By Paul Newfield
This week has seen a very flat Pound to Euro rate, with it only moving within a half cent range – the GBP-USD rate on the other hand has moved within a cent of the high and low, but this could change as we have the US interest rate decision later today – higher inflationary pressures in the US could see a hike, but this is unlikely until later in the year, assuming the current geopolitical situation remains unresolved. Oil, gas and food prices remain on the increase worldwide, but particularly in the western Europe area and the US.
With little else in the way of economic data today, tomorrow will see a lot of GDP, interest rate and inflation figures from individual EU countries including Spain, France, Germany, Italy, the EU / ECB and the UK, who’s Bank of England will be publishing the interest rate decision, minutes and the vote on whether to hike the rate or not. It is expected that a unanimous or near-unanimous vote will see no hikes or decreases so, any deviation to this may see rates move more than expected, particularly as the ECB shows its hand with their interest rate decision just over an hour later.
Interest rate cuts were expected later this year, but a reversal in recent events and with higher inflation, it seems far more likely that hikes may now occur later in the year. The weak and controversial political landscape in the UK, which would ordinarily weaken the Pound is moot, as levels have been kept up due to escalating inflationary figures.
Tomorrow again is relatively quiet with only mortgage approvals in the UK and ISM manufacturing in the US to round off the week. Remember, a weaker USD means a stronger Euro and worse rates if you are buying a property in Europe.
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