The Pound has been a victim of its own recent success, with the subsequent results now coming back to bite.
UK Factory Orders released yesterday showed a drop to the lowest figure for 2 years, confirming fears that UK exports are starting to struggle. The key factor for the reduced figures is the strong pound over the weak Euro, essentially meaning Eurozone partners are being priced out of the market. Factory output is currently reported as being at 2008 levels – a cause for concern.
We have seen in the past the BOE (Bank of England) act swiftly to boost export opportunities by ‘talking down’ the value of Sterling. I therefore wouldn’t be surprised to see Mark Carney (BOE Governor) make this move sooner rather than later to bring the Pound down – potentially in his address on Friday at 08:45.
UK ‘Consumer Price Index’ (Inflation) figures are released at 09:30 this morning and again a slight reduction is expected. Inflation is moving further and further from the set target of 2.0%. The main reason Inflation is struggling to hit target is primarily the incredibly low international oil prices, lowering the cost to the UK household for fuel. I wouldn’t be surprised to see the Pound again weaken so ensure that you are ready to act swiftly if you haven’t already.
The overwhelming point to consider for anyone holding Sterling is that we are about to enter potentially the most volatile trading period for 5 years. The UK General Election is essentially wide open with an outcome incredibly hard to predict. Parliament is set to dissolve on Monday 30th March, so expect the Politicians now free to hit the campaign trail to do so with vengeance!
German Chancellor Angela Merkel met yesterday evening with Greek Prime Minister Alexis Tsipras to discuss all things debt.
It is clear that even though extension to certain bailout payments have been granted, Greece is still struggling financially and is pulling out even the most drastic measures to change that.
With the Greek Bailout situation potentially back in the limelight, Euro buyers should ensure that they are watching their position.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here
Following last week’s bold move in to the mid-1.40s, Dollar buyers have seen a slight improvement.
Janet Yellen (Chair of the US Federal Reserve) indicated that, ‘Policy makers aren’t rushing to raise Interest rates’.
This has seen the Dollar lose the gains made, and puts a big focus on to data releases this week for those with a USD exchange.
This afternoon the US releases Inflation data (12:30) and tomorrow afternoon Durable goods figures (also 12:30).
The week is capped off on Friday afternoon with the US Gross Domestic Product figure so all in all still a very busy week for the Greenback.
That being said rates do not move in a straight line. Touch base with your trader to make sure you have every pair of eyes on the market possible!
The New Zealand Dollar has seen a huge improvement over the last 30 day (as noted in the above table), gaining back roughly 10 Cents against the Pound.
The Reserve Bank of New Zealand announced on 12th March that Interest rates were not going to be cut on this occasion, and more recently a primary Kiwi Bank (NAB) have been very ‘bullish’ in their Exchange Rate forecast. NAB has indicated that due to good returns harvested from investing in NZD, the NZ Dollar should have a period of strength.
However, this should be seen as a window, rather than the norm. Reserve Bank of New Zealand Governor Graeme Wheeler has the power to halt a rampant Kiwi Dollar by cutting Interest Rates so I don’t think it will be too long until a return north of the 2.0 mark is seen.
If you are Selling Kiwi it may be worth making a move…
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