By Tom Arnold
The last week has been something of a rollercoaster for the Pound – the back end of January had given us a mixture of negative UK economic data, which had weakened Sterling across the board, but then the IMF gave a surprisingly bullish growth forecast for the UK and the ECB cut their interest rate and suddenly the Pound was back in favour, pushing back up toward recent highs, particularly against the Euro. All eyes then focused on the Bank of England with their interest rate decision yesterday, and while roundly expected to cut rates, no one had expected there to be votes for bigger cuts. Seven of the members of the MPC voted for a 25bp cut, but the surprise was that two of the members voted for a 50bp cut. As a result the Pound then dipped again, eroding much of the gain it had made earlier in the week.
Over the course of the week, the cost of a €200,000 property fluctuated by over £2000, first one way and then the other. Proving how essential it is to be in touch with market specialists, who can help you to arm yourself with the latest market news and the mechanisms to secure your currency.
Today we have a busy day of economic data led off by German industrial production numbers and UK house price data, followed by speeches from ECB and BoE members, and then the big event which is the US employment data in the form of the Non-Farm Payrolls.
All of these releases have potential to impact exchange rates and the speeches from the central bank members will be key given the impact interest rates have on the currency markets. Its also worth keeping in touch with your currency consultant over the US data, because even if you are buying Euros, what happens over the pond in the US can still have a significant impact.