Luke Trevail, a currency exchange specialist at forex brokers TorFX, looks at the factors driving the pound’s exchange rate this week.
It appears that the concern surrounding Brexit is too dominant in influencing the market movement and that only a small miracle could change the direction of the trend of this rate.
Yesterday we had growth figures from the Office of National Statistics which showed that in the third quarter the UK economy grew by 0.5%. This is a positive for any economy that has been in a recession in the recent past, and better news still when you consider that it summarises the strength, or weakness in our economy in the three months following the Brexit vote. The ONS said “there is little evidence of a pronounced effect in immediate aftermath of the vote.”
The stronger than expected growth will help dampen the expectation that the Bank of England will cut interest rates next week.
Despite this headline grabbing news, the pound largely ignored what would ordinarily boost the currency. This market movement highlights the pound’s inability to shake off the gloom of Brexit and gives a big indication that the market will head lower.
Those of you that need to fulfil your euro requirements should look to move soon as the uncertainty and ongoing Brexit negotiations will only serve to unsettle the already nervous pound. This seems more likely to move the market lower rather than spike the rate higher.
It’s a ruthless stance I know, but it’s important to be realistic. If the Bank of England hold off in cutting rates next week then this might offer a little rest bite, but it’s difficult to pinpoint any glimmers of light in an already gloomy picture.
This article is written by a foreign-currency broker working for TorFX, a forex broker established in 2004 to provide foreign exchange and international payments to both individuals and companies. TorFX is authorised by the Financial Conduct Authority under the Payment Service Regulations 2009 for the provision of payment services. Their FCA number is 517320. To verify their authorisation, you can visit the Financial Services Register and search the register using their FCA number. SPI is not responsible for the opinions of guest contributors.