By Matthew Boyle
This month has been a turbulent one – we have seen GBP>EUR rates at a 13 month high sharply then followed by the biggest drop in a single week since September 2020.
Since then it seems however rates have remained flat and stagnant. Concerns over the Astra Zeneca vaccine have seemingly passed, Lockdown measures have been lifted allowing pubs and shops opened again but yet the Pound has struggled to make any significant moves. It seems the Pound has now and at least for the short-term flatlined – trading sideways against the single currency and within a very tight range against the USD greenback.
Readers should take note as this is the calm before the storm and volatility will no doubt return shortly.
Next week we have the Bank of England Monetary policy report (May 6th) and some are suggesting that following the ECBs recent rumours that the ECB would taper their programme of quantitative easing the BoE will follow suit.
Essentially slowing the money printing presses down this would encourage the Pound to strengthen and so could break the current status quo and see rates rise.
As we know – markets often buy the rumour so we might expect to see rates begin to climb ahead of the meeting next week.
However this is just a rumour, and we mustn’t also forget that consideration must be given to UK interest rates and also the economic effect Covid has had over the last year now.
Today we have German GDP data and the EUR interest rate decision released at 9am so any unforeseen readings here could start the break of the deadlock.
So with the Pound keenly eyeing a breakout shortly should you have an upcoming transfer to make call your broker today for some guidance on how to help safeguard against rates going the wrong way for you.
Calling us costs very little but waiting to do so in current conditions could be a costly error.