There has been an abundance of positive data regarding the UK economy of late. The FTSE 100 closed at a record fifteen year high on Monday and even usually so called negative data such as a drop in inflation can be seen as a positive. The purpose for the drop being caused by a fall in oil price and a decrease in energy costs. Core inflation has actually risen and with a large increase in the average wage the general public is starting to feel they have more money in their pocket.
The inflation problems in the Eurozone coupled with the lack of resolution on Greece’s debt has caused GBP/EUR to hit the high 1.36’s. The question is how long will the rally continue?
Although the problems in the Eurozone are not going to be resolved in the near future, it is important to bear in mind that the general election is looming and historically during periods of political uncertainty the currency in question will drop in value.
If you are a Euro buyer it may be wise to take advantage of the current seven year high. Holding on for that extra buck could prove costly.
Short term data releases that could cause volatility are UK GDP (Gross Domestic Product), German unemployment and LOTR (Long Term Refinancing Operation) figures released later today.
GDP is a very comprehensive measure of how the UK’s economy is performing. Any rise or fall could have a significant effect on Sterling value.
Germany’s unemployment data released later today could cause movement as they are one of the key players in the Eurozone.
The ECB’s (European Central Bank) long term refinancing operation is a process by which the ECB provides financing to Eurozone banks. The aim of LTRO is to provide a cushion of liquidity for banks holding non liquid assets. Any change will cause a shift in Euro value.
If you would like to make a transfer before these announcements take effect please do get in touch by contacting me on firstname.lastname@example.org .
Janet Yellen, the Federal Reserve Chair had a rather dovish tone yesterday during her testimony regarding the US’s current economic situation and monetary policies.
She has stated it will be a while before the Open Market Committee will consider raising interest rates citing that stagnant inflation is the reason for caution in regards to a rate hike.
Any indication of change in interest rates will cause significant swings in the Currency market.
US CPI (Consumer Price Index) data is released today and is a key indicator in the measure of inflation. These figures combined with the Durable Goods figures also to be released could cause significant movement in Cable.
US GDP figures are due out on Friday and as stated earlier they can be a big market mover. It may be wise to move before this data makes an impact.
If you are a USD buyer why not take advantage of Sterling’s current rally over the Dollar. If you are yet to open an account with Foreign Currency Direct why not put yourself in a position to trade?
The key data release this week for CAD is today’s CPI data for January. I expect there to be a drop which potentially will cause CAD to weaken.
This could be a major cause of concern as the RBC (Royal Bank of Canada) has already taken steps to encourage spending by dropping interest rates recently. This is good news for CAD buyers as Sterling continues to gain strength against the loonie staying course on the upward trend since December.
If you are a CAD seller it may be time to move. Why not get in touch with one of our experienced Brokers for a more detailed discussion on the matter by calling free phone on 0800 328 5884.
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