The UK’s economic growth slowed to 0.4% in the first Quarter of the year, mainly due to poor manufacturing and construction output. The year on year growth still remains at 2.1%.

Despite lower than expected growth, the UK continues its GDP growth for the 13 consecutive quarter.

Is the EU Referendum the cause?

Although it’s fair to assume the looming EU referendum has knocked purchasing trends for businesses the UK has a number of other issues that need addressing as part of a much wider economic discussion.

Poor manufacturing and construction data earlier this year weighed heavily on the pound in the wake of the ‘Tata Steel’ reform, which nearly cost thousands of jobs at its Port Talbot depot.

Despite comments that they may well keep their Port Talbot depot if the economic situation improves, the latest figures will raise question marks once again with David Cameron stating today ‘there are no guarantees of a rescue success’.

What does this mean for GBP exchange rates?

Despite an economic slowdown this was highly expected and as a result, very little has changed for GBP against most major currencies.
In fact, GBPEUR rates are trading at a 6 week high and cable exchange rates are at a 4 month high and despite the looming EU referendum, investors are putting faith in the recent polls indicating a strong ‘stay’ vote.

With very little economic data due for the UK for the rest of the week, all eyes are now on the FED’s Interest rate decision on Wednesday and the Euro consumer price index on Friday. The odds of a US hike rate are close to nil for this week’s announcements with the June release looking marginally more promising.

There is a potential for GBPEUR rates to reach the 1.30 mark this week if the Euro CPI release on Friday proves negative