Kwasi U Turn

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.