Sterling Holds Gains but for How Long?

By Ashley Finill

The start of this week has been a somewhat steady one for Sterling as gains made on both the Euro and dollar last week are still present still giving an opportunity to take advantage. As we have seen in the past weeks the currency market is certainly unpredictable and the Pound remains fragile and at mercy of the underperforming UK economy. The UK Stock market’s recent bounce has also played a part in Sterling picking up momentum on the major currencies. However, Morgan Stanley has suggested today that S&P 500 rally looks set to fade and as result could see gains reversed against the Euro & US dollar. If you have a currency requirement within 3 months, then it may be prudent to start seriously thinking about your options. With winter starting to set in homes and businesses will need to be heated and we could start to see the reality of the astonishing prices of gas being passed on to consumers, this being a consequence of the conflict in Ukraine which still rages on. As such, this could influence people’s mindsets during this Christmas season with spending and may have a knock-on effect for retail figures in the coming months, this at a time when the economy really needs all the help it can get, as inflation soared to 41-year highs last month. 2022 has been a turbulent year on the currency market, arguably the most turbulent and unpredictable to date. Playing the currency market isn’t a fun game when Sterling is in a freefall trend, the hopes of gaining a cent or 2 could be detrimental should the rates take a turn resulting in your property purchase becoming more expensive. We are here to help minimise the risk and make your property purchase cheaper with our competitive rates so that you can relax and not have to worry about any rising costs in what is unpredictable market. Speak to your account manager today about securing your currency early with our various contract options.

Data Releases Key Ahead of Christmas Break

We still have some important events in the way of data releases over the course of this month which will certainly have an influence on the currency market has heading into Christmas and the new year. As mentioned above inflation has continued to rise and as result the Bank of England are again expected to increase the interest rate in the UK. Should we see a higher figure in inflation then Sterling is likely to react in a negative fashion as we have seen over the course of the year. Also, the Euro could gain on the Pound if their inflation figure remains stable or sees a contraction like last month. In the US, inflation has continued to rise but the Federal Reserve have said that they will not take any further drastic action as we have seen in previous months. This has been met with caution by investors and as a result has seen Sterling gain on the Dollar by staggering 10% over the course of a month, the Euro also made gains on the Greenback clawing back historic lows. The Fed’s interest rate decision will take place next week Friday on the 16th of December.

Data Today

There a few key data releases to take note of today. Starting in the EU at 1.30pm, Gross Domestic Product is to be posted, it is expected to remain at last months figure of 0.2%, we could see some movement in the market should this figure change. Over to the US at 5pm as Nonfarm productivity and Unit Labour Costs figures are released. Finally north of the US border to Canada and the Bank Of Canada announce if they are to increase interest rates, it is being report there that there is expected to be a 50 basis point hike from 3.75% to 4.25%, except market volatility against the Loonie around this announcement.