By Simon Eastman
Sterling had a good day Tuesday, as markets continued to speculate over interest rate rises here in the UK.
We have the Bank of England meeting tomorrow where its widely expected they will raise UK interest rates again, this time by 50 basis points. Over the last week, we have seen the pound do much better than it was, rising a couple of cent against both the euro and the US dollar as markets priced this rise in. Although nothing is certain, and the leadership race brings uncertainty to the UK politically, which has kept rates from making further gains, and backtracking on days of late, there are some really good opportunities for buyers to lock in at present.
Yesterday was no different, seeing a peak on GBPEUR and GBPUSD for anyone with such requirements, as markets speculate whether we will see further interest rate rises if Truss becomes the next PM, considering the tax-cutting agenda she is promoting.
Cable rates did fall back as trade closed, as safe haven trading came back into the fore, triggered by Nancy Polosi arriving in Taiwan ahead of talks. China has previously threatened repercussions should this event happen, so investors’ risk appetite retreated once news broke that she had landed on the self-governed island which China claims as its own. The coming days will be interesting to see how that pans out, but anyone with a US dollar requirement might be prudent to jump in sooner rather than later, especially given how low cable has been in the last few weeks.
Wednesday brings German trade balance and EU retail sales in the morning, ahead of factory orders and services PMI from the US in the afternoon. Although key releases, its likely events in Taiwan might be ruling trader sentiment, so watch out for risk averse trading ahead of the BoE meeting Thursday lunchtime, as the pound is considered a risky asset, so may not fare too well. Keep in touch with your dedicated currency consultant here to discuss your imminent requirements or call us for some friendly guidance on any future plans to discuss all your options.