020 7898 0500
The Green Party won in the Manchester suburb (John B Hewitt / Shutterstock.com)
The pound has crashed to its weakest against the euro since mid-December this morning, following the Labour Party losing the Gorton and Denton by-election to the Greens yesterday.
Since yesterday, sterling has lost between half and two-thirds of a percent against all of its main pairs.
In one of the worst possible results for the current government, Labour lost to the more left-wing challenger but also trailed behind Reform on the right. This is already leading to renewed speculation over the future of Keir Starmer as prime minister, and the possibility of a more left-wing replacement in the coming months.
Also coming in overnight, the GfK Consumer Confidence reading weakened unexpectedly, amidst “increasing concerns about job security, particularly given the backdrop of weak wage growth,” according to a GfK spokesperson, and driven by deteriorating views of personal finances.
UK car production also declined, by 13.6%, as the UK’s usual markets in the EU, US and China sought to protect their own vehicle industries with, according to motor manufacturers, rising protectionist rhetoric in this new world of tariffs.
Elsewhere in the world we are just getting inflation data through in the eurozone. France’s inflation has just been reported at 1%. This sharp and unexpected rise, although still far below the target 2%, will have raised eyebrows at the European Central Bank in Frankfurt. Will the rest of the eurozone also see a rise – we’ll be finding out over the next few working days. Spain’s inflation rate remains above target at 2.3%.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your Business Account manager on 020 3918 7255 to get started.
GBP: Pound in headlong retreat
Sterling took an early bath yesterday as the markets looked nervously at what the result of the Gorton and Denton by-election might hold. Their fears were justified as, whatever you think of the politics, the markets tend to take against leftward turns (and some rightward ones too, as Liz Truss could attest). We’re in a slower period for data, but it’s Nationwide House Prices on Monday, plus some mortgage data. The two may go hand-in-hand as a sluggish property market looks to a spring blossoming.
GBP/USD past year
EUR: Stable euro heads into heavy data week
We are getting a lot of European economic data out this morning, and on Monday that continues with GDP and PMI in some European countries. However, with the ECB looking unlikely to move anywhere on interest rates for the foreseeable future, you may wonder how far the data needs to shock the market to have any impact on exchange rates.
GBP/EUR past year
USD: Dollar on the march
It was a sea of green for the greenback yesterday, gaining close to 1% on the pound and a solid wedge against the euro too. As the Fed looks for signs on inflation, they will be taking an interest in the Producer Price Inflation (PPI) this afternoon, along with readings on business mood in various PMI surveys early next week.
USD/GBP past year
For more on currencies and currency risk management strategies, please get in touch with your Smart Currency Business account manager on 020 3918 7255 or your Private Client account manager on 020 7898 0541.
