By Grace Smyth
A round up of last week
Last week markets were firmly focused on potential bank interest rate cuts and accompanying press conferences. The BoE voted 6-3 to keep the base rate at 4.25% but hinted at the potential for a further rate cut by August or November. Given results came as expected, there wasn’t any major negative reaction on the markets, trading a little lower against the Dollar but remaining flat against the Euro.
Friday saw disappointing UK Retail Sales data. It dropped 1.3% lower YoY, and a sharp decline of 2.7% MoM was reported – the steepest drop since December 2023. Again, sterling lost some ground against Euro and Dollar, but this was gained back within a couple of hours.
The week ahead
The week ahead is littered with various key data releases as well as speeches from key Fed, ECB and BoE members including the Fed’s Chairman Jerome Powell and BoE Governor Andrew Bailey. Any comments made regarding future monetary policy will be closely noted by investors so there is a chance we could see some market reaction.
For the UK the critical release this week will be the GDP (Gross Domestic Product) result, announced early doors at 6am on Friday morning. GDP is important because it is one of the most widely used indicators of a country’s economic health and performance, and tells us the total value of all goods and services produced over a specific period (usually a quarter or a year). A strong and growing GDP can attract foreign investment and boost the value of the currency. Current expectations are for GDP to remain at 0.7% MoM and 1.3% YoY, so any drop here could cause the pound to lose ground, making your exchanges more costly.
With ongoing geopolitical tensions in the Middle East and US tariffs still disrupting markets, it’s hard to make any clear predictions on what markets are likely to do next. We would hope to see the pound hold its ground ongoing but as ever there every possibility the markets can throw in a surprise. If you have an upcoming currency requirement and are concerned about which direction exchange rates may go, then do reach out to us. Our friendly team of consultants will be happy to have a chat and talk you through the various options we provide to help you minimise your risk and secure your funds.
Key Data Releases for the week ahead:
Monday
08:00 EUR PMI
08:30 GBP PMI
13:45 USD PMI
14:00 USD Existing Homes Sales
Tuesday
12:30 CAD CPI (Consumer Price Index)
13:00 USD Housing Price Index
14:00 USD Consumer Confidence
Wednesday
Overnight AUD CPI (Consumer Price Index)
14:00 USD Homes Sales Change
Thursday
12:30 USD Durable Goods Orders, Gross Domestic Product (GDP), Initial Jobless Claims, Pending Home Sales
Friday
06:00 GBP Gross Domestic Product (GDP)
09:00 EUR Consumer Confidence
12:30 USD Personal Consumption Expenditures