This is a major week for Sterling exchange rates as the Bank of England meet Thursday to discuss their latest interest rate decision. The market report below looks into the issues impacting Sterling rates at the moment in what could be a volatile week. The table below shows the range of a number of exchange rates during the past month, showing the importance of timing your transfer correctly.
|Currency Pair||% Change||Difference on £200,000|
At the same time released is the latest Quarterly Inflation Report followed by a Press Conference by Bank of England Governor Mark Carney. With uncertainty over the exact direction the Bank will take, Sterling should be in for a volatile week.
With the main consensus appearing to be that yes, the Bank will raise interest rates on Thursday, how will the Pound react? In my view the Pound will only rise sharply if we see a very positive Bank of England, hiking now and laying foundations for further hikes in the future.
However, given the Banks hesitation to hike previously, I feel a dovish hike or no hike is most likely. A dovish hike would be a raise accompanied with much caution and no clear direction on any future hikes. Such an outcome should see the Pound lower as would no hike.
Any possible good news from a hike could ultimately be short-lived for the Pound with Brexit induced storm clouds looming.
Michel Barnier, the EU’s chief negotiator in Brexit talks, shot down Mrs May’s Chequers customs plan leaving once again, a major gap between what the EU is offering and what the UK might expect from Brexit.
The UK is still suffering from a lack of clarity in its approach and Mrs May’s position remains precarious. Brexit day is March 29th and there is still a long way to go before we will know exactly what Brexit will mean.
The pound may well receive a boost from the Bank of England on Thursday but markets and regular trading clients will be very accustomed to the uncertainty that comes from the currency markets and relying on a projected outcome.
Wednesday to Friday also sees the release of the latest PMI, Purchasing Managers Index data. Expectations are for small declines, heaping yet more pressure on the Pound. If you have a Sterling position buying or selling, this is a key week with a high chance of market volatility. To keep up to date with the latest news please contact your account manager to discuss your positon.
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.
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