By Simon Eastman
The pound made some modest gains against the euro yesterday as the dollar clawed back some of its recent losses against both the euro and sterling.
The day kicked off with German producer price index figures which all came out below par, alongside UK average earnings, claimant count and unemployment numbers. The average earnings and claimant count all fell below expectations whilst the unemployment figure remained at 4.4 percent, which was forecast and left nothing for traders to move on.
The main event for data on Thursday was the Bank of England interest rate decision which came at lunchtime, but was no surprise to anyone, when they held rates at 4.5 percent with 8 of 9 members voting to keep rates stable whilst one went rogue, voting for a cut. A slightly hawkish result, but not enough to make markets think the Bank is shifting its sentiment on policy. The accompanying statement was noted as saying the BoE still have a “gradual” and “careful” approach when it comes to easing, especially noting increased uncertainty.
The pound had already made some gains against the euro before lunch, as the single currency found itself on the losing side of the currency seesaw we have been witnessing of late. The US dollar, on the other side was making back some of its recent losses, gaining half a cent from sterling as cable bounced off a key resistance ceiling overnight and nearly a whole cent against the euro at its peak of the day.
Sterling remained volatile against the dollar over most of the day’s trade, moving up and down within a half cent range, whilst GBPEUR continued to make slight gains after the Banks announcement, although, we only gained a little over half a cent, before reaching a resistance ceiling and moving back down, finishing just a quarter cent up by the close of trade.
Those with sterling in hand looking for that place in the European sun, took advantage of the brief gains and those who didn’t, would be worth chatting to one of the team today for some friendly guidance. With the Bank remaining close lipped about the future direction of interest rates and the focus on Trump and what he will do next, causing much of the ups and downs in the currency seesaw, the GBPEUR rates are being dictated by factors outside the UK and situations which are very hard to predict. The Russia/Ukraine and Israeli/Gaza ceasefires are shifting investor sentiment and whilst that is leaning towards risk averse, the pound is unlikely to gain much momentum.
Today we round up the week with final day of the EU leaders’ summit, UK Good for Knowledge consumer sentiment survey, Canadian retail sales, EU consumer confidence and a speech by Federal Reserve member Williams. Whatever your currency need is and whether its imminent or in the coming weeks or months, timing is key to making your money go further. Speak to one of the team today for some friendly guidance on your upcoming requirement.