By Ashley Finill
All aboard the Sterling Rollercoaster
Sterling continues its rollercoaster ride on the currency market this week as the pound remains highly volatile throughout this week’s trading as Sterling starts to claw back its losses. Last week saw sharp losses across the board for the pound, by close of trading on Friday afternoon Sterling had lost nearly 3 cents against the Euro, these losses were felt during a 72-hour period throughout Monday- Wednesday without warning, due to Andrew Bailey the Governor of the bank of England suggesting there will be no further interest rate increases. With inflation rising at alarming rates in the UK raises rates helps to curb inflation but with the bearish stance from the BoE on a hike the pound may potentially be in for further woes in the long term. That being said Sterling has gained some ground on the Euro presenting an opportunity for buyers.
Russian Start to pullback from Kyiv
We’re now six weeks into Russia’s invasion of Ukraine and it’s reported that Russian troops have withdrawn from neighbouring areas of Kyiv as the army looks to be pulling back as Ukraine held strong in Kyiv thwarting the capture of the country’s capital. As the army beings to pull back the atrocities of war of are coming to light, with Russia now it would appear to be committing unimaginable war crimes. This has led to further sanctions being imposed on the Kremlin this week and the US pledging $100m worth of missiles to Kyiv to bolster its defence further. With NATO allies all imposing sanctions on Russia, the Kremlin is responding in cutting gas from mainland Europe should their gas not be paid for in roubles from a Russian bank account to rebuild their economy. This has given the Rouble a boost returning to levels on the USD seen before the war and has seen the Euro slump as the EU fares worst from the Kremlin’s counterattack on sanctions as they rely heavily on Russian gas supplies. The situation in Ukraine remains uncertain but what we do know is that it is for the most part is dictating the currency market which has created such unpredictability and uncertainty which is not Sterling’s friend. If you have a requirement for Euros over the coming months, it may be prudent to start thinking about your options regarding currency so that you are not caught out in the ever-changing market. We are currently still trading at very good levels for GBP/EUR but as seen last week these advantageous positions can be lost without warning resulting in an increase in the price of your property.
GBP/AUD – Potential Aussie interest raise boosts AUD
Those looking to sell Australian Dollars should be rubbing their hands together as Sterling dropped to four years lows against AUD. This is after the Reserve Bank of Australia indicated that it could meet market expectations and raise interest rates in Australia. If you are looking to sell Australian dollars back to Sterling then now may be a great opportunity to take advantage of the current lows. The Australian dollar has gained nearly a whopping 20 cents on the pound over the past 2 months, in monetary terms bring exchanging $100k today as appose to the start of January would get you an extra £5k.
Data this week
This week has been somewhat quiet on the data front with little to note. Members of the ECB committee do make some speeches today which may cause some volatility if they speak of interest rate hikes although this is not expected. At 6pm in the US the FOMC minutes are released which could cause some late ripples in late market trading. Overnight Australia announces their trade balance figure and imports and exports data. At 9am the ECB post retail sales which could cause some volatility early doors of Thursday morning. In the afternoon at 12.15pm BoE member Huw Pill will speak and may give more indication on the BoE’s rate hike stance. Lastly on Friday the only notable event is the unemployment rate in Canada which is expected to make an ever so slight contraction from last month’s 5.5% reading to 5.4%.