Outlook for currency rates this week

By Matthew Boyle

This week is particularly busy for data with Eurozone inflation on Tuesday, the US Federal reserve interest rate decision on Wednesday followed by the Bank of England Interest rate decision on Thursday.

The Pound has found itself under pressure in recent weeks as markets have scaled back expectations for further rate hikes. Last week saw the European Central bank hold EUR interest rates at 4%, and whilst this allowed the Pound to claw back around half a cent against the single currency in the latter part of the week, GBP/EUR rates remain close to a 7-month low. EUR inflation data on Tuesday will be closely watched by investors given its link to interest rates and will provide a key indicator as to the ECB’s ongoing stance.

Whilst the US Fed are not expected to raise rates on Wednesday and hold at 5.5%, the monetary policy statement is critical to market rates. Wars in Ukraine and Israel have pushed strength to the Dollar given its high liquidity and resulting safe-haven currency status and USD strength is expected to continue whilst conflict and global market uncertainty remain. Fed policy has been bullish to date with this tone is likely to remain, which puts pressure on other central banks to keep pace. Should however the statement confer a more reserved tone this might help benefit Pound buying rates.

Thursday is the key day for the Pound this week and again whilst rates are expected to be held at the current level of 5.25% the statement is key to GBP rates as markets and investors consider if the door is still open for more hikes in early 2024 or if in fact rate cuts should start to be priced in long-term.

With GBP rates sat at the bottom of a well-established range it does seem a concerning time for Pound exchange rates. Whilst there is a strong floor of support for the Pound currently protecting it, GBP/EUR data releases this week have the potential to see the Pound plummet if all are against its favour. Should you have an upcoming currency requirement speak to your consultant today to help avoid and remove unnecessary risk of adverse market movement and resulting increased potential cost.

Data This Week


10.00    EUR        Business Climate, Consumer confidence and Economic sentiment data

13.00    EUR        German Inflation Data

19.30    CAD       BoC’s Governor Macklem speech


01.00    CNY        PMI data

N/A        JPY         BoJ Interest rate decision and monetary policy statement

07.00    EUR        German Retail Sales

10.00    EUR        Inflation data

21.45    NZD       Employment data


01.45    CNY        Manufacturing data

12.15    USD       Employment change

14.00    USD       Manufacturing PMI

18.00    USD        Fed Interest rate decision and monetary policy statement


00.30    AUD       Trade balance data

12.00    GBP        Bank of England report, MPC vote and Interest rate decision

12.30    GBP        BoE Governor Bailey speech


12.30    USD        Nonfarm payrolls and earnings data

12.30    CAD       Unemployment data

14.00    USD       ISM Sercvices