The pound has fallen across the board today after the UK economy was revealed to have stalled in July. Growth of around 0.2% had been expected by the markets but for the second month in a row Gross Domestic Product (GDP) showed zero growth.
To be clear, the drop in exchange rates is very small – around 0.1% against the euro and even less against the US dollar – and today’s rate is still exceptionally good by the standards of recent years. The pound is 2.5% stronger than this time last month against the dollar and almost 1.5% stronger against the euro; well worth considering locking in with a forward contract if you are committed to a large transaction.
You can talk it through with your account manager on 020 7898 0541.
We are halfway through a complicated period for global exchange rates, with important data releases influencing central bankers. This afternoon we will hear US inflation and there is an interest rate decision in Europe tomorrow.
Next week there is the all-important UK inflation data on Wednesday, then the interest rate decision from the Bank of England (BoE) on Thursday.
The pound’s strength is largely based on the BoE proving so reluctant to cut interest rates, yet that could all change next week if the economic data continues to disappoint.
