By Nick Harrison
The British Pound is now at the highest level against the Euro we have seen since US President Donald Trump announced his intentions to charge tariffs on his global trading partners. We are now at the trading range last seen at the beginning of April, which will make a huge impact on the cost of your foreign currency requirements. If you had a EUR 200,000 exposure just a few weeks ago compared to today, this will now be around £6,000 cheaper at the current level.
It’s very much worth speaking to your Currency Consultant for an update on the market as many investors are now putting their money back into the Pound after the recent Euro rally. The Pound has also gained strength off the back of recent positive market data. The inflation figure released last week showed an increase to 3.5%, beating the forecasted 3.3% expectation. Higher inflation means a lower chance of the Bank of England cutting their interest rate, which is at the forefront of that country’s monetary policy. The Monetary Policy Committee started the year fully expecting to go through a raft of rate cuts, so this recent data has potentially given further food for thought to the Governor of the Bank of England Andrew Bailey and his team. They chose to cut the interest rate to 4.25% earlier this month, but that looks like being the last cut for a while.
Since then we have seen Retail Sales and GDP figures come in higher than expected. Customers are back shopping again it would seem as we saw the rise in retail sales hit 1.2% versus the expected 0.3%, so consumer confidence appears to be on the rise again in the UK after previous figures had showed an economic slowdown.
As we have seen so many times though, things can change in a moment in this highly dynamic market we are in, so do keep in contact with us as we will keep you up to date on the impact of weekly data releases.
This week is quite quiet as far as economic data in concerned. Highlights are tomorrow’s release in the US of the US Central Banks meeting minutes. This will give us as insight as to whether the US are looking to change their interest rate policy, so some market movement could come off the back of this.
On Thursday, the US will also release their GDP and Unemployment data, with the evening being taken up by the Governor of the Bank of England Andrew Bailey making a speech about monetary policy in the UK. Again, this could be a market mover overnight, so do watch out for market volatility on Friday as the market reacts to his rhetoric. The week finishes off with German inflation data released on Friday along with the US Personal Consumption Expenditures data.
THIS WEEK’S DATA
WEDNESDAY
US FOMC Minutes – 7.00pm
THURSDAY
US Preliminary GDP – 1.30pm
US Unemployment Claims – 1.30pm
BoE Governor Bailey speech – 8pm
FRIDAY
German Preliminary CPI – 12.00pm
US Core PCE Price Index – 1.30pm