UK data could provide fresh hopes for Sterling
We’ve had a large round of gloomy outlooks for the UK in recent weeks, Brexit is, and will be the main economic concern for the UK. But this is where I deviate from the status quo. Whilst I accept Sterling is in for a bumpy ride over the next few years, the immediate reaction to Brexit is simply that, a blip.
For one, the UK is not leaving the EU for at least 2 years, and given the complexities surrounding the departure from the EU, this period is likely to persist well beyond these timescales. Regardless, the UK’s decision to leave the EU has not resulted in any immediate changes, as the dust settles I am expecting the outlook to return to similar levels to before.
Tomorrow’s Consumer price, given the positive retail sales figures despite ‘Brexit’, could give the Pound fresh strength. Consumer price is a measure of inflation and I am expecting the data to come out stronger than previously anticipated. Investors are monitoring carefully the impact of a Brexit vote on the economy, any signs of stability could be interpreted positively. Given that the UK is not leaving the EU in the short term, the UK has plenty of time to continue business as normal, the markets want to monitor this period of calm before the storm before making further investments.
Releases tomorrow do not give us the bigger picture post-Brexit
Whilst I am expecting a turn-around for the Pound I would not get too caught up in tomorrow’s data. Data being released is for July, a month on from the initial shock from the vote. At this stage data from August, September and October will provide more insight into the outlook. As it becomes more prevalent and understood that the UK remains within the EU for the foreseeable, I am expecting confidence to return to similar levels to before.
I am expecting exchange rates to return to levels close to 1.75 in the weeks ahead, Aussie Dollar sellers may want to make the most of this window of opportunity. Email me at [email protected] if you would like to discuss this update in more detail, or have a currency exchange to make.