By Matthew Boyle
The Pound finds itself firmly in the spotlight this week as we see UK inflation data released on Wednesday followed by the Bank of England interest rate decision on Thursday.
Having tested the ceiling of a two-year high last month, downward pressure seems to be weighing on GBP in recent weeks.
All eyes will be watching the inflation number on Wednesday as an indication for what will be the BoE’s next move for UK interest rates.
Last month saw inflation rise from the 2% target to 2.2%, which in the short-term delayed the Bank cutting rates and with it kept the Pound strong. Following the European Central Bank cutting their own interest rate last week it is perhaps little surprise to still see rates at these peak levels. This could however be short lived as should Wednesday’s reading show a drop this will likely catalyse the BoE to recommence their programme of cutting UK interest rates.
Should the reading remain unchanged though the Pound may continue to ride close to these 2-year highs.
Undoubtedly though this week poses a risk to the Pound so readers with an upcoming Euro requirement may like to consider securing Euros in case rates should move lower. With the the first Labour Budget due next month with warnings from the government it isn’t going to be pleasant as they attempt to bridge a 22 billion pound ‘black hole’, could this be the last chance saloon for Pound buying rates at these levels? Similarly, against the USD as we near the American election it is expected the USD could regain some strength with greenback buying rates to potentially pull back also.
Should you have an upcoming requirement speak to the team at A Place in the Sun Currency for some friendly guidance on how we can help you manage the risk of rates dropping and the price of your place in the sun increasing.
Data This Week
Monday
08.00 EUR Italian inflation data
12.30 USD NY Empire State Manufacturing Index
Tuesday
09.00 EUR ZEW Survey – Economic Sentiment
12.30 CAD BoC inflation Data
12.30 USD Retail Sales
Wednesday
06.00 GBP Inflation Data, PPI and RPI data
09.00 EUR Index of Consumer Prices
18.00 USD Fed Interest rate decision & Monetary Policy Statement
18.30 USD FOMC Press Conference
22.45 NZD GDP Data
Thursday
01.30 AUD Employment Data
11.00 GBP BoE Interest Rate Decision, MPC Vote & Policy Report
Friday
06.00 GBP Retail Sales
12.30 CAD BoC Governor Macklem Speech
14.00 EUR Consumer Confidence