By Tom Arnold
This week we have seen something of a rollercoaster for the Pound, with early week successes against the Euro, then wiped out as the week moved on, but some more positivity seeming to come back in as we reach the climax of the week’s trading today.
The backdrop to this is a wide range of key news points…
- In the UK, we are in political conference season, with the various opposition parties chomping at the bit to put forth the policy ideas to attack the government’s perceived failures.
- In Europe, we have ongoing political turmoil in France, with a new Prime Minister imminent and President Macron under intense pressure to hold together a stable government.
- In the US, the government is still in shutdown, with no deal to open things up imminent, and President Trumps focus very much elsewhere.
- In the Middle East, we have the first stage of President Trump’s peace deal for the Israel/Palestine war coming into effect and hopefully bringing an end to two years of conflict.
Economically there is less going on, particularly in the US with the shutdown in effect. We are seeing a continuing move into safe haven positions though as the global turmoil continues, which means a stronger Dollar, potentially weaker Euro, and the Pound caught in the middle.
Rates for those of you with Sterling in hand and a Euro requirement coming up, did see an improvement to month highs earlier this week, followed by a drop off, but do seem today to have pushed back up as the week draws to a close. On the Uk economic side of things much of the focus at present is on inflation and interest rates, with the upcoming Bank of England decisions on whether rates can be cut a key mover of the Pound.
Yesterday we got a further clue, when BoE policymaker Catherine Mann said “that the monetary policy must remain restrictive for longer to create an environment conducive to growth”. She went on to add that “inflation remains persistent and the outlook for growth remains modest”. Which is likely why we have seen a bit of a resurgence for the Pound since, with a lower chance of interest rate cuts broadly good news for Sterling.
There is almost no data of note out today, so the markets will continue to digest global news pieces, and current trends are likely to persist.
Make sure to stay in close contact with your account manager to be kept informed of what is happening and what the likely impacts are for your upcoming requirement, as well as the options open to you to remove the risk in a volatile market.