Uplifting local economic data

Over the course of last week, we saw some uplifting local economic data. There has been a bounce in business and consumer sentiment, with Confederation British Industry(CBI) survey backing up business optimism to its highest since April 2014. The GBP grew stronger against all its major pairings by the end of Thursday, potentially due to a rosy job report as well as high business confidence.

Unfortunately, the Financial markets estimated a higher than average chance of potential rate cuts, if the BoE cuts interest rates, it may result in a potential loss in GBP against the USD, EUR and AUD. Luckily, towards the end of last week the possibility of rate cuts became less likely, but nothing has been set in stone due to surprisingly soft PMI reports. The BoE policy meeting is on the 30th of January, a day before Britain finally leaves the EU which may cause volatility and we therefore recommend you get in touch with one of our brokers regarding any payments you may have.

As anticipated after the re-election results, Boris Johnson’s EU withdrawal bill has been passed through parliament. Now everyone’s awaiting this Wednesday, when the EU Parliament will vote on Boris Johnson’s Brexit deal and the UK is set to leave the EU on the 31st of January. The prime minister has reiterated that he wants a trade deal to be reached between the UK and the EU by 2021.

Towards the East, the outbreak of coronavirus may disrupt the Chinese economy eventually having global consequences. Reports of people affected in Japan, France and Australia are being investigated and so far, none of the 56 patients’ tests in the UK came out positive. No official SARS (Severe Acute Respiratory Syndrome) crisis has been announced outside of China, therefore it may have little to no impact on the UK economy in the short term.

Another risk lurks across the Atlantic Ocean; the Federal Bank of America is reviewing its monetary policies on Wednesday. Although in question, reducing term operations and increasing liquidity can make the USD more appealing and stronger against the pound. Our currency consultants can secure and protect your funds against potential volatility as well as capitalize on potential gains in pound sterling this week, get in touch with your currency consultant for more information.