By Tom Arnold
Over the last few weeks we have seen two clear movers for the Pound on the currency markets, with firstly the Bank of England’s halt of interest rate rises causing a dip in Sterling strength, and then more recently a surprise increased GDP revision causing a partial recovery. Other than this the markets have been very flat with not much in the way of reaction to any of the other Sterling news. House prices have dropped, unemployment is on the rise and the government had a near disastrous showing at the Tory party conference, yet none of these things have much impact in the face of a laser-like focus on the big eco-stats of inflation, associated interest rates and growth (GDP).
The week ahead sees some further insight into these key movers with German CPI inflation due on Wednesday, visibility of the minutes from the Federal Reserve’s last interest rate setting meeting in the US, also on Wednesday, and then UK GDP and US CPI inflation both on Thursday.
The US Dollar has been the dominant major for most of 2023 and continues to win all of its battles against both the Pound and the Euro, and this week could well give further support to this. One note of caution for those with a Dollar focus – the Dollar is a safe haven currency and so in times of trouble around the world Dollar volatility can come, so a focus on the ongoing events in Israel is also important if you have upcoming requirements.
For those with a Euro requirement in the coming days or weeks it is also critical to watch the markets generally, with UK and European data your focus, but don’t lose sight of the impact the Dollar can have – a stronger Dollar almost automatically gives a weaker Euro and a weaker Dollar on the flip side often equals a stronger Euro.
What will move exchange rates this week?
German industrial production
US FED members speeches
UK BoE Mann speech
German CPI inflation
US FOMC minutes
UK House price survey
UK industrial production
UK manufacturing production
US CPI inflation
US initial jobless claims
EU industrial production
Make sure as ever to stay in close contact with your currency consultant to be kept informed of what is happening and what your options are to best secure your upcoming currency requirement.