By Paul Newfield
As we approach Christmas time it seems the festive cheer has even infiltrated the currency markets, at least for a short while, with a barely explainable strengthening of the pound against both the euro and the USD. Last week, despite poor economic data releases in the UK, US, and with an expected interest rate cut in the UK coming shortly, the pound gained nearly a cent against the euro and two against the greenback – quite inexplicable, with the only reasoning being that the Rachel Reeves delivered Budget, although seen very negatively by the masses, was actually viewed in a much more positive light by financiers, investors and market movers.
With mixed data on housing – mortgage lending down and house prices up by more than expected by Nationwide but much lower than expected by Halifax – little else was there to push the pound one way or the other. There is a similar story for this week.
Bank of England supremo Governor Bailey provides a speech tomorrow morning at 10:45 am, with his ECB counterpart Christine Lagarde providing her own soundbites the following day. Later on Wednesday sees the Canadian interest rate decision and most importantly the United States rate decision and economic projections, both released after trading hours and followed by the usual press conference.
The “big one” comes on Friday, when we will learn the outcome of the UK’s GDP figures, trade balance, manufacturing and industrial production numbers, together with construction numbers – all critical for the UK economy, so there could be some volatility come the end of the week. If you have sterling in hand and wish to take advantage of the better euro buying rates get in touch, before the potential of a drop off again later in the month.