By Ashley Finill
The month of June has started off quite brightly here in in the UK, with some much needed sunshine for the country along with strong spells in rises for the pound against the majors, bringing back some optimism for the currency in what was a poor run for sterling at the start of 2023. With last year’s Russian invasion in Ukraine and the recovery from the pandemic, the world economies all took a big hit with rapid rises of inflation crippling countries into high food, fuel, and clothing prices to name a few amongst other surging pricing in various sectors. However, it seems the peak of inflation is past us and price rises in most sectors have started to come down in the UK although food prices still remain high, but reports suggest that prices have started to come down for retailers with the savings yet to passed on to the consumer and are likely to start seeing in the weeks ahead. This would aid in bringing down high inflation in the UK and could see further increases for the pound as the Bank of England may take a step back from intervening and take a view on increasing the interest rates further in the UK, although another rate hike is expected later this month by 0.25%.
Data Releases to Shake Up the Market
As we are somewhat early into the month there are big market mover data releases ahead which will almost certainly shake up the markets. Inflation, unemployment, and interest rate decisions are set to be released within the next couple of weeks and should you have a currency requirement it would be prudent to stay in contact with your currency consultant so you can try to take advantage of preferential rates and not be caught out by any surprises when data is released. There are several key releases this week in the Eurozone and the US which are likely to bring some volatility in the currency market. A quiet start today as no important releases to note, however Tuesday is a very busy day data wise and should bring some volatility with it. Early morning at 7am the UK will release its unemployment figure. The figure is expected to rise marginally to 4% from 3.9%, if tomorrow’s reading is significantly different from the predicted 4% then we can expect sterling to be on the move early doors, at 11am the NIESR GDP estimate will be released which gives an overview of estimated growth in the UK over the past 3 months and can influence the Bank of England’s monetary policy committee on future rate hikes. Later that afternoon at 1.30pm the US inflation figure is announced which is expected to show a contraction from last months 5.5% to a predicted 5.3%, this release will influence the Fed’s interest rate decision which is due out on Wednesday at 7pm. At 3pm today, the BoE Governor Andrew Bailey will speak, he may touch on the BoE’s vision for rate hikes over the coming months. On Wednesday, the UK release GDP data bright and early at 7am, the EU release industrial production figures at 10am which is expected to be a positive figure from -4.1% to 1.2%. Overnight on Thursday Australia will post their unemployment number which is expected to remain at last months release of 3.7%. Over to the Eurozone at 1.15pm as the ECB are expected to raise their interest rate by 25 basis points, they will also hold a press conference detailing the increase and future thinking on further hikes. In the afternoon the US retails figure will be announced, a contraction is predicted from last months reading of 0.4% to a predicted -0.1%. Finishing off the week in the EU as their inflation figure will be released which is expected to remain at 5.3%. With a busy week ahead on the data front stay in close contact with your currency consultant so you can be ahead of the game and think about taking advantage of sterling’s recent fortunes of 10-month highs whilst they are still here.