By Matthew Boyle
Last week was another tough one for the Pound, seeing it make new lows against the Euro and leaving buying rates the worst they have been in around 3 years.
Recent unemployment data showing the numbers in the UK out of work is continuing to rise, coupled with last week’s poor GDP reading, have left the Pound struggling ahead of the upcoming budget on the 26th.
Discontent amongst the public and within the Labour Party has given rise to a potential leadership battle within the government as Starmer seems to be living up to his title of the most unpopular PM ever.
Political uncertainty is not helping the Pound, and Chancellor Reeves’ announcement last week of a u-turn regarding income tax hikes has heightened concerns regarding public spending, given the huge budget deficit that needs to be addressed.
Markets and investors’ concerns are rising as to whether public spending cuts are imminent or if Reeves will break to fiscal rules allowing government borrowing. And with the UK bond market already pressured, a break of the fiscal rules would likely send concerns over security of investment in the Pound sky rocketing. With inflation data this week, the Bank of England could look to cut interest rates it looks a tough road ahead for the Pound and one which could see rates plunge even lower.
Across the pond, the Dollar remains strong despite the government shutdown and mounting unrest surrounding the release of the infamous Epstein files. Remaining relatively flat against both the pound and the single currency it is without doubt the Pound that takes centre stage as we creep closer to next Wednesday’s budget announcement. Now the federal shutdown has been resolved it is likely we will see some USD rate movement with its unpausing and the release of economic data again.
Given the sensitive nature of GBP/EUR rates, Dollar movement could well impact sterling rates also this week.
Should you have an upcoming currency requirement speak to your consultant today for some friendly and professional guidance.
Those with an upcoming requirement to buy Euros or Dollars may like to consider and discuss a forward contract option which could help you help you remove risk and make your money go further in these uncertain times.
Notable data releases this week :
Monday
11.00 JPY GDP data
10.00 EUR European commission growth forecast
13.30 CAD Inflation data
Tuesday
12.30 AUD RBA meeting minutes
13.15 USD Import and export
Wednesday
07.00 GBP UK Inflation data
19.00 USD
Thursday
13.30 USD Average earnings, unemployment data and non-farm payrolls
Friday
07.00 GBP Retail sales
08.30 EUR German PMI Data
09.00 EUR ECB Lagarde speech