By Matthew Boyle
Last week saw GBP>EUR rates sink to a 6 month low, as lower-than-expected UK inflation data increased speculation on the Bank of England cutting interest rates sooner than expected.
This drop-in rates against the single currency is concerning as we have now broken down and outside of a well established range in which GBP/EUR has been performing for many months.
With this floor now, gone downside pressure on the rate will meet little resistance with the next floor of support at around 1% lower than where the rate sits currently.
On Wednesday, the Autumn budget may push GBP strength if Sunak and Hunt are able to do a job at convincing markets of a speedy UK economic recovery. It is likely the budget will be strong, measured and well delivered as the Tories will want to avoid the catastrophe as was seen during Liz Hunt’s leadership.
GBP>USD rates pushed to a month high last week as weaker than expected USD jobs data combined with a low inflation figure have seen the previously soaring Greenback give back some ground. Tuesday’s FOMC minutes and durable goods data on Wednesday are the driving data releases which will likely set the tone for USD rate this week. However, it is production and manufacturing data on Thursday and Friday that will be the market’s main focus as the Pound, Dollar and Euro go head-to-head. In what looks to be a busy end to a quiet week for data, speak to us at A Place in the Sun Currency for the latest updates. With GBP/EUR having broken an established floor of support and GBP/USD on month+ highs, now may be a good time to secure required funds and remove market risk.
Data this week
Monday
13.45 GBP BoE Governor Bailey Speech
23.00 AUD RBA Governor Bullock Speech
Tuesday
00.30 AUD RBA Meeting minutes
12.30 CAD BoC Consumer price index
21.00 USD FOMC Minutes
Wednesday
08.35 AUD RBA Governor Bullock speech
09.30 GBP BoE Monetary policy report Hearings.
12.45 GBP Autumn forecast statement
13.30 USD Durable Goods data
Thursday
08.30 EUR German PMI data
09.00 EUR Eurozone PMI data
09.30 GBP PMI data
12.45 GBP Autumn forecast statement
1.45 NZD Retail Sales
Friday
00.01 GBP Consumer confidence
07.00 EUR German GDP data
14.45 USD PMI data