Sterling has recently had a turbulent time against a host of currencies, notably the Euro having lost in excess of 2% in the past week. This makes a difference of €5,300 on a £200k money transfer.
Looking at the recent trends against some other majors and some significant swings have also been seen. GBP/AUD in particular seems to be very hard to forecast and each time the pound takes one step forward it takes two back very quickly, in fact the range in the past 30 days sits from a high of 1.886 to a low of 1.835, over 2.5%.
Similar trends can be seen against currencies such as the CAD having shifted from 1.8650 to 1.81 (3%) and the NZD having shifted over 4% in the past month ranging from 2.0215 to a low of 1.942.
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With the pound having lost value in excess of 2% those clients looking to secure funds in excess of 1.21 and beyond have had somewhat of a shock in the last week. For me I feel this dip is temporary and some of the softer data sets from the UK may be as a direct result of the recent adverse weather conditions in the UK and it will be interesting to see what impact this will have on official GDP data at the end of the month.
Looking at data sets to watch out for in the coming week, yesterday’s ECB monthly report indicated that the latest ECB projections, now covering the period up to the end of 2016, support earlier expectations of a prolonged period of low inflation with levels to naturally fall in line with the banks 2% target.
However should the levels of inflation remain low, and certainly below the current 0.8% then Draghi may have no option but to look at cutting interest rates to combat deflation, this is something that is likely to keep pressure on the Euro and on this basis I feel current levels could be an opportunity for Euro sellers.
For me the next major impact for this pair, particularly from the pounds point of view, will be next Wednesday’s Bank of England minutes. This will give a full review of the latest interest rate meeting from the Bank of England’s MPC and clues as to when they may consider raising interest rates. Any hint towards this and it could prove a positive morning for the pound.
Also watch out for today’s trade balance figures. Expectation is for -£8.7bn, any improvement on this and this could lend support to the pound. Figures are released at 09:30.Contact your broker here to discuss the timing of your exchange.
Recently cable (GBP/USD) has seen a slight move in favour of the dollar pushing back into the 1.65s for the first time in over a month, is this the start of a reversal in fortunes for the dollar?
Yesterday’s retail sales figures came in at a positive 0.3% slightly improved from the forecasted 0.2% and way up on last month’s -0.6% figure. However as a result the dollar has weakened, a surprise based on this release? But Why?
It would appear the moves have come as investors are looking at riskier currencies such as the Aussie and Kiwi and moving out of the safety of the greenback.
Today is relatively quiet day for the dollar with PPI inflation figures at 12:30, with the next major data release Wednesday next week with the FED interest rate decision and accompanying statement.
Sterling’s unpredictable run against these currencies continued yesterday as the pound posted losses in excess of 0.5% against both. Moves came following strong employment figures on Wednesday night and still appear to be benefitting from increased risk appetite from investors following the ECB’s reluctance to cut interest rates to ease deflationary pressures.
This move has been even more surprising considering the softer data from China with industrial production falling from 9.5% to 8.6% and retail sales down from 13.5% to 11.8%. With the Australian economy heavily reliant on Chinese demand for their raw materials poor data like this would usually cause a large sell off for these currencies again highlighting how unpredictable this current market is.
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