By James Caley
Last week saw a continued upward trend in GBP, strengthening against the Euro. A notable spike occurred on Friday, pushing GBP to one of its highest levels this year. However, this movement was short-lived, as the currency quickly levelled out and returned to its previous range within about 15 minutes. This could have been triggered by a series of negative data releases from Europe. Despite similarly disappointing data from the UK on Friday, sterling did not experience the same downward pressure, maintaining its strength against the Euro.
It was a different story against the dollar which showed continued strength against the pound, finishing the week almost 5 cents lower than it started the month. This is great news for anyone looking to repatriate funds the UK but not so great for those who need to purchase dollars.
This week, there are no major data releases for the UK, so we will focus on external economic data that could impact sterling. Today, the IFO Business Climate Index will be released in Germany, measuring business sentiment regarding the current economic situation and expectations for the next six months.
On Tuesday, the US FOMC minutes will provide insights into the Federal Open Market Committee’s decisions on open market operations, including central bank money levels and the federal funds rate.
On Wednesday, Germany will release its GfK Consumer Climate Index, which gauges consumer confidence. A high reading is generally seen as positive for the Euro, while a low reading tends to be negative. Additionally, several key US data releases are due, including the Core PCE Price Index (the Federal Reserve’s preferred measure of underlying inflation), Durable Goods Orders (new orders placed with manufacturers for durable goods), GDP Growth Rate, Personal Income, and Personal Spending.
Thursday and Friday will be significant days for the Euro, with YoY inflation rates announced for Germany, France, Italy, and the Eurozone as a whole.
With some big changes recently to both GBPEUR and GBP USD its worth getting in touch with your currency consultant for friendly guidance and contract options to mitigate any risk of any adverse market movement.