By Michael Mitchell
The GBP-EUR exchange rate has traded fairly flat this week, moving within a narrow half-cent range, indicating relative stability compared to previous weeks. This calm is largely attributed to the lack of significant data releases, but that could change as the week unfolds.
Today’s UK inflation figures for September have been highly anticipated, with some experts even suggesting that softer-than-expected inflation could actually boost the Pound if long-end gilt yields ease. This challenges conventional wisdom that higher inflation typically strengthens a currency.
This morning’s release, has seen the CPI inflation figure for the UK come out at 3.8%, exactly the same as we have had now for three months. This has seen the rate for the Pound against the Euro drop about half a cent, on the assumption of a more likely interest rate cut from the Bank of England in the next 3-6 months.
Friday’s UK retail sales figures will also be closely watched, with forecasts indicating a significant decline, which could further weigh on the Pound against the Euro.
Meanwhile, GBP-USD has seen the Pound slip about a cent from last week’s level, driven by Dollar strength, fuelled by optimism around easing US-China trade tensions. This has also contributed to a recent drop in Gold prices. We have US inflation figures on Friday afternoon to round up the rest of the weeks’ data.
Additionally, ECB President Christine Lagarde’s speech will provide valuable insights into the Eurozone’s economic outlook and potential monetary policy decisions, keeping markets on their toes.
If you have any currency requirements before the New Year, it’s an ideal time to speak with your currency consultant so they can help you to navigate the tricky weeks ahead.