By Simon Eastman
Last week we saw the recent good form for sterling disappear following some key data releases, with unemployment coming out above expectations and inflation rising above forecast, and further still from the Government’s 2 percent target.
We have also seen the USD weaken across the board following the most recent shenanigans from President Trump with his ongoing pursuit of Greenland, threat of tariffs against NATO allies and comments aimed at the British forces in Afghanistan, which he has since backtracked on since King Charles got involved. All in all, the greenback dropped 3 cents against sterling and just under 3 cents against the single currency Euro over the past week.
With the euro taking pole position, the poor data from the UK earlier in the week caused GBPEUR to fall a little over a cent, pushing us back down to levels seen back in December when the Bank of England last cut interest rates. With the data indicating the door is open for further cuts and the next interest rate decision in a couple of weeks’ time, markets speculate over whether we will see another cut or not.
The pound did manage to claw back some of its losses as the week concluded so we shall see how it performs as the month ends this week.
The week kicks off with German IFO business climate, current assessment, and expectations data, followed later by US durable goods orders.
Tuesday is quiet bar a speech from European Central Bank President Christine Lagarde at 5pm.
Wednesday is all about northern American central banks, with the Canadian interest rate decision, monetary policy report and press conference from 2.45pm, followed by the US Federal Reserves interest rate decision at 7pm and their press conference at 7.30pm. Both are expected to hold, so any change is likely to have a meaningful impact on the relevant currency.
Thursday gives us EU business climate and consumer sentiment surveys in the morning, with US jobless claims figure after lunch.
The week and month end with German unemployment and GDP first thing. Followed closely by EU GDP and German inflation readings at 10am. After lunch, Canadian GDP and US producer price index to end with.
A quiet end to the month, with little UK data to go on so traders will look elsewhere for guidance. Trump will no doubt keep himself in the headlines so we can expect more influence on the markets from the US, and an ECB president speech early in the week could set the tone for the euro.
Those with sterling in hand and an upcoming currency requirement should contact the team today for some friendly guidance and let us help make your money go further.