Here’s the latest currency news from our partner Moneycorp, to help you find out what your money is worth.
GBP
Last week, GBP held a solid footing following Chancellor Hunt’s Spring Budget on Wednesday and the revisions from the Office of Budget Responsibility, raising GDP growth forecasts and predicting improvements for household disposable incomes. These trends were reflected in the market, with GBP/EUR and GBP/USD showing positive trends and nearing 12-month highs. The rates have corrected towards the end of this week, with the pound weakening slightly.
This week was a busy one in terms of UK data, with updates on the labour market and GDP included in the schedule.
Recent developments in the labour market indicate a slight easing, though overall conditions remain tight. With the unemployment rate hovering at 3.8% during the three months leading up to December, it remains historically low. Despite this, the pace of average earnings growth slowed to 5.8% year-on-year in Q4 2023, marking the lowest expansion rate since Q1 2023. Forecasts suggested that the unemployment rate would persist at 3.8% in January, but it came in slightly above expectation at 3.9%. On the other hand, average earnings growth was anticipated to marginally decelerate to 5.7% year-on-year but came in slightly below expectation at 5.6%.
Many newspapers focussed particularly on economic inactivity, which now stands at 21.8%. That means that 9.2 million working-age adults in the UK are not employed or looking for work.
Shifting the focus to GDP, the UK economy managed to avoid the deep recession anticipated by many but did enter a shallow downturn in the latter half of 2023. GDP experienced a contraction of 0.1% in Q3 and further declined by 0.3% in Q4, partially attributed to a 0.1% month-on-month decrease in output observed in December. January’s GDP figures came in as expected, revealing a 0.2% month-on-month increase, signalling a modest improvement to the start of 2024.
The most significant economic event in the UK next week will be the next Bank of England rate meeting, which will take place on Thursday, March 21st. Markets expect policymakers to hold rates steady for the fifth consecutive meeting.
EUR
Last week, the ECB left interest rates unchanged for a fourth consecutive meeting at 4% last week. Lagarde continued to emphasise that it will ensure rates are sufficiently restrictive for as long as required to reach it’s 2% inflation target. However, they indicated a rate cut in June is a possibility and the market bets are on three 25 bp cuts this year to 3.25%.
There were no significant data releases in the EU this week. Next week, we’ll see the release of the latest Manufacturing and Services PMI data as well as CPI Inflation data for the single currency.
Disclaimer: This commentary does not constitute financial advice.
Why Moneycorp?
With a Platinum Trusted Service Award 2020 from independent review site Feefo and 40 years of experience in the industry, FrenchEntrée has been recommending Moneycorp for more than 15 years. During this time they have helped thousands of client planning the best way to pay for their property as well as supporting them afterwards with any further payment from paying bills, mortgages to repatriating UK pension payments for those who have retired to France.
Furthermore, we have worked with the same person at Moneycorp for more than a decade! You might be familiar with her as she often writes for our French Property News magazine. She has 13 years’ experience in foreign exchange, and is a qualified European lawyer with experience in European transactions. Mar will be happy to answer any questions or enquiries to support you through these difficult times
Opening an account is really easy and free of cost. You can register online or over the phone in a couple of minutes and for FrenchEntrée readers there are no transfer fees in any payment.
