Outlook for rates this week

By Luke Dyson

Following on from last week we have seen sterling make some solid gains against the Euro. This pair has experienced high levels of volatility but sterling still holding its strength on its new found gains.

Against the dollar we have seen a decline due to dollar strength, from better than expected eco data. This dollar strength was across the board for all the majors.


With sterling now breaking above the top of its recent range-bound market for the euro, it seems this level will now operate as a support acting as a baseline buoyancy for sterling strength moving forward.

The Euro has been particularly vulnerable across the board, specifically against the dollar as a pair. Shedding 3/4 of a cent last Thursday and down 2.0% total since beginning of may, mainly off the back of regional stock market and US equity gains, and as a result of US leaders on course to reach a new fiscal settlement. It it believed the US federal reserve has the option to raise interest rates higher as a result of stronger than expected US economic data.

With the Dollar index now surpassing 103 this has had a significantly larger impact on euro strength than sterling’s, meaning a faster decline in EUR/USD  than GBP/USD resulting in steadier performance gains for the GBP/EUR cross exchange rate.

If you have an up and coming currency requirement to buy euros or dollars in the next few weeks, it’s worth considering taking advantage of the current rates. Both potentially very good times to buy – Euros at their cheapest point for the last 6 months. And for Dollars,  the GBP/USD market could weaken following more aggressive rate hikes from the Federal Reserve.

Economic data out this week

May 23rd 08:30 EUR – S&P Global Manufacturing PMI

May 24th 07:00 GBP – Consumer Price Index (inflation)

19:00 USD – FOMC Minutes

May 25th 13:30 USD – GDP

May 26th 02:30 AUD – Retail Sales

13:30 USD – Durable Goods Orders