When the Bank of England announced over a month ago that interest rates may rise in the upcoming months, foreign currency buyers had something to smile about. Sterling strengthened against all of the major currencies by approximately 4-6%. However, in recent weeks the gains have begun to diminish due to a host of economic data releases coupled with political events.
UK GDP numbers (yearly) were revised down to 1.5% from 1.7%, the amount of mortgage approvals was down by 3,000, manufacturing numbers dropped to 55.9 from 56.9 and construction data also fell to 48.1 from 51.1. UK Prime minister Theresa May failed to deliver at the Conservative party conference speech. It’s been heavily publicized that a comedian provided the Prime Minister with a fake p45 signed by Foreign Secretary Boris Johnson and that after the Prime Minister failed to recover.
Reports are now suggesting that there are a number of Tory MPs that believe the Prime Minister should step down if the Conservative party want to win a majority at the next election. However, Mrs May has fought back and exclaimed that she has the full support of the cabinet and in short, a leadership contest would be a complete waste of everybody’s time.
Unfortunately, currency speculators appear to be selling off their pounds and this trend looks to continue in the near future. Brexit negotiations continue to put pressure on the Prime Minister, as the market is looking for answers and quite simply she cannot deliver.
Next week the UK are set to release another round of manufacturing and industrial production numbers Tuesday morning at 9.30am. The figures are set to be a mixed bag with manufacturing falling and industrial production rising. As regular readers will know economic data releases are hard to predict at present due to Brexit, so expect a volatile period for sterling exchange rates Tuesday morning.