By Lauren Buckner
Sterling trades within its recent range versus both the EUR and USD this morning, still struggling to find enough momentum to break through the top of these levels. Falling flat on Friday’s retails sales numbers for the UK, GBP is still failing to break 1.20 against the EUR convincingly, leaving some to suggest that we have hit a significant peak in exchange rates. UK retail sales showed an unexpected decline by 0.3% in February and missed expectations of a 0.6% rise, as the spiralling rise in the cost of living in the UK impacts consumer spending.
UK consumer price inflation data has shown that prices in the UK are rising at their fastest pace in over 30 years sitting at 6.2% last month and predicted to hit 8% by April. The office for budget responsibility are warning that British households are facing their biggest drop in living standards for over 66 years. For UK consumers this means that costs of basics such as food and fuel are increasing by the day and that the squeeze on income is likely to continue as wage growth lags painfully behind.
Rishi Sunak’s spring statement failed to deliver much of a reprieve despite a cut to fuel duty for the first time in over a decade and some reprieve in national insurances costs. The facts remain that the cost of living in the UK at present pushes a further estimated 1.3million households in to poverty and Sunak’s popularity amongst voters takes a hit. Interestingly, the odds of the UK now hitting recession in Q1 2023 are now sat at over 30% on many betting platforms. Recession is measured by a fall in GDP (economic growth) over two consecutive quarters and with the squeeze on our purses from so many directions at the moment it’s difficult to argue against.
Any talk of recession in the UK is bound to dent investor confidence in the UK and could further derail the value of the Pound. This could suggest that GBP represents great value at it’s current levels and sellers should consider their position carefully. One way to fix the cost of your currency is to utilise a forward contract, please speak to us to discuss further.
Data this week
Monday; UK; BofE’s governor Bailey speech.
Tuesday; EU; Gfk consumer confidence.
UK; consumer credit.
Wednesday; EU; Consumer confidence (Mar).
US; GDP Q4
Thursday; UK; GDP Q4. Nationwide House Price survey.
EU; German retail sales.
EU; Unemployment Rate.
US; Initial jobless claims
Friday; EU; Markit manufacturing PMI
UK; Markit manufacturing PMI
US; Employment rate (Mar)