Mark Carney’s warning for the UK

A reminder this morning that it’s not all about Greece at the moment – well not directly at least. While many of you waiting to buy Euros might be hoping for further arguments between Athens, Brussels and Frankfurt, the Bank of England Governor, Mark Carney, reminded us yesterday that the UK economy is not immune to developments in Europe.

Mr Carney used his Financial Stability Report briefing to point out that, while the direct effect of the Greek crisis on UK businesses and banks was minimal, there was a wider effect that worried him – saying “the outlook has worsened” for UK economic stability due to general uncertainty in the Eurozone, which as a whole carries enormous importance to economic success at home.

The Pound fell sharply yesterday morning against most currencies around the time of the speech, as investors were reminded that the UK, and the Pound, are not immune to the effects of a possible Greek default and exit from the single currency.

Trading for the Pound against the Euro remains volatile but within a fairly tight range, with Sunday’s Greek referendum now the key focus for all financial markets, not least foreign exchange. Greek PM Alexis Tsipras gave a defiant speech yesterday urging Greeks to vote against the measures their creditors are demanding in the crucial weekend vote.

In other news over the last couple of days, on Tuesday UK GDP was revised slightly upwards for the first quarter this year, and Eurozone inflation figures came out at 0.2% for the year to June as expected. Today we have US unemployment released at 1.30pm UK time, along with non-farm payrolls, a key monthly labour market figure, a day earlier than usual due to the Independence Day holiday on Friday.

South African Rand at cheapest level since 2007

Another currency attracting very good exchange rates for those of you sending money to South Africa is the Rand, which on Monday saw its cheapest exchange rate against the Pound since the global economic crisis. As a ‘commodity currency’, the Rand has been hit hard by the decline in global risk appetite and along with falling commodity prices the Rand, a notoriously volatile currency, has fallen in value too. The Canadian and Australian Dollars are also at their cheapest since 2009, signs that the recent strength of sterling has been wide ranging.