Pound Still Under Pressure

By Ashley Finill

Last week’s comments from Andrew Bailey regarding interest rates cuts for the UK, have given the pound some unwanted pressure over the past couple of days in the currency market. We saw a large sell off for Sterling on Thursday morning of last week resulting in the Pound stooping nearly a cent and a half on the Euro in the mornings trading alone. Although no official decision has been made yet, pricing in has already started to take shape post Bailey’s comments. The interest rate decision will be announced at 12pm on the 7th of November and from now until then, we can expect some volatility for Sterling ahead of the key decision. Should members of the BoE or the governor himself make more remarks on a cut then we can expect more of the same for Sterling weakness. When the Bank of England last cut rates in July, the pound plummeted by around 2 and half cents, so with Andrew Baileys recent comments sending the pound into a fragile state, we can expect more of the same should a cut take place in early November. Should you have a Euro requirement in the coming weeks or months, it may be prudent to start assessing your options of getting your currency in place ahead of the decision. We have options here to help you remove your exposure from the currency and securing a favourable rate, although Sterling has seen a recent drop from the 2 and a half year high’s from only a couple of weeks ago, we are still trading at very attractive levels on the Euro, so whilst decent rates are still available, talk to your account manager today to discuss your options.

GBP/USD Slump Due To Rising Tension In Middle East

With the worrying an unfortunate events taking place in the middle east, this crosses over into the currency markets. As the Dollar is seen as a safe haven currency, there has been a shift in GBP/USD over the past week. Before the recent escalation in the middle east, Sterling had been trading at 2 and a half year high on the Dollar, this was due to the FED cutting interest rates in the country by 50 basis points in September but due to the ongoing conflict the Pound has now slumped nearly 4 cents against the greenback. With tensions in the middle east only growing it can be expected that support for the dollar will only continue. Should you have a requirement for USD then again, it may be worth speaking to your currency consultant to discuss your options.  

Remaining Data This Week

There are a few data releases to take note of which may affect the currency market. Today, we have members of both the ECB and FED speaking, any comments on future interest rate decisions are likely to have an impact as we saw with Andrew Bailey’s comments last Thursday. The FOMC Minutes are released at 6pm, Minutes of the Federal Open Market Committee (FOMC) in the US are published three weeks after the day of the policy decision. Investors look for clues regarding the policy outlook. A bullish tone is likely to provide a boost to the greenback while a dovish stance is seen as negative for USD. Tomorrow is a busier day as Consumer Price Index is to be released in the US at 1.30pm, along with Initial Jobless Claims. Staying stateside, in the evening at 7pm the Monthly Budget Statement is posted. Finishing off the week, at 6am in Germany Harmonized Index of Consumer Prices is to be released and at the same time in the UK, GBP data is to be announced which is likely to wake the market up early doors.

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