Will GBP exchange rates remain strong despite recession fears?
Last week saw the Pound to Euro break above the 1.1650 handle for the first time this year, after remaining rangebound between 1.1600 to 1.1650 since the start of 2024.
The GBP/EUR pair have begun the week above 1.1650 even if only just, so the trend for the pair is gently climbing despite there being concerns for the UK economy falling into recession.
Retail Sales figures for December were released last week and came out below expectations, increasing the chances of an official recession in the UK.
Although economic data this week is light, Wednesday’s release of PMI data will be followed closely by financial markets and especially the Services PMI figure.
PMI readings are a measure of the prevailing direction of economic trends, and it’s based on a monthly survey of supply chain managers.
On Wednesday there will be releases for Manufacturing, Industrial and the Services sector. The Services sector will be key as this sector covers around 70% of the UK economy. A release above 50 indicates growth in the sector, and the last reading was 53.4. A slight increase to 53.5 is expected this time.
The Pound could be influenced by this release, especially if the figure released is below expectations.
Thursday’s European Central Bank (ECB) interest rate decision and monetary policy statement could also have an impact on the GBP to EUR pair. No changes are expected to be made but the language used could offer insight into the ECB’s monetary policy plans through 2024.
The President of the ECB, Christine Lagarde recently suggested a cut could come as soon as the summer.
If you would like to discuss timings and exchange rates on a currency transfer you’re planning on making, please feel free to contact me with an outline of your plans. You can email me directly on joseph.wright@lumonpay.com and I’ll be happy to offer my opinion and exchange rate examples.
Source: https://www.poundsterlingforecast.com/2024/01/will-gbp-exchange-rates-remain-strong-despite-recession-fears/
