Pound Sterling Forecast – Today at 09:30am the UK released a raft of economic data. Industrial and Manufacturing production both came in marginally below forecast. The expected figure was low anyway so it’s had little effect on Sterling.
They key GDP figure for May came in at the expected 0.3%. This is much better than the last reading of -0.4%. The number was in line with forecasts so it was already largely priced into the market. The Pound rose slightly after the news was released, but there was little significant reaction in the value of the Pound. Tonight the NIESR releases its latest GDP estimate. This estimates how the UK economy has performed over the last 3 months to June. This number is expected to be much lower at -0.1%. If confirmed it could cause the Pound to fall below €1.11 vs the Euro.
Pound Sterling Forecast next 3 months
Today was the main hope of any gains for the Pound. It rose a little, but only to where the GBP/EUR rate was at yesterday. Now the data has come and gone there is little reason to expect Sterling to gain in the short to medium term.
We won’t know who our new Prime Minister will be for another 2 weeks. There will be an extended period after that during which the new PM will attempt to seek concessions from the EU with regards to the Brexit withdrawal agreement. Realistically it will probably be September at the earliest before we see any significant new information. As such, any potential upward moves for the Pound will be limited.
If it looks like the EU will make some concessions that mean a deal can be voted through parliament, then I would expect the Pound to rise back towards the €1.20 level. If they refuse to budge (which they have said they will do) and a Brexit extension looks unlikely, then the default option is leaving without a deal. The uncertainty this would generate would almost certainly cause the Pound to collapse in value.
Worried about exchange rates falling?
The next 3 months will be key to what happens to Sterling exchange rates. Those that need to make a large transfer within this timeframe should be aware of the fact exchange rates could drop dramatically. If you need to convert a large volume of Sterling to Euros, to buy property overseas for example, then you should take steps to protect yourself against any adverse movements in the exchange rate.
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