This report will cover recent currency market movements for Sterling against a basket of major currencies over the course of the week covering vital economic data releases for the U.K and worldwide, also outlining data that is due out in the near future that may affect the cost of sending money overseas or selling foreign currency to bring back into Pounds.
Sterling weakness in advance of BOE rate decisionSterling suffered yesterday against a basket of major currencies as investors confidence in the Pound started to slip leading up to the much anticipated Bank Of England interest rate decision due out on Thursday at 12:00pm.
Although it is widely expected that rates will remain at 0.50% all eyes will be on announcements concerning any further quantitative easing to be introduced, as following the last few rate decisions we have witnessed announcements regarding this which has generally led to Sterling weakness.
The Bank Of England minutes for August suggested that a couple of members of the BOE (including governor Mervyn King) were in favour of a further £25billion to be pumped into the economy in the near future.
This could well lead to further Sterling weakness not only on Thursday but in the days leading up to it as investors start to shift funds away from the Pound in advance, as markets do move on rumour as well as fact and the potential of seeing more Sterling in circulation obviously means it becomes less valuable.
If you do have an upcoming transaction to make then it may be prudent to consider your options sooner rather than later, as although many major analysts and indeed myself believe that Sterling is currently undervalued it is also quite widely thought that it may get worse before it gets better. Why not get in contact with one of our friendly and experienced traders on 0800 328 5884 who will happily explain all options available to you to ensure your foreign currency costs as little as possible.
Specific Currency News – The week ahead GBP – An important week ahead for the Pound with a huge amount of important data that may lead to extreme volatility over the course of the week, overnight will be the RICS house price data release, Halifax house price data is also due out in the near future on top of this. House prices are a key indication as to how the U.K economy is moving so expect movement off the back of this information.
Wednesday night brings an important release for the U.K by way of the GDP estimate by the NIESR (National Institute of Economic & Social Research). The GDP (Gross Domestic Product) data will inform us as to whether the U.K economy is growing or contracting and if so by how much, this estimate will give a good indication as to what to expect for the next figures and could lead to high volatility.
As previously mentioned in the report Thursday brings the U.K interest rate decision alongside various information due on Friday with the key factor being PPI (Producer Price Index).
USD - Yesterday was labour day in the States so led to thinner trading on the Dollar however we did still lose a little bit of ground over the course of the day. A reasonably quiet week ahead for U.S data releases with the main factor being the FED Beige book tomorrow evening.
EUR – A relatively quiet week for the Euro zone this week however do not be fooled into thinking that this will mean rates remain stable, there are numerous surprises popping up on the markets lately and with so many economies performing in different ways it is certainly worth keeping a close eye out for unexpected announcements on economic policy by the ECB.
Other Major Currencies – During the course of this week and the early part of next week there are a number of key releases for other major currencies including a number of interest rate decisions – the major ones being as follows; Tomorrow sees the Reserve Bank of New Zealand interest rate decision, Thursday brings the Bank Of Canada interest rate decision, Monday brings the decision in Japan and a week today the Swiss National Bank will announce what they plan to do with interest rates.
For those of you that aren’t aware interest rate decisions can be a key release for that particular economy. An interest rate cut generally has a negative affect on the currency concerned and a hike a positive one, this is due to investors possibly shifting their funds over to a higher yielding currency to achieve a better return on their investment and similarly a rate hike generally brings positive movement.
This week is very heavy data wise so should you have an upcoming currency transaction no matter which currency you are looking to sell or buy it is imperative that you inform your account manager here at FCD so that they can keep a close eye on the markets for you. If you do not have a trading facility set up then click here to open one today – It is completely free and carries no obligation to trade, however ensures that you are in the position to book out a rate off of the back of one phone call should rates spike in your favour.
Breaking news – Overnight saw the release of Australian Business confidence which is still on the up, this has led the minor Australian Dollar strength this morning.
This is a brief summary of todays report, should you wish to make a currency enquiry
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Daniel Wright
