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Sterling still flying high – Will the trend continue?

The Pound had a really good week once again last week following a really positive press conference by Governor of the Bank of England Mark Carney.

Sterling surged against most major currencies for the rest of the week and is now sat at great trading levels for anyone looking to buy foreign currency in the near future.

The key question now is will the Pound kick on and have another positive week or will it now get scared of heights once again and drop back away again like we have seen so many times in the past?

The answer to this question really lies on what happens on Tuesday and Wednesday morning in my opinion.

Important data this week

Tomorrow morning we see the release of key inflation data for the U.K which could lead to a particularly volatile morning for Sterling exchange rates. At present the Government and the Bank of England appear to have inflation under control and expectations for a slight rise year on year may lead to possible speculation of an interest rate rise and could give the Pound a little spike.

Wednesday for me is the most important day of the week, as we see the release of unemployment data and the Bank of England minutes, both at 09:30am. Unemployment levels really have been one of the main talking points over the past few months as they are one of the key factors that may convince the Bank of England to start looking at moving interest rates.

Expectations are for the levels to remain at 7.1% however if levels are any lower than expectations then we may see Sterling react extremely positively.

At the same time we also have the Bank of England minutes due out which will show what was discussed at the last BOE interest rate decision. They will also show which way members of the MPC voted regarding any change in interest rates. Personally I do not feel we are a long way away from seeing the first member of the BOE vote in favour of a rate hike and should this become clear on Wednesday then the Pound could really shoot up in value.

An interest rate hike is generally seen as positive for the currency concerned and a cut negative so if there is even a hint that we are moving closer to a potential hike in any of this data this is why we may see Sterling head further north as markets do move on speculation as well as fact.

If you have a pending currency transfer to make involving either buying or selling the Pound then feel free to email me directly on djw@currencies.co.uk and I will be more than happy to keep you abreast of the latest market movements.

Australian Meeting minutes tonight

Another key piece of data due out early in the week is the RBA (Reserve Bank of Australia) meeting minutes. Much like the BOE minutes this information will show what was discussed at the last interest rate decision and whether or not they really do plan to halt any more rate cuts as mentioned in the last few weeks.

The most interesting factor is if they really are not planning to cut any more then are they now happy with the value of the AUD? It was only a matter of months ago that the RBA had been saying they would be happy to artificially weaken their currency so do they have another plan up their sleeve and will the AUD weaken overnight tonight?

Personally I still feel we are much more likely to see the GBP-AUD rate get over 2 during the course of 2014 as I do not feel the RBA is finished yet and they may have a few surprises up their sleeve, maybe we will get a hint or two on Monday night?!

If you would like to speak with one of our experienced and knowledgeable traders about any currency pairing then feel free to call us on 01494 725353 or request a call back here.

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