By Simon Eastman
Wednesday saw US inflation released in the afternoon coming in lower than forecast, which in turn caused a slide in the US dollar’s value. Is sentiment finally shifting?
As rising inflation has been a concern around the globe since the Covid pandemic, we have seen central banks increasing interest rates to combat inflationary pressures, with the UK, EU and the US all raising base rates of late. But with the US inflation not rising to the expected level, traders have sold the dollar as expectations for further interest rate rises in the US have been priced down.
This sentiment flowed into Thursdays trade, as we saw GBPUSD exchange rates move in favour of dollar buyers, with rates moving nearly a cent in favour. For GBPEUR buyers, we have seen the currency seesaw come into play, with the Euro taking some benefit off the weaker dollar, and exchange rates for buying the single currency, falling from the peak we saw earlier in the week. We saw a good cent loss over night, with a slight recovery but rangebound trading throughout the day of just 30 pips.
A lack of any EU or UK data yesterday didn’t help the pounds position, but with the US jobless claims and PPI data both missing expectations, cable managed to stay buoyant towards the pound. If you have US dollars to buy in the coming weeks, it might be worth speaking to one of our consultants today to discuss your options for securing a rate. On the flipside, with the euro benefitting from the dollars weakness, those with a euro requirement might want to look at securing funds sooner rather than later, should the single currency continue to take the upper hand.
Today we have UK GDP released early in the morning with a decrease expected, alongside UK manufacturing and industrial production figures due early doors also. At 9am the EU release their industrial production figure, the UK NIESR release their Q3 GDP forecast and this afternoon the US release the Michigan consumer confidence index, a key economic statement for the country as a whole and undeniable market mover.
So as the week closes and sentiment shifts, anyone with a currency requirement coming may benefit from speaking with one of our team today for some friendly guidance.