Some respite for GBP

Yesterday saw GBP recover some of its lost ground, which would have been welcomed by many given the recent major losses. Morning data showed a contraction in UK PMI construction data, down to 54.2 from a predicted 55.5. This saw rates dip slightly in the morning however given that this was still a fairly good figure the drop in rates was short-lived, and throughout the day GBP gained. Against the single currency it gained over a cent and a half throughout the day’s trading, which was perhaps strange given the data release from the UK.

The ECB are due to met on the 10th of March with markets pricing in 100% they will reduce their deposit rate, and a 50/50 chance of an increase to their current programme of Quantitative Easing. This left GBP/EUR rates the highest they have been in over a month, which may offer a great opportunity for Euro buyers before the uncertainty of the UK referendum resumes and the likely downward trend. Also aided by the USD/EUR cross and the see-saw effect, the Dollar gaining against the Euro is also helping the pound gain there.

Against USD , GBP also made gains throughout the day which by close had taken just over a cent. Whilst the US posted positive employment data it was the release of Crude Oil stocks change that was concerning – showing an increase from a predict 3.5M to 10.374M. This figure is slightly alarming given the ongoing oil price war between the Saudis and the US, as the Saudis try to price the U.S out of the market.

It has been warned that this could be a trigger for a global recession. However in the short term it could see the USD advances reversed and the currency weaken which could in turn allow EUR to gain against GBP. Given the spike in rates we have seen, the uncertainty over the extension of the ECB Q.E programme and upcoming UK referendum, as well as the effect of USD/EUR on GBP rates, we could be seeing the last opportunities at these levels before the downward trend continues.

Speak to us today if you have anything you many need in the coming months, whether that is an invoice to pay or potential overseas property purchase. With the markets so volatile and the speed at which we have seen rates drop in recent weeks you don’t want to be caught out with a costly increase to your bill.