By Matthew Boyle
Last week was a busy one with both UK and Eurozone inflation data released. For the UK this saw a drop to 1.7% on Wednesday’s release from an expected 1.9% and under the Bank of England’s 2% target.
This undoubtedly will catalyse the Bank of England to cut rates early next month with markets almost fully pricing this in. Lower interest rate prospects saw investors sell the Pound and as a result it dropped around half a cent against the single currency and a cent against the greenback. However, The Pound quickly regained ground against the Euro on Thursday as inflation decreased to 1.8% from an expected 2.2%, causing the ECB to cut their headline interest rate by 0.25% to 3.25%. The effect of this saw the Euro weaken and GBP>EUR rates push to the peak of the highest level seen in the last 2.5 years.
However, it failed to push higher, and like so many times previously bounced off the ceiling, and starts the week half a cent down from the 2.5 year high. With the Budget in 9 days and the BoE set to cut rates next month downside pressure will no doubt be on the Pound now. And for the USD the US election result on November 5th will see certainty resume across the Pond and the greenback potentially gain strength. With seemingly tricky times ahead for the Pound speak to the team at A Place in the Sun Currency for some guidance on how to remove risk and make your money go further.
This week’s economic data
Monday
18.00 USD Feds Kashari & Schimd Speech
Tuesday
01.00 USD IMF Meeting
14.25 GBP BoE Governor Bailey Speech
20.15 EUR ECB President Lagarde Speech
Wednesday
15.00 EUR ECB President Lagarde Speech
18.00 NZD RBNZ Givernor Orr Speech
Thursday
08.30 EUR Manufacturing And Services PMI
09.30 GBP Manufacturing And Services PMI
14.45 USD New Home Sales
Friday
00.30 JPY Inflation Data
15.00 USD Durable Goods Orders and consumer sentiment