UK GPD figures have just been released, showing the economy grew by 0.5% in the last quarter. This is well above the expected 0.3% and Sterling has strengthened as a result. However the gains are already looking short-lived, with GBP/EUR settling back down at it’s level of €1.12. Yet again it’s looking like the economy is proving resilient in the wake of the Brexit vote, and the predicted recession is now looking very unlikely. It also looks like the BoE acted prematurely in cutting interest rates earlier this year.
Those that need to convert Sterling to a foreign currency may wish to consider taking advantage of the spike in rates, as it’s likely any gains will be short lived. A quote I heard this morning was that ‘Brexit’ is a 2 hour movies and we’re only about 10 minutes into it at the moment. There is still so much the market doesn’t know about what negotiations will look like next year, and the markets hate uncertainty. This is likely to keep the Pound suppressed and halt any significant recovery in rates, despite the economy looking robust.