Mixed week for the Pound

By Ashley Finill

It’s been a fairly mixed bag of a week against the majors for the pound as we break into the first week of October, with only few data releases to have a real shake up in the currency market. The GBP/USD market has been quite volatile, although trading within a 2-cent range. GBP/EUR’s trading has been much tighter and seen little movement trading within a half a cent range all week. After Sterling’s dismal performance against the majors in September, dropping nearly 2 cents on the euro and over 3 cents on the US dollar, the pound could really do with some help to kickstart any real recovery against the majors and will be looking for some help from UK data releases this month to bring back some stability. But could the slowly recovering UK economy continue to hinder any gains for sterling for the remainder of 2023. This morning, the pound has had a marginal boost as Houses Prices Data in the UK came in at 0.4% better than expected at -0.4%, up from last month’s -1.8%, showing that pricing for UK property is starting to drop, albeit marginally. Volatility in the USD markets is likely to continue today as the US will announce their unemployment rate at 12.30pm, the figure is expected to make the slightest of contractions to 3.7% from 3.8%, should this figure be way off then we can expect some market movement throughout the afternoon which could also affect the GBP/EUR market. Should you have a requirement today it may be prudent to get in touch with you currency consultant ahead of this release. Those of you with CAD in hand or looking to sell may want to also stay in touch as the unemployment rate in Canada will also be announced at 12.30pm.

HS2 U-Turn, Sunak Promises Investment into UK Economy

This week the UK prime minister Rishi Sunak announced that the government will now scrap the Manchester leg of HS2. After spending of billions of pounds on the project and years of planning the government have now made a U-turn and has said that the money will be better spent elsewhere especially given the current state of the economy in the UK and promises to re-invest the billons of pounds that were to be spent on HS2, back into the economy and delivering important infrastructure for the country in the future. Given the Pound’s current frailties, it could do with a much-needed boost and although Sunak’s speech was all about delivering positivity and optimism this had little to no effect for the unstable pound against the Euro. Sterling is in much need of support as the BoE’s recent interest rate hike pause which had been supporting the pound of the last 18 months has started showing cracks for the pound as the currency has been trading at the low’s last seen in May of this year. September’s inflation data when announced later this month will be very important for Sterling going forward. Should the inflation figure stall or increase then the BoE may once again intervene. The government’s projected inflation target of 2% by the end of the year is a way off and with the figure only falling by 0.1% last month it is very unlikely to reach anywhere near 2% within 2 months. Questions will then be asked to the government and with the election potentially only 12 months away, the Conservatives who a party were once known for bringing stability to the economy, are struggling. With poll already suggesting a party change at Westminster could be upon us, will the uncertainty within UK Politics come back to haunt the Pound?