Sterling Struggles Post GDP Data Release

27 April, 2018

Tom Arnold

As we start the final day of the week, we find ourselves in a very positive territory for those with an upcoming Euro purchase, with the Pound back up close to the recent highs following yesterday’s ECB monthly policy statement. The Euro had been trading better against the Pound following a few negative UK releases over the last few days, but Mario Draghi and his colleagues dealt the single currency something of a blow by firstly not altering their policy position, i.e. no interest rate rises, and secondly indicating that there might not be rises any time soon. A slowdown in some of their key indicators had lead to a change of view on this side and as such the Euro has slipped back across the board. This is great news for those of you with a Euro purchase, with €200k almost £1500 cheaper today than it was yesterday morning.

Not such good news against the Dollar, where the Pound is still struggling thanks to a strong Dollar and fears over what might happen with today’s UK GDP release and renewed Brexit concerns following the government’s defeat on the subject of the UK staying in the customs union. MPs passed a non-binding motion stating the UK should stay in the customs union, which follows a similar defeat last week in the House of Lords. This is seen as a massive pitfall in the Brexit process and opens up a significant amount of uncertainty for the UK economy as a whole and as a result the Pound.

The UK GDP release at 9.30 this morning is also another critical economic indicator and with expectations for a slow down, there is no real reason to believe we will see Sterling support from this quarter, with it in fact much more likely that the Pound will struggle following this data.

So, the pound is doing well against a weaker Euro, but this could be very short lived. If you have an upcoming Euro requirement then you potentially have a very small window of opportunity to take advantage of this spike. Make sure to get in touch with your CI account manager, to discuss your options and why not consider a forward contract to lock in these higher rates while they are still available.