By Ashley Finill
It’s the start of a new week and sellers of the Pound will be hoping for a better one than the last as Sterling continued to slip against both the majors. The UK economy has been Sterling’s Achilles heel as of late and last week’s rising inflation setback, has heaped more pressure onto the Pound as the UK economy remains in a weak and fragile state. Unemployment in the UK is also rising as was announced last week, this could be a consequence of tax rises for businesses imposed by the government in Labour’s budget last year as they have to lay off more staff to cut costs, but a strong wage print helped support Sterling from further losses and stabilised rates at the close of play last week. This now puts the Bank of England in somewhat sticky position, as whether to stick or twist on cutting interest rates in the UK at their meeting next month on August 7th.
Bank Of England
Andrew Bailey spoke to the Times last Monday with regards to the Bank of England’s outlook on rate cuts ahead of week’s data releases. He said that the BoE are ready to cut rates if the job market shows signs of slowing down. The number of job vacancies is currently at its lowest point in the last 10 years. The strong wage growth has thrown a spanner in the works adding inflationary pressure. Economists had predicted that a 25-basis point cut from 4.25 to 4% would come in the August but the feeling is it could go either way for a cut or to hold rates. With uncertainty surrounding the BoE’s decision, this could spell bad news for Sterling, as we know, uncertainty is Sterling’s foe. Should you have a currency requirement imminent or over the next few weeks, it may be prudent to start looking at your options so that you are not caught out but any surprise when it comes to data releases and political issues. Here at A Place in the Sun Currency we have options to mitigate your risk in the currency market and help your money go further. Get in contact with your currency consultant today to discuss your options.
Data releases for the Week
Not a busy start of the week on the data front with little to note, but from Thursday there is a raft of data that is likely to affect the currency market with PMI data releases from the EU, UK and US. The US also post initial jobless claims and the ECB hold a press conference who are likely to touch on interest rate plans. Onto Friday the UK post retails sales at 6am , this could shake the market up early doors as would be more of an indicator to how the UK economy is faring and if the nation is spending their money. A list of all the more important data release across the globe are below.
Monday;
2.30pm – CAD – Bank of Canada Business Outlook Survey
Tuesday;
8am – EU – ECB Bank Lending Survey
Wednesday;
14:00 – EUR -Consumer Confidence
14:00 -USD – Existing Home Sales Change
23:00 -AUD – S&P Global Composite PMI
Thursday;
8am – EU – HCOB Composite, Manufacturing & Services PMI
8.30am – UK – S&P Composite, Manufacturing & Services PMI
12.15am – EU – ECB monetary policy statement
12.30pm – CAD – Retail sales
12.30pm – US – Initial jobless claims
12.45pm – EU – ECB press conference
13.45pm – US – S&P Composite, Manufacturing & Services PMI
14.00pm – US – New Homes Sales Change
11pm – UK – Gfk Consumer Confidence
Friday;
6am – UK – Retail sales
8am – GER – IFO Business climate, current assessment and expectations
12.30pm – US – Durable goods orders