By Tom Arnold
This week has largely been a positive one for the Pound, with various pressures coming from different areas, but a net gain against the Euro and the US Dollar of around a cent, making a €200,000 property in Spain around £1,500 cheaper.
Much of the focus of the week was on Rachel Reeves delivering her Spring statement, with the expected welfare cuts, mid-week. As is often the case with budgets and Chancellor statements, so much of what is announced has been pre-briefed to the press, that when it actually comes, there is limited impact on the market and this once again proved to be the case.
Economic data-wise we have had two of the biggest ones this week in the UK with both coming out surprisingly positive – UK CPI inflation on Tuesday came out at 2.8%, which while still above the chancellor’s 2% target, was lower than anticipated and a drop of 0.2% from January. This morning, we have had UK GDP, which has come out at 0.1% as anticipated, which is an increase of 1.5% year on year, slightly above the 1.4% expected. Both of these are critical releases and while not necessarily very Pound-positive in terms of their results, point to a slightly more cheery outlook for the UK economy as a whole, and so Sterling has benefited. We have also seen a really positive jump in UK retail sales this morning, with a year on year rise of 2.2% versus the expected 0.5%, so Rachel Reeves will I am sure be happy that consumers are out and about and spending.
The backdrop to this good week is that the global geo-political outlook and economic situation is increasingly uncertain, with President Trump throwing tariffs around and upsetting much of the previous status quo. This means we are very likely in for some shocks and so any positive movement on the currency markets should likely be viewed as a buying opportunity, rather than a sign of an ongoing rising trend.
As ever stay in close contact with your currency consultant to be kept informed of what is happening, what the likely impacts are on your requirement and critically what the options are for you to mitigate against the risk of a volatile market.