By Paul Newfield
As we reach the end of another eventful week, it’s time to take a look back at the previous days and what may be in store for us next week.
Monday, we saw a half cent improvement on the previous week for GBP-EUR, although the Pound saw a slump against a strengthening US Dollar.
Tuesday saw rates against the USD and Euro fall significantly, with respective 2-cent and three-quarter cent drops, Rachel from accounts gave a speech in which she appeared to be laying down the foundations of the least welcome budget in recent history, neither confirming nor denying predicted across-the-board tax hikes that many are expecting.
Mid-week was very quiet with rates largely flat, so it was up to Thursday and the UK interest rate decision to set things in motion again. Surprisingly, even with a 5-4 vote in favour of keeping the rate locked at 4%, with four of the MPC members voting on a rate drop to 3.75%, the Pound, after a brief bit of up and down, settled back at the level it has been for the last couple of days.
The likelihood of an interest rate cut before the end of the year now stands at “very likely”, which is “very likely” to put further pressure on the Pound, with worsening levels against all other major currencies. This, the likelihood of further rate cuts, and the longer term outlook off the back of the ‘budget of doom’ could well cause the sky to open up before the end of the year – make sure we are the metaphorical umbrella that helps shield you from the downpour, and make sure your potential currency gains don’t end up in the storm drain.
Rounding off the week we have already seen Halifax house prices that were predicted to come in better than the previous figures for both MoM and YoY. Any positive or above expectation levels will have likely bumped the pound, with the other way likely sending the Pound even lower. Later today we have US employment and earnings numbers – if positive it could, being optimistic, yield a slightly better GBP-EUR rate.
Next weeks major data releases are as follows:
Tuesday: UK employment
Thursday: UK GDP, US manufacturing/industrial production, CPI inflation
Friday: US PPI, retails sales, Eurozone GDP