, it may be prudent to secure a level now or certainly before Thursday afternoon. Today, we also have important EU GDP and US income and expenditure figures, which all have the capacity to help or hurt pound-dollar or pound-euro rates.

As ever stay in close contact with us here at Currency Index and make sure you get the best exchange rate you can.