By Ashley Finill
Last week saw another positive week for the Pound amid the uncertainty surrounding economic data releases and interest rates decisions, which in the end went Sterling’s way bringing over two-year highs on the Euro with levels not seen since April 2022, and two and a half year highs against the US Dollar. On Thursday of last week, the Bank of England opted to hold interest rates at 5%. There was an expectation that a hold was on the cards but ahead of the decision uncertainty continued to dictate the pound movements losing some ground on the Euro with the decision too close to call but with the BoE deciding to hold Sterling rallied on the Euro. On Friday morning, Sterling was boosted again due better than expected retail sales figures, coming in at 1% over the predicted 0.4%. As mentioned, we are now at over a two-year high on the Euro presenting a great time to buy Euros in what could be short lived come November, when the Bank of England are likely to cut interest rates as hinted at by bank of England Governor Mark Carney post decision on Thursday.
Forward Contracts
Interest rate decisions will likely continue to dictate Sterling’s movements across the rest of 2024 with a cut from the BoE now potentially coming in November. Our popular forward contract option could be of interest as you can lock in at today’s fresh highs with only a 10% deposit, giving you peace of mind in knowing you’re within your budget and crucially removing the risk of the market going against you during the time before the completion on your property. With the recent increase against the Euro rate for example, a property costing €150k this time last month is £1k cheaper and with interest rates only to come down for the foreseeable future it is possible that Sterling’s recent gains could be reversed, as we saw with the last interest rate cut in July where the pound plunged by 2 and a half cents within 5 days, which would make your property purchase more expensive when it comes to completion. A forward contract is a great way to remove your exposure to the currency market give you peace of mind on what you have budgeted for. Speak to your currency consultant today should you want to take advantage of the current highs and to go through your options.
Data This Week
As we come towards the end of September there are still a few important data releases to take note of which are likely to affect the currency market. Today PMI data is released across the board starting in the EU at 9am, then over to the UK at 9.30am and finally in the US at 2.45pm so we can expect volatile movements throughout Monday trading. Data releases for the week are as follows.
Monday
9am – Eurozone – PMI
10am – UK – PMI
2.45pm – US – PMI
Tuesday
4.30am – AUS – Interest rate decision
9am – Ger – IFO Data
2pm – US – Housing Price Index & Consumer Confidence
6pm – CAD – Governor Macklem Speech
Wednesday
2.30am – Aus – Monthly Consumer Price Index
3pm – US – New Homes Sales Change
Thursday
8.30am – Swiss – Interest Rate Decision
9am – EU – Economic Bulletin
1.30pm – US – GDP
UK – BoE Monetary Policy Report Hearings
2pm – US – Fed Chair Powell Speech
Friday
8am – ESP – GDP
9am – GER – Unemployment
9am – EU – Consumer Confidence
1.30pm – CAD – GDP
1.30pm – US – Price Index