Pound close to six-week lows

With the recent UK services report leaving investors concerned about the nation’s economic outlook, the pound is lingering at multi-week lows.

What movement have we seen in the currency market?

After a less-than-impressive performance last week, the pound held losses against the euro and US dollar on Monday.

The GBP EUR exchange rate was clinging to 1.15 while the GBP USD exchange rate remained in the region of a six-week low at 1.22.

What happened?

A number of factors contributed to the pound’s weakness on Monday, including ongoing concerns relating to last week’s below-forecast services PMI.

Sterling also suffered as a result of comments from Prime Minister Theresa May’s spokesperson – who said that the PM had decided not to offer parliament the right to veto the final Brexit deal in case it prompted EU leaders to form a bad one.

French President Francois Hollande also weighed in on the issue, asserting that the UK will have to give up its EU perks post-Brexit.

Hollande was quoted as saying; ‘The UK’s problem is this: it had thought that in leaving Europe it would tie up a strategic partnership with the US. But it now happens that the US is closing itself off from the world. The UK has made a bad choice at a bad moment. I regret that.’

However, with the odds of far-right National Front leader Marine Le Pen winning the French election rising, the pound’s new losses against the euro were limited.

What should you be looking out for?

There are a few reports with the potential to inspire currency movement today, including the UK’s Halifax house price figures for February, final fourth quarter Eurozone GDP and US trade balance numbers.

House price growth is predicted to have accelerated by 0.4% on the month following a -0.9% decline in January and an on or above forecast result could lend the pound support.

That being said, any pound gains are likely to be limited ahead of the UK’s spring budget.

According to some sources, Chancellor Phillip Hammond is likely to take an optimistic stance on domestic growth, highlighting how resilient the economy has proven since the vote to exit the EU.

However, if the Office for Budget Responsibility’s (OBR) forecasts for inflation, real wages and household spending indicate that consumers will be feeling the strain in the months ahead, we could see the pound slide on Wednesday.

We’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news or how it could impact your currency transfers.