By Kian Songra
This week sees a quiet one in terms of UK data. The global IT outage dominated the headlines towards the end of last week. The start of this week brings a new shock, that Joe Biden has decided to step down in the upcoming election. Investors will look to absorb this news and the true impact on the currency markets remains to be seen.
A global stock market dip is weighing heavily on the pound, reminding us that the stars can’t always align after a stellar performance in 2024 thus far. Sterling’s winning streak against the Euro and Dollar has faltered amidst a selloff in global equity markets as concerns grow that a trade war between the US and China is heating up. Friday’s weak retail sales figure for the UK could also add to the market pegging back recent highs. Stock market losses on Friday deepened amidst a major global IT failure, weighing on the Pound against some of its major peers.
With Joe Biden announcing his withdrawal from the upcoming US elections in 4 months, there could be ramifications for the dollar as the market will look to see how this announcement fares. This historic announcement will cause uncertainty for the US and so increased volatility could be seen in the currency markets this week. The polls for the upcoming presidential race may swing further and so Republicans may be more threatened by the uncertainty of who will be the next leader for the Democrats. Those with dollar requirements may look to remove any unknown variables to create peace of mind for your upcoming purchases.
Taking nothing away from the current trading levels, as the pound is still well positioned against the dollar and euro, with rates in and around the 2 year highs. This week’s minimal data releases could mean any news event could have a greater impact on the markets. With this is mind, it could be worth considering your options in securing your currency and locking in the rate ahead of your upcoming purchases.
We see Canada release their interest rate decision on Wednesday, with the market predicting that the Bank of Canada will look to cut by another 25 basis points to 4.5%. Those with Canadian dollar requirements should closely monitor this reading, with any unexpected announcements typically causing increased rate movements.
With the week ahead and the shock announcement across the pond increasing uncertainty in the currency markets, keep in close contact with your dedicated currency consultant to assess your various options to suit your circumstances ahead of your purchases.
Remaining data this week:
Monday
– German Euro retail sales
Tuesday
– ECB Lane speech
Wednesday
– BOC interest rate decision
– German Manufacturing, services and composite PMI
– Eurozone Manufacturing, services and composite PMI
Thursday
– US GDP
Friday
– US Core PCE price index
– US Personal Income