Pound drops after 0.1% GDP figure

What goes up, must come down. Yesterday we saw GBP/EUR rates break through €1.15 again, however these levels have proved to be short-lived. This morning UK GDP figures were released, showing the economy grew at just 0.1% in the last quarter. It was expected to have grown at 0.3%, so the poor reading has weakened the Pound as you can see from today’s chart.

The slow growth was largely due to a slowdown in Construction, which isn’t really much of a surprise given the snow and freezing temperatures earlier this year. I would expect growth to pick back up in Quarter 2, however the markets have sold off Sterling on the back of the latest figures.

To put things into context though, things aren’t really too bad. The chart below shows how Pound/Euro rates have fared over the last year:

Pound/Euro rates since last summer:

GBPEUR

There is a clear trend that you can see. The rate gets to around the €1.14 level and hits resistance, unable to sustain a break about this mark. We briefly saw rates hit €1.16 earlier this month, €1.15 yesterday, but yet again the rate has dropped back away.

Despite the drop in the value of the Pound this morning, rates to buy Euros are still close to the best it’s been in a year. The Pound is also trading high against the AUD, NZD and other currencies.

Do you need to buy Euros?

If you need to convert Pounds to Euros, or indeed any major international currency (to buy property abroad for example), then one thing you we offer is a ‘Forward Contract’. This allows you to freeze the current rate for up to 2 years, protecting you against any adverse movements and giving you an exact GBP cost. This is very useful for budgeting. If you would like to find out more about Forward contracts, get a quick quote, or simply discuss the currency markets with an expert, make a free enquiry or email me today alastair@currencyforecasts.co.uk

Have a great weekend.