By Simon Eastman
Markets saw sterling improve against the euro yesterday, with the energy crisis deepening in Europe, as Russia closed the gas pipeline indefinitely.
The USD made further gains on the back of this, as investors continue to ply the dollar whilst sentiment remains risk averse.
The UK spent the morning wondering who would take the top job in government, although it was widely expected that Liz Truss would win the race, becoming only the third female PM and the fifteenth Prime Minister the Queen has welcomed to parliament.
We have seen her appoint various people into her cabinet, including Kwasi Kwarteng as Chancellor and James Cleverly as Foreign Secretary. She’s also announced various plans to tackle the energy crisis, pledging £100 billion to cap costs. More borrowing to add to the ever growing debt, whilst the cost of borrowing is on the rise, so will markets take this favourably or will it be sterling negative? Time will tell. For those of you out there with a currency requirement it may be prudent to look at securing your funds sooner rather than later, in case rates come under further pressure.
The Bank of England meet next week, and there is talk of further rate increases which would usually help the currency involved, but that’s not been the case of late, given higher interest rates mean higher costs to the country with its increasing debt.
AUD GDP is released overnight. Speeches from 4 Bank of England members may shed further light on interest rates and their current stance.
EU GDP is released at 10am. Then US trade balance after lunch as well as some Fed member speeches ahead of Canadian interest rate decision and 3pm.
Plenty to go on so expect some volatility. If you have an exchange to make give one of the team here a call early doors to discuss your options.