Home » Currency Note » Currency Note » European Commission forecasts put UK bottom

The European Commission forecasts were published yesterday and made for interesting reading. The latest projections show that Europe’s economy will steadily slow over the next few years, as trade wars, rising geopolitical tensions and higher oil prices exert their influence.

Perhaps the most interesting aspect of the European Commission forecasts was the fact that the UK is expected to be at the bottom of the EU growth league in 2020. This year, the UK is projected to be the third-slowest growing EU member at 1.3%, behind only Italy and Denmark, while next year it will drop to joint last with Italy at 1.2%. As it stands, the EC has no idea how Brexit will pan out so the data should be taken lightly at present, but it doesn’t bode well if the forecasts prove to be anywhere near the mark.

There was very little movement between the euro, dollar and sterling in what proved to be an extremely quiet day for the currency markets. Overnight, we learned that Trump fired the attorney general, Jeff Sessions. Democrats in the House of Representatives responded by vowing they will investigate the removal. Sessions famously recused himself from Robert Mueller’s investigation into Russian election interference and possible collusion with the Trump campaign. Both Democrats and Republicans have since said that Mueller must be permitted to continue his work under Session’s replacement, Matthew Whitaker.

The Federal Reserve announced its latest interest rate decision when, as expected, rates were kept on hold within the target range of 2% to 2.25%. The central bank reaffirmed its plans to continue hiking rates gradually, which appears to confirm that rates will be hiked in December. The dollar has strengthened against sterling and the euro this morning in response.

Today is a very busy day for the UK, with the highlight being the GDp growth rate for the third quarter of 2018. The markets are expecting growth to have picked up to 1.5% from 1.2% in the previous quarter, but if it misses the mark, it certainly wouldn’t be the first time. If it does, the question is whether it will come in above or below expectations. Let’s hope it’s the latter.

With so much volatility on the horizon, do make sure your budget is protected against risk. Speak to your Personal Trader on 020 7898 0541 to find out how a forward contract can help you lock in a single exchange rate for a whole year.

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