By James Caley
This week’s most significant data release for the UK will occur tomorrow, with widespread expectations that the Bank of England will cut interest rates to 5%. Historically, a reduction in interest rates typically leads to investors selling the currency in question, resulting in its depreciation against other currencies.
The consensus, driven by recent declines in inflation, is that there will be a 0.25% rate reduction. If this happens, it is likely to cause weakness in the pound. While the outcome is not certain, and some financial institutions predict that a rate cut will occur in September with a more substantial reduction, the prevailing view is that the timing is right for an imminent cut.
Recently, Sterling has reached peaks against the single currency, the greenback , the New Zealand, Canadian and Australian dollar. However, these highs may be at risk of a significant downturn and the window for taking advantage of these current rates could be very narrow, effectively limited to today, as tomorrow’s interest decision could drastically alter the landscape.
Should you want to take action in this short window there are several factors that could influence your chances of securing the best rates today, depending on the currency you wish to purchase.
This morning, Australia and New Zealand has already released a series of economic data. AUD has weakened against the pound with a 2 cent increase in the early hours of the morning whereas NZD has gone the other way showing strength against the pound with a 1 cent decrease in the GBPNZD exchange rate.
At 7 am, German Import Price Index was released but this has made little difference to the current GBP EUR trading range. There are a few more data release this morning that could effect the euro including the EU core inflation rate, German Unemployment figures, and Italian Inflation rate.
In the US, multiple data releases are scheduled throughout the day, culminating in the Federal Reserve’s interest rate decision at 7pm UK time. While no change in the current rate is expected, any unexpected adjustment could significantly impact the dollar.
Whether you have an immediate currency requirement that could be affected by the above or are planning for the future, contact A Place in the Sun Currency for expert guidance and a professional perspective on the market to help you achieve the best rate on your currency exchange.