New month brings fresh starts and data

By Ashley Finill

As we come into a new month of September, we start to see the summer come to an end and the holiday season draws to a close. Schools resume with the start of a new academic year, also back are the MPs from their summer holiday as parliament will be back in session with the first prime minister’s questions to take stage at Westminster on Wednesday of this week. Also, those of you with property purchases overseas may have a need for currency as agencies and solicitors re-open from their summer holidays. More key to the currency market, we also see a lot of new data releases throughout the month which no doubt will shake up the markets and create volatility, which will impact anyone who has a requirement for euros, dollars, and other currencies. Over the past few months, we have seen a very range bound market for GBP/EUR as the pair have been trading within a 2-cent range with Sterling repeatedly trying to test the ceiling only to find itself back where it started only within a few days of trading, which shows the currency market’s frailties and sensitivity to economic data releases. Sterling throughout this year has been hindered and held back by the poor performing economy in the UK, as the country continues to battle its way through the cost-of-living crisis and as we move into a new month there is a raft of key data releases, like inflation figures and interest rate decisions announced in the UK, EU and US to take note of which will almost certainly affect your currency potential should you have requirements this month.

Global Economies to Continue to Dictate Currency Market

As mentioned, key data will be released all through September which will give more of insight to how the world economies are faring, after huge inflation increases throughout 2022/2023 due to the COVID-19 pandemic and conflict in Ukraine inflicting huge price increases on commodities and leisurely activities which have stretched pockets across the board. With inflation starting to drop prices are, they say, starting to even out. Although in the UK the cost of living remains very high with food, energy, and other products still heavily inflated. Jeremy Hunt gave an interview to Sky News yesterday ahead of the return to parliament to reassure that the government are still very confident that their plan to reduce the rising prices in the UK is working and will soon ease the financial strain on UK households. Inflation has eased back to 6.8% from a recent peak of 11.1% last October but is still far from the Bank of England’s 2% target. Should inflation stall or not fall on its predicted trajectory then could we see the Bank of England once again step in and raise interest rate for a consecutive 15th time later this month on the 21st of September. The decision will almost certainly affect Sterling’s continued recovery against the Euro and US Dollar; could it be doom or gloom for the pound come the 21st or could Sterling finally break through the ceiling and bring with it a new trend and high for 2023. Should you have a more risk-averse approach then it may be worth considering our forward contract option which minimises the risk of the currency market moving against you should the Pound take a dive. Speak to your currency consultant today for more information and friendly guidance.

Data This week

A quiet start to the week today, the only notable event is a speech by ECB’s president Christine Lagarde, she could give an insight on how the central bank is feeling on further interest rate increases. Overnight tomorrow, Australia announces their interest rare decision which is predicted to remain at 4.1%, any increase is likely to see volatility in the AUD markets. At 9am, producer price index in released in the EU which is expected to come in worse off than lasts months figure of -0.4%. Wednesday see a busy day for data. Overnight, Australia post GDP which is expected to post a marginally better figure of 0.3% from 0.2%. At 9am, a likely market mover early door as .the Eu release retails sales which is expected to be a more positive figure from last month’s low recording of -1.14%. In the afternoon, the US post ISM services PMI. Going north as Canada release their interest rate decision which is expected to remain at 5%. Over to Thursday and again overnight Australia release imports, exports, and trade balance. In the morning, the BoE Monetary policy report hearings will be out at 8.30am. at 9am, the EU release employment change and GDP. In the afternoon Canadas Central Bank Governor Tiif Macklem speak. Finishing the week off and only a couple of notable releases as in the morning at 6am in Germany Harmonised index of consumer prices is to be released and in the after the unemployment rate in Canada is posted at 12.30pm.