By Matthew Boyle
It has been a flat week for GBP against the two majors – EUR and USD with it trading within half a cent and a cent range, respectively. Last week’s Bank of England vote to hold interest rates in the UK at 3.75% has left the market at somewhat of a crossroads. Previously the Bank of England had suggested they would hold rates until the end of the year.
However last month’s surprising drop in inflation left some believing the Bank’s position may change towards perhaps reducing the headline interest rate. As the situation in Iran has once again escalated though, oil prices are on the up again and with that inflation will likely rise. Combined with the recent heatwave and resulting drought food prices will likely suffer which will also push the inflation basket up encouraging the BoE to raise rates.
The next few weeks could be critical for GBP rates as upcoming data releases could determine the path for the Pound for the coming months ahead.
For GBP/EUR and GBP/USD whilst both seem stable at present they remain at critical crossroads as the three central banks struggling with inflation trouble, unemployment, and rising food prices. To add the impact of the conflict in the Middle East flaring up and of course the war in Ukraine waging on.
Buyers and sellers alike may want to consider strategies to hedge risk through forward or limit orders – speak to your consultant who can offer you some guidance on this.
Next week looks like it may be a busy week with German and US inflation data released on Wednesday. UK GDP and US Producer Price Index data out on Thursday and US Retails Sales finishing the week on Friday.
All these releases could see rates shift, so if you have an upcoming transfer to make in the coming months speak to your Currency consultant ahead of time. We offer several ways in which you can secure currency, including booking currency rates in advance to help you make your money go further.
Today’s economic data
04.00 CNY Export and Import data
07.00 EUR German Industrial production data
13.30 CAD Net change in employment
13.30 USD Nonfarm Payrolls & earnings data