020 7898 0500On a relatively quiet end to the week for UK economic data, it was Brexit uncertainty that once more came to the fore to exert unwieldy influence on the pound. Rumours that the UK might well remain in the customs union beyond the transition arrangement contradicted an earlier statement by Theresa May and the pound promptly weakened against the dollar. It retraced earlier losses against the euro, but that is likely down to the fact that the ECB will leave interest rates unchanged for the foreseeable future.
Nothing is set to be released today, but tomorrow we will see the public sector net borrowing figures for April, while Wednesday sees the all-important inflation rate. On Thursday we will see retail sales for April and the week will end with the second estimate of the GDP growth rate for the first quarter of 2018. It is expected to dip from 1.4% to 1.2% which could spell trouble for the pound.
The chart below shows sterling’s movements against the dollar over the past month. As you can see, the pound hasn’t been having a great time against the greenback. Fears over the economic impacts of Brexit haven’t helped matters, but neither has the growing consensus that the Bank of England will likely keep interest rates on hold for the foreseeable future. The volatility between the pairing really does help highlight how important risk management strategies can be for UK businesses with dealings in foreign currency.
