Last week the economic data turned against sterling, with predictable results. The pound has lost close to 0.75% against the euro over the past week, 2% against the US dollar and somewhere between those two against other major rivals.
However, while the recent direction has been downwards, it is worth bearing in mind that for now GBP/EUR remains 5% stronger than this time last year. So, with plenty more UK data coming down the wires this week, starting with inflation on Wednesday, if you are committed to a payment in the eurozone, consider locking in today’s rate, with a call to your account manager on 020 8108 5163.
Last week ended with GDP (gross domestic product) data revealing economic performance far below expectations. Quarterly GDP from July to September was cut to growth of just 0.1% (compared to 0.5% the previous quarter) and the economy shrank in September.
That wasn’t all. Unemployment rose sharply, construction orders collapsed to -9.4 and quarterly labour productivity was at its lowest since the same quarter three years ago.
Some analysts blamed the downbeat messaging from the government. While the betting remains against an interest rate cut at the Bank of England’s next meeting on 19 December, it’s less unlikely than it looked before, which will also have weighed on sterling.
The dollar, on the other hand, has been boosted by American business and investors deciding that the re-election of Donald Trump will be good news for them. But economic success from the current administration’s policies has also boosted USD. Jobless claims were well down and one economic optimistic index was at its highest since August 2021, leading to US Federal Reserve chair Jerome Powell to downplay hopes of an interest rate cut at its last meeting of the year.
