By Simon Eastman
Thursday was a day of no data for the UK, so it was left for other releases to move the markets, where we saw movement for both the Euro and Dollar, with the Pound moving as a result.
Sterling/Euro ended up trading at some of the highest levels we have seen since 2022 as the European Central Bank left its key interest rate at 4.5 percent, whilst in the adjoining statement which aired on the side of caution with regards to their thoughts on interest rate cuts. There was only a slight suggestion that cutting interest rates was on the cards presently, with markets pricing in the chance of a rate cut being pushed back to June. But sterling came off best, as the expectations are that the Bank of England will also not look to cut rates anytime soon, and to a lesser extent than the 125 basis points the ECB is forecast to cut rates this year.
After lunch, the US awoke to a raft of data, including trade balance and the all-important GDP reading. Most readings came out as expected or lower, but goods orders were up on forecasts and the GDP reading showed the economy growing by 3.3 percent, in contrast to the 2 percent markets had expected. The result was dollar strength, with half a cent taken from sterling and nearly ¾ cent taken against the weaker euro.
As the week concludes, we’ve got the Good for Knowledge (GfK) consumer confidence survey results for the UK where a negative figure is expected. But a lower-than-expected figure could see the gains sterling made yesterday against the euro dwindle.
We have EU money supply figures shortly but expect little movement off the back of this low-key data release, especially given the all important inflation figure due from the US this afternoon. With a surprising uptick last month, the forecast is for a drop in the inflation figure this month. If that happens, we could see further dollar strength as it couples with the stronger GDP figure, so dollar buyers beware we could see rates move further against you, certainly so, should the figure drop more than forecasts.
For those with a euro requirement, get in touch today to secure a rate whilst the going is good and for any other currency requirements, contact the A Place in the Sun Currency team for some friendly guidance.