Sterling strength hinders UK market

Published 30 June 15

The strengthening of Sterling against the Euro is increasingly impacting the competiveness of UK products. Sterling reached a high of 1.4165 on 30 June, a level which has not been seen since pre-2008. An example of the impact is the movement of wholesale butter prices.

Prices for EU wholesale butter have seen some upward movement in June, increasing circa 5% from the first week to the third week of the month. However, in the UK they remained unchanged over the month at £2,150/tonne. Had UK prices followed the movement on the continent, it would have resulted in UK butter averaging around £50/tonne more than it actually did.

The impact of currency movements has also been seen with Arla Foods recent farmgate price announcement, resulting in the co-op reducing its UK members’ milk price by a further 0.41ppl on top of the 0.77ppl cut, due to exchange rate movements.

Exchange rates 30.06.15