Do you intend to transfer money to the UK from Singapore in the foreseeable future? This might be because you're a Singaporean citizen emigrating to the UK for work and to buy a property. Also, it could be because you're a Singapore company owner, exchanging currency for your business.
Either way, it could interest you to know that the SGD to pounds interbank exchange rate has hit 0.5740 today. This is the highest Singapore dollar exchange rate versus British sterling in 14 weeks, or since February 15th.
As a result, when you transfer money from Singapore to the UK, you might now get a notably higher GBP total, compared to the recent past.
To put this rise in the value of the Singapore dollar against the pound into context for you, back on March 17th, the SGD was as weak as 0.5521 versus the GBP. As a result, in the nine weeks since, the Singapore dollar has risen by over +2 cents versus sterling, or by +3.96%.
At today's interbank exchange rate of 0.5740, SG$250,000 would be worth £143,500. By comparison, at the interbank exchange rate on March 17th of 0.5521, SG$250,000 would have been worth just £138,025.
So as the SGD has gained in value versus the GBP, for the same Singapore dollar amount, that's a rise in the pound total of +£5,475.
A big factor why the Singapore dollar to pound interbank exchange rate has reached this 14-week high is because UK Prime Minister Theresa May has announced her resignation today.
That said, looking forward, Singapore's economy slowed sharply in early 2019, which might conceivably impact the value of the Singapore dollar exchange rate.
Let's look more closely at these factors that have lifted the SGD to pounds exchange rate to this 14-week high, ahead of your transferring money to the UK in the foreseeable future.
SGD to Pounds Rate Gains, as Theresa May Announces Resignation
A partial explanation why the Singapore dollar exchange rate versus the pound has reached this 14-week high is because UK Prime Minister Theresa May has today announced that she'll resign.
Speaking outside 10 Downing Street, Mrs. May told journalists that she'll stay in her post until June 7th, to provide continuity during US President Donald Trump's forthcoming state visit to the UK, reports The Guardian newspaper.
Mrs. May's announcement this morning follows weeks of intense pressure from her Conservative Party to quit, to allow another leader to finish Brexit.
Events came to a head earlier this week, when Mrs. May's fourth draft Brexit bill, the Withdrawal Agreement Bill (WAB) was roundly rejected both by the opposition Labour Party, and Mrs. May's own Cabinet of ministers.
However, while Mrs. May's decision allows the Conservative Party to elect a new leader, for UK investors and businesses, it further complicates the UK's Brexit outlook.
In particular, the Tories will now spend weeks, perhaps up until the end of July, to elect a new leader, and whoever becomes Prime Minister must still win the support of a majority of MPs in Parliament, to pass Brexit.
At the time of writing, former Foreign Secretary and "hard" Brexiteer Boris Johnson is the favourite to replace Mrs. May.
Already, Mr. Johnson was won support from several influential figures, including the Chairman of the European Research Group (ERG), Jacob Rees-Mogg, and the former Defence Secretary, Gavin Williamson.
Mr. Johnson is the favourite to become Conservative Party leader and Prime Minister, because he was instrumental in the "Leave" campaign, during the Brexit referendum in June 2016.
As a result, Tory MPs and members are confident that Mr. Johnson will finally take the UK out of the EU, even if this means exiting with a "No Deal", regardless of the economic cost to the UK.
However, if the UK exits the EU without a deal, the UK will default to trading with the EU on World Trade Organisation (WTO) terms, with lots more tariffs and bureaucracy than is the case today.
The UK does roughly half its trade with the EU, so this could significantly slow the UK's economic growth, after Brexit. In turn, this risk has weakened the pound.
Singapore's Slower Economy May Affect SGD to Pounds Rate
That said though, looking ahead, the Singapore dollar exchange rate to the pound could be affected by the fact that Singapore's economy slowed noticeably in early 2019.
In particular, Singapore's GDP (Gross Domestic Product) expanded by just +1.2% in Q1 this year, between January and March, well below economists' forecasts for +1.5% growth, according to newspaper Al Jazeera.
This was Singapore's slowest economic growth rate since Q2 2009, between April to June ten years ago. It's also well below Singapore's average GDP expansion rate of the past five years, of 2.9%.
In particular, Singapore's manufacturing sector shrank by -7.1% compared to a year ago, while Singapore's exports dropped by -6.4% year-on-year.
Singapore's economy slowed between January and March, in large part because of the USA's and China's ongoing trade war.
The trade conflict between the world's two largest economies has notably slowed global trade flows and supply chains, of which Singapore is an important part in Asia. Put simply, when the USA and China fight, other countries get caught in the crossfire.
In addition, following Singapore's slower economic growth in Q1, this Tuesday 21st May, Singapore's Ministry of Trade and Industry (MTI) downgraded the country's GDP growth forecast for 2019.
To be specific, MTI now predicts that Singapore's economy will grow by 1.5%-2.5% this year, down from the previous forecasts of 1.5%-3.5%.
Announcing the downgrade, MTI's Permanent Secretary, Gabriel Lim, said that this "goes beyond any single company or issue".
Mr. Lim said that "Against this challenging external economic backdrop, key outward-oriented sectors in the Singapore economy are expected to slow this year. In particular, the electronics and precision engineering clusters... may face strong headwinds.”
If the MTI's forecasts are correct, this could affect the Singapore dollar exchange rate versus the pound, looking forward.
This is because, first, if the USA's and China's trade war slows Singapore's manufacturing and export sectors, Singapore could become less prosperous, with slower wage growth or higher unemployment. This may be expected to affect the Singapore dollar.
If America's and China's trade war further slows Singapore's economy, this might also influence the SGD to pounds rate, if the Monetary Authority of Singapore (MAS) cuts interest rates to compensate.
In particular, MAS might slash Singapore's borrowing costs below their current 1.94%, to stimulate investment and loans, and make up for weaker trade flows.
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Please bear in mind, this article is Pure FX’s opinion only and does not constitute advice. Moreover, the exchange rates referred to in this article are the interbank rates, which are the rates at which banks and financial institutions buy and sell currency to each other. Therefore these exchange rates cannot be accessed by individuals or SMEs, and are not the same rates that Pure FX can offer. To get a free exchange rate quote, call us on +44 (0) 1494 671800, or email [email protected]