Is Sterling set to fall further against the Euro following the Brexit? (Tom Holian)

Sterling Euro exchnage rates have once again come under pressure with the release of the UK’s latest Purchasing Manager’s Index.

The data release from yesterday morning showed a fall in economic activity to 47.7 which is the lowest figure since April 2009. Anything blow 50 represents contraction and with the data covering the post-Brexit period then could this be a sign of things to come. Sterling fell by over 1% against the Euro during Friday.

Recent economic data has been relatively strong for the UK including that of UK unemployment data which was the best for over 10 years. However, the economic data including the Brexit period will come later and I think this could show some real concerns for the British economy.

Bank of England governor Mark Carney has spoken out a number of times in the run up to Brexit and also after the announcement and has signalled that the central bank will change monetary policy if necessary in order to shore up the economy.

Last month’s absence of an interest rate cut was more than likely due to the change in Prime Minister only a day before the result so when the meeting takes place of 4th August I would not be surprised to see either an interest rate cut or further Quantitative Easing both of which are likely to negatively effect the Pound if they are introduced.

On Wednesday the UK releases GDP data and this could be a pivotal point for Sterling Euro exchange rates going forward as if the data comes out lower than expected I think we could see some problems for the Pound going forward.

One possible piece of good news for Sterling is that the European banking stress tests are due next Friday night 29th July.

This includes 51 of Europe’s largest banks by assets including British banks but the real concern is that of the Italian banking sector.

They currently owe EUR550bn of which almost half of that is due to French banks so if the announcement supports this view then we could see some huge volatility for GBPEUR rates towards the end of next week.

If you have a currency transfer to make and want to save money on exchange rates compared to using your own bank then contact me directly for a free quote. Tom Holian [email protected]

I look forward to hearing from you.