In our latest update about when to buy Euros, we’ll look at how the Monetary Policy Committee (MPC) at the Bank of England (BoE) has upgraded its predictions for growth in the UK.
The BoE has posted growth predictions of 1.5%, up from 1.2% in February. In addition, the BoE has upgraded its forecast for medium-term growth in 2020 from 1.5% to 1.6%, and in 2021 from 1.9% to 2.1%.
Also, the MPC has said that, if a resolution is reached with regards to Brexit negotiations, we could see more frequent interest rate increases than previously expected.
Following the release of this information, we have seen some volatility in Sterling exchange rates today. The highest level reached was 1.1670, before dropping back to levels around 1.1640.
UK interest rates on hold at 0.75%
The MPC voted 9-0 in favour of keeping interest rates on hold at 0.75%. This came as no surprise, with BoE Governor Mark Carney taking his usual cautious approach. Mark Carney has stated that the future of interest rates in the UK will be dictated by the outcome of Brexit. Depending on developments, we may not see interest rates at 1% again until the final three quarters of 2021.
UK construction data for April, which was released today, showed an increase in output for the first time since January. The Purchasing Manager’s Index (PMI) figure rose to 50.5, from 49.7 in March. Residential work expanded at the fastest pace in 4 months. A rise in new homes and new buyers was the main reason behind this boost.
Weak manufacturing data from Eurozone powerhouse
Meanwhile, weak German manufacturing data has also impacted the Euro, with a reading of 44.4 in April. This was slightly higher than previously at 44.1, although it is still close to 80-month lows. This is not a good sign for the main contributor to the Eurozone.
For the remainder of this week, we will be looking at UK services PMI data, which contributes around 80% of the UK’s GDP. Last month, the UK services PMI data contracted, and a further contraction has the potential to negatively impact the Pound.
If you have an upcoming Pound to Euro currency transaction, and would like to know more about how the above factors could impact your currency exchange, you can contact me directly here. I look forward to hearing from you.