By Luke Dyson
Now entering September, we still haven’t seen much traction for sterling against the euro, with the price still stuck in a 2 cent range-bound market with no clear trend or direction in sight as of yet.
However, moving forward we are potentially going to see some big changes shortly, as the cracks are beginning to appear for sterling.
The British pound at present is having comparisons to the 1976 currency crisis, as economists warn of high inflation, weak growth and fiscal stress.
We have seen inflation now climb to 3.8% year on year, now a key concern for Rachel Reeves to adjust current policies, or the UK could be at risk of a serious economic mess.
Although sterling is under some pressure , it’s not all clear sailing for the euro either moving forward.
With a French political crisis, it’s deemed prime minister Francois Bayrou will likely be replaced, as a vote of no confidence is to take place on the 8th September.
The main opposition parties are now suggesting they can lower France’s national debt.
With uncertainty extremely high in France, it leaves risk for investors and so massively impairs the euro’s potential gains for the time being.
With the current situations in place, we may see some good GBP to euro buying opportunities in the next few weeks, however this could be very short lived given the UK’s current financial situation. Consider taking advantage of this, or get a strategy in place, if you have requirements in the near future.
For the week ahead we have a few key data releases to keep an eye out for:
EUR – Tuesday 10am Consumer price index
USD – Tuesday 15pm PMI
AUD – Wednesday 02:30am GDP
EUR – Thursday 10am Retail sales
USD – Thursday 13:15pm Employment Change
GBP – Friday 07:00am Retail sales
EUR – Friday 10:00am GDP
USD – Friday 13:30am Non farm payrolls