By Tom Arnold
Last week the currency markets were dominated by the previous Friday’s “mini Budget” from Chancellor Kwasi Kwarteng, with the Pound under extreme pressure, posting all-time lows against the US Dollar and year lows against the Euro. In what could only be expressed as a complete rejection of the UK’s new economic ideas, the Pound experienced multiple-cent drops on a daily basis, with nowhere to hide, until the Bank of England stepped in mid-week, with a new bond buying scheme designed to shore up the markets, and primarily in the background, to help out some key pension funds who were flirting with insolvency.
As the week wore on Sterling was able to pull back some of its losses, as the Bank of England’s action, together with some poor economic data outcomes in both Europe and the US, gave the Pound some momentum.
Over the weekend the Prime Minister was interviewed on the BBC and seemed to be in more realistic mood suggesting she could have “laid the ground better” for her plans, and this has been followed this morning by the Chancellor u-turning on the 45p tax cut aimed at higher earners. There had been suggestions that there could be a Tory revolt in the Commons when the budget was voted through, so this is no great surprise, but is nothing short of devastatingly embarrassing for the new government’s credibility.
The week ahead has plenty of data across the globe for the currency markets to digest, with the pick of the bunch being the various PMI releases and on Friday US Non-Farm Payrolls.
Monday
UK Manufacturing PMI
EU Manufacturing PMI
US Manufacturing PMI
US FED Speeches
Tuesday
Australian Interest Rate Decision and Statement
EU Ecofin Meeting
EU Producer Price Index
US FED Speeches
Wednesday
New Zealand Interest Rate Decision and Statement
German Trade Balance
UK Composite & Services PMI
EU Composite & Services PMI
US Composite & Services PMI
US Employment Change
US Trade Balance
Thursday
Australian Trade Balance
UK Construction PMI
EU Retail Sales
US Jobless Claims
Friday
EU Leaders Summit
German Retails Sales
Bank of England Ramsden Speech
US Non-Farm Payrolls
Canadian Unemployment Rate
Please make sure to stay in touch with your currency consultant during these volatile times, to ensure you have the most suitable strategy in place to best take advantage of any positive market movement for your upcoming currency requirements.