Production concerns arising amid weak Pound

In news this week Tesco & Unilever are currently involved in a price row over Major household brands including Marmite, PG Tips and Pot noodles to name a few. The supermarket is resisting moves by Unilever to increase prices in the UK to adjust for the sharp decline in the Pound.

Tesco’s have removed these brands from there online store at this time, price increases are always discussed by retailers and there suppliers but rarely become public news. However I expect this dispute to be resolved quickly, as neither side will want to damage there respective brands reputations.

This is worrying sign of things to come though as other major suppliers may be looking to increase there prices pushing up the price of food and goods in the UK.

This squeeze on retailers is likely to hit data coming out of the UK in the next few months and as such may cause further volatility in the pound.

Hard data is lacking as we end the working week but next week sees the release of UK inflation figures and this will be one to watch when considering a currency deal.

In other news the European Central Bank will meet again next week to discuss any changes to be made to there monetary policy. The ECB have been facing there own set of problems with low inflation and weak growth continuing to affect the economy. Any action to strengthen there position should be monitored with interest and may cause a choice opportunity to buy Euro’s in the short term.

As usual if you have any requirements for currency or would like further information on anything mentioned in this post please feel free to email me at accounts@currencydeals4u.co.uk

 

Flash Crash and Political Turmoil continuing to hit the Pound

Although there has been little in the way of hard data to effect the currency exchange rates in the last week, there has been plenty of speculation and political turmoil to cause big swings on the currency markets and a huge decline in the pound.

The flash crash caused by a mistake in Asian trading last Friday has kept the markets very on edge. This is still being investigated by the Bank of England and is responsible for much of the harm caused to the Pound Sterling, which in my opinion still remains undervalued at this point in time.

However this is not the only reason for the continued poor performance of the Pound.

The Brexit process is beginning to look increasingly messy with MP’s taking the government to court seeking Parliamentary approval before the UK officially begins to leave the European Union. This political in fighting with Theresa May’s government has caused major companies such as Fujitsu to talk of cutting jobs within the UK, other companies such as Morgan Stanley have begun to talk about moving business away to the likes of Paris and Luxembourg. I believe a lot of this talk is a lobbying tactic designed at shaping the deal Theresa May tries to get from the EU. Though I expect we will see a few major players exit the UK market in the months to come further adversely affecting the Pound.

Analysts have commented that actions such as this in the face of Brexit could see £66bn a year lost in tax revenues as major companies head for the door.

The pound looks set to continue being driven by speculation in the coming months with Credit Suisse’s forecast of GBPEURO already hitting 1.10, I believe other analyst predictions of parity being hit by the end of the year are now looking more likely (1GBP for 1 EURO).

In summary if your going away for Christmas or a late holiday this year I would advise to act sooner rather than later to secure a more favorable rate of exchange against most major currencies. If you are holding on to currency from a previous holiday you will see a great rate of return selling your left over currency to us. In most cases your likely to walk away with more money than it cost to purchase in the first place!

Should you have any questions about anything mentioned in this blog or your individual currency requirements please don’t hesitate to contact me at accounts@currencydeals4u.co.uk