Here’s the latest currency news from our partner Moneycorp, to help you find out what your money is worth.
GBP
Towards the end of March, the pound faced headwinds following a promising start to the year, experiencing losses against most G10 currencies. The drop in value followed some softer data releases, including the latest Consumer Price Index (CPI) inflation data, which came in 0.1% lower than anticipated and now sits at 3.4%.
Although this is still above the Bank of England’s 2% target, this figure represented a significant decrease from the previous month’s 4%, signalling a potentially quicker-than-expected return to normality. As expected, the Bank of England voted to maintain interest rates at 5.25% in the monetary policy decision that followed the inflation data. However, Governor Andrew Bailey also suggested that the UK economy was moving towards the point where the Bank of England could start cutting rates.
As a result of these developments, the pound dipped to its lowest levels against the euro since January, with interbank rates touching 1.1599 before a market correction. Similarly, GBP/USD experienced a downward trend, falling from 1.28 to 1.2577.
Official statistics released at the end of March confirmed the UK’s technical recession in the second half of last year. The Office for National Statistics reported a 0.3% quarter-on-quarter GDP contraction between October and December 2023, consistent with initial estimates.
This confirmation further challenges Prime Minister Rishi Sunak’s economic growth agenda, overshadowing his efforts to stimulate the economy. However, the start of 2024 seems to be more positive, with a 0.2% monthly increase in GDP in January, driven by a surge in high street and online spending.
There are also signs of relief in the UK as shop prices hit a two-year low, according to data released on 2nd April. Retailers appeared to have slashed prices on Easter treats, clothing, and electrical goods to attract consumers after a slowdown in spending. The data, released by the British Retail Consortium (BRC) and NielsenIQ, showed prices in March increasing by just 1.3% annually, a significant drop from February’s 2.5% and marking the slowest pace since December 2021. Non-food inflation also plummeted to 0.2% from 1.3% the previous month, while food inflation moderated to 3.7% from 5%. The next CPI inflation data release in the UK is scheduled for 17th April.
EUR
Only the ECB will be meeting in April among the major central banks; however, this month’s critical data may give us a better or changing view of the interest rate path. The key factors will be inflation and economic growth. These will feed into policymakers’ decisions going into the second half of the year. In Europe, the European Central Bank (ECB) left interest rates unchanged for the fourth consecutive meeting, maintaining them at 4%. ECB President Christine Lagarde reiterated the bank’s commitment to ensuring sufficiently restrictive rates to achieve its 2% inflation target. However, policymakers hinted at the possibility of a rate cut in June, with market expectations pointing towards three 25 basis point cuts this year, potentially bringing rates down to 3.25%. According to Eurostat, Eurozone CPI inflation data presents a mixed picture across the bloc, hovering around 2.8% year-on-year. April’s inflation figures were released on 3rd April, coming in below economists’ forecasts and showing a month-on-month decline to 2.4% in March, continuing the downward trend from the previous month’s 2.6%. While Europe has managed to avoid a recession, GDP growth stagnated at 0.0% for Q4 2023, with Germany and Ireland dragging down the figures.
Why Moneycorp?
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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
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