020 7898 0500
Businesses and consumers continue to count the cost of the Budget
After a solid day of gains yesterday the pound has fallen in early trading this morning, as a busy day for high-level data gets underway.
First up was GfK Consumer Confidence, showing an improvement in public mood about money. The measure strengthened three points to -18, which while still negative, was an improvement. Analysts suggested it was a post-Budget boost.
On the other hand, pre-Budget worries were evident in retail sales for October (the Budget was on 31st October), which declined by 0.7% month-on-month – far below expectations.
We will learn the mood of British business leaders at 9.30 this morning with PMI – the purchasing managers’ index – and see if it matches that of the general public post-Budget. The markets are predicting no loss of confidence, which would surely fly in the face of what we’ve been hearing from businesses employing lots of staff, and farmers. Yesterday the Royal Mail was the latest big employer to highlight the cost of the chancellor’s National Insurance rise, saying it will lose an extra £120mn.
The mood at Smart Currency is particularly buoyant this morning, however, having been listed as a Finalist in the West London Business Awards for 2025. The West London business area is the second-largest economic powerhouse in the UK, with around 109,000 active businesses and a GVA of £50bn. We are proud to be a key part of that.
Back to business, and the euro has fallen against almost all currencies apart from the pound, with roughly 0.5% drops against the US dollar, yen, yuan and others. This morning the German economic recovery reported in early GDP data has been downgraded to just 0.1% growth and an annual figure of -0.3%.
The PMI data is coming in thick and fast today, and it will be interesting to see how mood varies on each side of the Atlantic, with US data coming in at 2.45pm.
Other than that, the biggest influence on your exchange rate may come from central bankers, who are taking to the airways in force. How worried are European policymakers about Trump’s potential tariffs? Certainly Deutsche Bank warned yesterday that full implementation of suggested tariffs of 60% on Chinese imports and 10% on others could see EUR/USD fall below parity – it is already close to a two year low.
It’s certainly a highly volatile time for exchange rates and well worth being proactive in protecting your money.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your Business Account manager on 020 3918 7255 to get started.
GBP: GBP/EUR survives big data week unscathed
Despite weakening this morning, sterling has reached the end of the week pretty much where it was last Friday against the euro, but 0.75% down against the dollar.
Later this morning we’ll hear PMI (Purchasing Managers’ Index) reports for the important UK services sector. That will round off high-level data for the time being for the UK.
GBP/USD past year
EUR: Positive start against sterling
The euro fell across the board yesterday, largely due to dovish tones from at least one European Central Bank policymaker. It has perked up against sterling this morning, however. The final reading for Germany’s Q3 gross domestic product (GDP) has just been downgraded to -0.3, less than initial estimates. Watch out for PMI reports coming out shortly and more ECB comments. Monday kicks off with Germany’s Ifo Business Climate report.
EUR/USD past year
USD: Dollar’s rise continues
Further rises for the US dollar, taking USD/GBP close to its best for six months and USD/EUR teetering on a two-year high. The usual PMI reports will be out this afternoon and on Monday the analysts will be poring over the minutes of the FOMC’s last meeting.
USD/GBP past year
For more on currencies and currency risk management strategies, please get in touch with your Smart Currency Business account manager on 020 3918 7255 or your Private Client account manager on 020 7898 0541.
