Sterling Euro Exchange Rates
We start the days trading with some very high levels on GBP EUR exchange rates and this is largely attributed to some stronger than expected manufacturing and production data which showed the fastest year on year growth since 2011 and also a rise in the UK’s Gross Domestic Product (GDP) data which the National Institute of Economic and Social Research (NIESR) confirmed yesterday afternoon. I mentioned in this currency blog yesterday that these GDP figures would be key and it proved to be true. Now we have had this estimation from the NIESR it does lead to expectation being that we will see the official figures from the ONS later this month being positive which could again generate some Sterling strength. The fact that we have seen yet more positive economic data for the UK is good news for Sterling and helps continue what has largely been a good year for the UK and therefore the Pound.
The International Monetary Fund (IMF) added to the positive news for the UK yesterday with the announcement that the UK economy will be the fastest growing in the G7 this year with growth of 2.9%, an increase on the previous estimate of 2.4%. The IMF stated that the previous predictions for growth had been too pessimistic and this added to the confirmation that we have already seen that the UK is performing very well and is further good news for Chancellor George Osborne. This news is also likely to help Sterling on its current upwards trend against most of the major currencies, especially the Euro which is pushing back up towards the high levels we witnessed earlier this year. This means there are currently some good opportunities to buy Euros and there is also a chance that the rates may improve further.
US Exchange Rates
The big economic data set today is the latest set of Federal Open Market Committee (FOMC) minutes from the latest interest rate decision where interest rates were kept on hold at the record low of 0.25% but the bond buying scheme was reduced by another $10bn. So, what will be interesting in these minutes will be whether tapering the bond buying scheme by more than $10bn per month was discussed and if so whether we may see a faster reduction in the coming months. This set of minutes is announced at 7pm tonight and so outside of normal trading hours, so if you need to transfer USD then a limit order may be helpful as it can allow you to set a target rate of exchange which means if the minutes trigger some movement in the markets you could still secure the rate you want. You can read more about limit orders here.