By Simon Eastman
The past week saw sterling remain flat against the euro, trading within a half cent range. Against the US dollar, we saw a different picture.
With gains made following the higher UK inflation figures, we saw sterling gain nearly a cent and a half against the greenback over the rest of the week. Higher inflation leads investors to speculate on increased interest rates (which is the main tool the Bank of England have to lower inflation to their 2% target). As a result, the pound gained value against the broadly weaker US dollar.
The antipodean currencies on the other hand made gains against the pound, which is usually the case when the dollar weakens. Investors are looking for the higher rewards, selling off the safe haven USD and buying into the commodity led currencies like the Aussie, Kiwi and Canadian dollars and the South African Rand which have higher interest rates and therefore, higher returns.
The week ahead leads us to the end of the month and a Bank Holiday for the UK ahead of September. Its also very quiet for UK data so expect a week of sentiment led trading for the Pound, alongside any overseas data, and any geopolitical tensions which may arise.
The week ahead looks like this:
Tuesday – AUD RBA meeting minutes, giving guidance on the most recent central bank meet. German GDP and IFO – business climate, current assessment and expectations readings. (The IFO Group gives a current reading of market conditions and expectations through a survey of 7000 enterprises on their short term planning). US consumer confidence and new home sales for August.
Wednesday – Aussie inflation, ECB member Cipollone speech and US inflation, durable goods orders and GDP readings.
Thursday – Jackson Hole symposium, German GfK consumer confidence survey, ECB monetary policy meeting and US jobless claims.
Friday – Jackson Hole symposium (which continues over the weekend), EU consumer and industrial confidence and economic sentiment indicator, Canadian GDP, a speech by Fed chair Walsh at Jackson Hole, the Michigan consumer expectations and sentiment index, a non-farm payrolls benchmark revision announcement, and finishing off with 1-yr ad 5-yr consumer inflation expectations
An absolute myriad of data releases to end the month so plenty to affect the currency markets for whatever exchange you might be looking to do in the coming weeks. We have Europe’s summer holidays coming to a close and that means those completions might be imminent.
Speak to the team today, whatever your requirement, to let us, help make your money go further.