By Matthew Boyle
It seems the Pound may be on its backfoot as we have seen both the USD and EUR gain ground over the last week. Federal Reserve Chair Jerome Powell stated on Friday at Jacksons Symposium the Fed would do “whatever it takes” to bring US inflation back under the 2% target, even if the cost was lower growth and unemployment. Despite some suggesting the Fed may slow in their aggressive monetary policy it seems therefore more interest rate hikes should be expected.
Markets also expect a rise of 75bp from the Euro this month to help curb rising inflation on the continent. This added with a fall in gas prices in Europe has meant since Friday we have seen the single currency gain over 1% against the Pound.
This could well spell short term doom for GBP. Given we have seen the biggest rate hike in 27 years, perhaps Sterling has played its Trump card?
As the USD continues to power on and the ECB’s own programme on Interest Rate hike starts to draw market attention, interest rate hikes by the Bank of England may not receive the interest from the market the Pound desires for it to strengthen and for rates to increase.
We could well have seen the Pound run out of steam and the tables turn now for it against the Euro.
Should you have an upcoming transfer to make, speak to your Consultant today for guidance on how you might reduce this increasing risk.
Economic Data this week
Tuesday
10.00 EUR Consumer confidence and business climate data
13.00 EUR German Harmonized index of consumer prices
14.00 USD Housing Price index
15.00 USD Consumer confidence
Wednesday
02.00 CNY Manufacturing PMI
07.55 EUR Unemployment data
09.00 EUR Inflation Data
12.15 USD ADP Employment change
Thursday
06.00 EUR German Retail Sales
09.00 EUR Unemployment rate
12.30 USD Jobless Claims
14.00 USD ISM manufacturing PMI
Friday
06.00 EUR Trade Balance data
12.30 USD Non-farm Payrolls