Sterling currently remains fragile due to the lack of clarity surrounding Brexit. Boris Johnson remains adamant the UK will leave the European Union on 31st October with or without a deal in place. The point of contention for a potential deal remains the Irish backstop.
President of the European Commission, Jean Claude Junker has stated he is prepared to listen to alternatives to the current solution but has made it clear Boris Johnson is yet to put forward any of these alternatives. Boris has said that talks are progressing positively, but without a backstop solution and with the 31st October deadline quickly approaching there is a real possibility of a no deal scenario taking place.
Historically, the stronger the probability of a no deal the weaker you would expect sterling to become. The pound has recently made gains, with the GBP/EUR interbank exchange rate hitting 1.1305 during yesterday’s trading. This is the highest level in over three months, those with a low risk appetite may wish to take advantage of current levels.
Today will see the release of UK Consumer Price Index (CPI) data. The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services. Month on Month figures are expected to rise from 0% to 0.5% and then there is expected to be a contraction on year in year figures from 1.9% to 1.8%.
One of the catalysts for the pound strengthening over the euro is news coming from the European Central Bank (ECB) that we could see changes in monetary policy. For several years inflation has been a major concern for the bloc. It currently sits well below the 2% target.
The ECB have stated they are willing to lower interest rates in order to combat deflation, but this would put interest rate levels in negative territory with the hope of stimulating growth by encouraging spending. There has also been talks of Quantitative Easing (QE) coming back into play.
QE is a controversial monetary policy at it involves pumping large sums of money into an economy to try and increase spending, the draw back is the region in question tends to get in a large amount of debt. The news that these measures could be taken would not be taken well by investors.
There has been much speculation of late as to whether there will be an Interest Rate cut from the Federal Reserve. Global economic uncertainty and concerns surrounding the impact of the US/China trade war have caused rumours to circulate that a rate cut could be on the cards. According to FX street there is a higher probability of a cut than the rate remaining unchanged. Rates are expected to be cut from 2.25% to 2%. This interest rate decision could cause movement in US dollar value so be sure to keep an eye on the event.
New Zealand Gross Domestic Product figures will be released and it is a key indicator as to the health of the economy. Quarter on Quarter data is set to land at 0.4% down from 0.6% and Year on Year data is also expected to see a drop from 2.5% to 2%. You may wish to take into account how these figures could influence the cost of your transfer if you have a trade involving the New Zealand dollar.
Simple, fast, great rate. Speedy uncomplicated transaction with no commission and very good exchange rate. Friendly service
We have been using Foreign Currency Direct for more than 10 years. They are very competitive and customer service is excellent.
Excellent friendly service always. We have used Foreign Currencies Direct for many years and always get an excellent rate and service. Can’t fault them.
Everything was managed perfectly. I felt secure in my transaction with foreign currency direct. Nothing was too much trouble and I would certainly recommend their services.