The Pound has started this week on the backfoot, falling further against the Euro and US Dollar, continuing it’s downward spiral that started in May. In just 6 weeks the Pound/Euro rate has fallen from €1.1750 to €1.12, and has the potential to fall further this week.
GBP/EUR falls: Poor economic data hurts the Pound
Today we had some key UK economic data that painted a gloomy picture of how the economy is performing. The latest GDP number was -3.9% against an expected +0.1%. Industrial and Manufacturing production numbers also came in significantly below forecast, indicating that the cloud of uncertainty surrounding the UK is starting to affect the economy.
It had been the case until recently, that despite the uncertainty caused by Brexit and politics, the economy was resilient and robust. Indeed, jobs numbers are very good and production levels were also holding up. That no longer seems to be the case. With Brexit being delayed, it has simply increased the uncertainty over what is happening in the UK, and that is started to affect the economy and the Pound is falling as a result.
What other data is due out this week?
Today showed that factory output is at it’s lowest since 2002. Tomorrow (Tuesday) we’ll see the latest jobs market data, including average earnings and unemployment numbers. These are at record lows, but if the result is worse than expected, then it will be a further sign that Brexit fatigue is starting to take hold. It would also send the Pound lower against the Euro and other currencies.
In addition to the jobs numbers, the UK Conservative leadership contest will heat up this week. It’s only going to create more uncertainty and it’s unlikely that the Pound will rise on political news in the coming weeks. So all in all the outlook for Sterling is rather poor.
Do you need to convert Pounds to Euros?
Given the rate seems to be in freefall, those that need to exchange Sterling to Euros or any other currency, should take action to ensure you’re not caught out by the rate continuing to fall. We offer exchange rates that are usually much better than banks or other brokers can offer. You can also take advantage of tools like Forward Contracts, and free rate alerts if you are targetting a particular rate of exchange.
The first step is to contact us to have a quick chat on the phone with one of our currency experts, to discuss the options and get a free quote.