GBP
The Pound continued to come under pressure on Monday as the UK attempts to come to terms with its decision to leave the EU, posting losses of 2.8% against the euro, and 3.2% against the US dollar.
Wednesday saw the pound start to strengthen hitting highs of 1.2128 against the euro, and 1.3532 against the US Dollar.
On Thursday of last week Mark Carney gave his second live televised interview since the leave vote was announced. The Governor of BOE used his speech to reassure business leaders and investors that the Bank’s contingency plans were “working well”. Carney stated that “The result of the referendum is clear. Its full implications for the economy are not”
Carney said the BOE would have to loosen its policy over the summer to weather the storm. It’s expected that this will come in the form of an interest rate cut, but he also said he would consider a whole host of other measures. Reaction from the market was not favourable as the pound dropped 1.2% against the euro immediately.
EUR
The EU Summit on Tuesday saw key European political figures take a hard-line stance against the UK. Angela Merkel was at the forefront stating that the UK would be forced to leave quickly once article 50 is triggered in September and said that any discussions about the UK-EU relationship would not happen until article 50 is triggered.
We saw mixed messages in the economic data coming out of Germany. Unemployment figures were positive, the unadjusted rate declined to 6% from 6.3%. The consumer price index figures were also positive as both core and the regular reading both came out ahead of the forecast. German Retail figures were disappointing though as year came in at 2.6% against the 3% forecast .
USD
As expected the US Dollar continues to benefit from the leave vote gaining 3.2% against the pound reaching trading levels not seen for 30 years.
US consumer confidence data showed an increase for the month of June coming in at 98, up from last month’s 92.4 as Americans become more optimistic about their economy, will these options change post “Brexit” time will tell. Chicago PMI was also positive at 56.8 which suggests manufacturing conditions are improving in the US.
The good news for the US economy continued as the initial jobless claims figure improved to 268,000. This is now the 69th consecutive week the figure has come in below 300,000 making it the longest streak since 1973.
Elsewhere.
China has devalued its currency by the greatest amount since last August. This could be bad news for Austrialia and New Zealand as they rely heavily on the export demand from China.
New Zealand is expecting any effects from the “Brexit” to be short term as continued volatility in the financial markets can delay investment decisions. The New Zealand Tresury said the country is “in a relatively strong position to withstand any shock"
Canada’s economy is currently experiencing a resurgence, with strong retail sales, trade data and the increase of commodity prices.
British expats, people looking to move overseas or those contemplating purchasing property, essentially anyone concerned about how Brexit decision will affect their future international money transactions should contact one of our currency specialists to discuss possible solutions.
