By Simon Eastman
Last week saw sterling end positively as it rallied back against all major pairs, following the hammering it took from the first Labour Budget last week.
The pound dropped significantly against the euro and US dollar after the budget was announced, with 48 hours of losses, which came to a halt on Friday, but only just. Helped mainly by poor US data in the form of the non-farm payrolls figure which is a key indicator to how the US economy is doing – any variance in the figure can have major effects. The reading for last month was 223,000 with a consensus that this month would be lower at 112,000 new jobs created, but with an actual figure of just 12,000 this came as a major blow to the US markets and subsequently saw the dollar sold off and the more attractive pound bought up. The result was a gain by the pound of just over half a cent against both the single currency and the greenback.
The week ahead is dominated by the US presidential election, which sees Kamala versus Trump to see who will become the next POTUS. Whilst the voting kicks off on Tuesday the 5th, it will take days to get the results, so in the meantime we should expect volatility on the financial markets whilst the votes are counted and results announced. The US is the biggest economy in the world with major sway on global markets, so the result could be a big mover for all currencies pairs over the coming days and weeks.
The US Federal Reserve will also meet Thursday night to discuss interest rates and decide whether to cut once again, following last month’s bold 50 basis point rate cut.
In addition to this, the Bank of England gives its latest interest rate decision, where a cut is widely expected of 25 basis points, but the key here is the press conference and policy statement subsequently released, which will give guidance as to how the Bank sees interest rates going forward, this year and into next. The results could have dramatic effects on sterling so those in hand with a currency to buy could be prudent to look at the options available sooner rather than later.
While rates are down, but still significantly above the past 2 year average, it’s a fantastic time to be buying euros for that place in the sun, so call today for some friendly guidance on your upcoming currency requirement, whether it’s for this year or into next, it’s never too early to have a strategy in place.
In addition to the major points this week, the following are also worth noting as they could also have an effect on how far your pound might stretch.
Monday – European Central Bank member speech
Tuesday – Royal Bank Australia interest rate decision & policy statement. US Presidential elections. ECB President Lagarde & Schnabel speeches. New Zealand unemployment rate.
Wednesday – German & EU PPI & PMI data. Canadian PMI.
Thursday – AUD trade balance. German trade balance. EU retail sales. UK BoE interest rate decision & policy statement. ECB members Elderson & Lane speeches.US Federal Reserve interest rate decision & policy statement,
Friday – ECB member Cipollone speech, BoE member Pill speech, Canadian employment and average earnings data. US Michigan consumer sentiment index.