After a solid day of gains yesterday the pound has fallen in early trading this morning, as a busy day for high-level data gets underway. Worth pointing out, however, that the pound is still strong relative to recent times, and around 4.5% stronger against the euro than this time last year, still very close to its best for eight years.
For data today, first up was GfK Consumer Confidence, showing an improvement in public mood about money. The measure strengthened three points to -18, which while still negative, was an improvement. Analysts suggested it was a post-Budget boost.
On the other hand, pre-Budget worries were evident in retail sales for October (the Budget was on 31st October), which declined by 0.7% month-on-month – far below expectations.
We will learn the mood of British business leaders at 9.30 this morning with PMI – the purchasing managers’ index – and see if it matches that of the general public post-Budget. The markets are predicting no loss of confidence, which would surely fly in the face of what we’ve been hearing from businesses employing lots of staff, and farmers. Yesterday the Royal Mail was the latest big employer to highlight the cost of the chancellor’s National Insurance rise, saying it will lose an extra £120mn.
The mood at Smart Currency is particularly buoyant this morning, however, having been listed as a finalist in the West London Business Awards for 2025. The West London business area is the second-largest economic powerhouse in the UK, with around 109,000 active businesses and a GVA of £50bn. We are proud to be a key part of that.
Back to business, and the euro has fallen against almost all currencies apart from the pound, with roughly 0.5% drops against the US dollar, yen, yuan and others. This morning the German economic recovery reported in early GDP data has been downgraded to just 0.1% growth and an annual figure of -0.3%.
The PMI data is coming in thick and fast today, and it will be interesting to see how mood varies on each side of the Atlantic, with US data coming in at 2.45pm.
Other than that, the biggest influence on your exchange rate may come from central bankers, who are taking to the airways in force. How worried are European policymakers about Trump’s potential tariffs? Certainly Deutsche Bank warned yesterday that full implementation of suggested tariffs of 60% on Chinese imports and 10% on others could see EUR/USD fall below parity – it is already close to a two year low.
It’s certainly a highly volatile time for exchange rates and well worth being proactive in protecting your money.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your account manager on 020 7898 0541 to get started.
