October could prove an interesting month for sterling exchange rates with the Brexit deadline set for the 31st October. This was an extension to the March 29th exit date, the previously agreed date for the UK to leave the EU with or without a deal.
Parliament has voted to force the British Government to go back to Brussels and request an extension, however at the time of writing the legal position is that the UK will leave the EU on the 31st, since no extension has been agreed, nor is a deal in place.
A key event for Brexit and the pound looks set to be the 17th and 18th October EU Summit, where we will learn of the latest developments in any negotiations between the British Government and the EU.
Sterling has generally reacted negatively to any signs of a no-deal Brexit, as it indicates uncertainty in the economic and political direction for the UK. Signs of an extension or deal being reached have generally been positive for the pound, as it makes it less likely there will be disruption to UK business.
Brexit is likely to continue to play an important role for the pound but other events globally may influence the currency market and other pairings. The 1st October is the Reserve Bank of Australia (RBA) Interest Rate decision, which can often be influential on the Australian dollar, as the raising and lowering of interest rates is key to a currencys strength.
A higher interest rate usually makes a currency stronger and therefore more attractive to hold and, whilst a lower rate makes a currency weaker and less attractive . The RBA has been cutting rates in 2019, and there could be more cuts ahead according to some of the recent commentary.
The European Central Bank (ECB) holds its European Interest Rate decision on 24th October which may prove a time of interest for the euro and GBPEUR exchange rates. At the last meeting, the ECB cut its interest rate, and with this being Mario Draghis last meeting before Christine Lagarde joins as the new President and first female leader of the ECB, there may be added focus.
Other interest rate decisions in October to be conscious of are the Wednesday 30th US Interest Rate decision which has been attracting attention as the US cut interest rates too. On that same day the Canadian Interest rate decision is announced. With the UK destined to leave the EU on the following day, this may be an increasingly volatile time for GBPCAD and GBPUSD exchange rates.
Globally, a series of interest rate cuts in 2019 have indicated slowing global growth and prompted increasing talks of possible recession ahead. The beginning of 2019 saw many Central Banks indicating that they might raise interest rates this year, only for increasing concerns on waning growth and the effects of the Trade Wars to put such plans into reverse.
Below are the key dates during the month of October that have the potential to impact exchange rates along with the currency theyre likely to have an impact on.
Tuesday Oct 1st – AUD – RBA Rate statement and Interest Rate Decision, EUR CPI, GBP UK Markit and Manufacturing PMI, USD, US ISM Manufacturing PMI
Friday Oct 4th – USD – US NFPR and Unemployment
Wed Oct 9th – GBP – NIESR GDP estimate, USD US FOMC Minutes
Thurs Oct 10th – GBP – Industrial and Manufacturing Production data, Trade Balance, EUR ECB Minutes, US CPI
Fri Oct 11th – CAD – Unemployment, EUR German CPI
Tuesday Oct 15th – AUD – Chinese CPI, UK Unemployment, UK CPI
Thursday 17th / 18th – GBP/EUR – EU Summit
Thursday Oct 17th – AUD – Employment Change and Unemployment rate
Fri Oct 18th – AUD – Chinese GDP
Tuesday 22nd – AUD – RBA Meeting Minutes, CAD Retail Sales
Wednesday Oct 23rd – NZD CPI
Thursday Oct 24th – EUR – ECB Interest Rate decision and Policy Statement
Tuesday 29th October – AUD – Inflation data
Wednesday 30th October – EUR – German CPI, CAD Interest Rate decision, US Interest Rate decision
Thursday October 31st – GBP – Brexit deadline, EUR GDP and Unemployment
If you are considering a currency transfer, buying a property abroad or looking to bring funds back to the UK from overseas, 2019 has a number of potential events which could create some excellent opportunities for well-prepared buyers and sellers.
In any event, our currency experts are on standby to answer any of your questions, so feel free to call our trading floor on 01494 725 353 if you would like to discuss a transfer.
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