Currency Forecasts

GBP Forecast – will we see a rate hike in August?

Bank of England

As forecast by my colleague Alastair rates have pushed back through the 1.14 level today following the latest Bank of England interest rate meeting. As expected, the central bank held its key base rate on hold at 0.5% but it was the how the nine members decided to vote that was to drive the market. Market expectation was for 7-2 split in favour of keeping rates on hold however the vote was 6-3. Andrew Haldane, the Bank’s chief economist, joined two other Monetary Policy Committee members in voting to raise rates to 0.75%

GBP Forecast – Will we see a rate rise in August?

The bold move by Andrew Haldane has now increased the chance of a rate hike at their next meeting in August although the last time  three people moved away for the majority view, in June 2017, rates rose the following November.

Before today’s decision the markets were split 50/50 on whether there would be a rate rise at the MPC’s next meeting in August and markets are now pricing in  a higher chance this will happen. As a result the pound pushed to a high of 1.1459 against the single currency and back though 1.32 against the US dollar.

Our GBP Forecast – For anyone looking to buy euros this might be a short term opportunity. We have seen the pound push through 1.1450 on three occasions in the last month and on each occasion we have been back into the 1.13s within 2-3 business days. Will this trend continue?

In my view we could actually see a rebound this evening. Normally Carney would speak an hour later than the rate release however tonight he will be speaking at the annual Mansion House dinner. He will be speaking along with a number of key and high profile bankers and politicians, including Chancellor Philip Hammond. Mark Carney is due to speak at 21:15 this evening. I would expect him to play down a rate hike in August, particularly as he voted for rates to remain on hold at 0.5%. He has a history of cooling the market and should he follow suit I would look for levels to fall back into the 1.13s.

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Politics and Central Banks to affect GBPEUR this week

GBPEUR

Good morning. GBPEUR rates have slipped into the €1.13’s this week, giving up the gains we saw last week. GBPEUR rose into the €1.14’s after the European Central Bank (ECB) cut growth forecasts. this had weakened the Euro and pulled GBPEUR lower. The gains were short lived however, as UK politics move back in to focus.

Commons vote could move GBPEUR today

There are 2 key events in the next few days that I think could affect the Pound/Euro rate. Firstly, today we have another vote in the House of Commons. Last week the government won a vote against amendments the House of Lords were proposing. The Lords have now re-worded their amendment. What they want is Parliament to have a say in negotiations in the event that no deal is agreed. The government disagree. It will be a close vote. If the government lose today, then effectively it means that Parliament will have the power to intervene in negotiations that, in my view, would weaken May’s hand in negotiations. if they lose the vote today, I would expect the Pound to fall in value. If they win, then it should remove some political uncertainty and shore up the Pound.

Bank of England to meet on Thursday

After today’s debate and vote in the commons, focus will turn to tomorrow’s Bank of England meeting. We do not expect any change to interest rates. What will be important for GBPEUR however is Read More

What could impact sterling exchange rates this week? GBPEUR, GBP/USD, GBP/AUD

As we start another busy trading week I will outline below would data could impact sterling exchange rates this week. It is a busy week with much of the notable data scheduled towards the latter part of the working week. I have outlined this below and how it could impact the pound against a number of key major currencies.

What could impact exchange rates this week?

Monday June 18 – today has been a relatively quiet day with little data of note. We have a number of speeches from key Fed members and also a speech from European Central Bank (ECB) President Mario Draghi. Nothing of note is Read More

Pound Euro rates rise after ECB meeting

Good morning. Pound Euro rates rose yesterday after the European Central Bank (ECB) meeting. As expected, they announced an end to their Quantitative Easing (QE) Programme at the end of the year. My colleague Michael predicted this, however the effect on exchange rates proved a little harder to foresee! Michael, and the markets in general, thought that an end to QE would be positive for the Euro. This should have strengthened the Euro and pulled Pound Euro rates lower. However, in the Press Conference the ECB president Mario Draghi made some other announcements. This caused the rate to move in the other direction.

Why did Pound Euro rates go up?

Draghi said that interest rates will remain unchanged for at least another 12 months. This did not help the Euro. He also said that Read More

Sterling exchange rates strengthen following positive retail sales. Will it last?

Pound exchange rates have received a welcome boost this morning with strong retail sales figures, as predicted by my colleague Alastair yesterday.

The week started poorly with weaker than forecast manufacturing data on Monday along with concerns surrounding Brexit pushing the pound close to 1.13 against the Euro and 1.33 against the US dollar. This mornings data has put an end to a recent run of poor data. Will it last?

Overnight the Federal Reserve released its latest interest rate decision and as expected they raised the US base rate to 2%, something that was heavily priced into the market and therefore caused very little market reaction.

Is this the end of the run for the dollar against the pound?

As mentioned this move from the Fed was widely expected and has caused very little market reaction. In fact the dollar has weakened following the post rate press conference for Fed Chair Jerome Powell. Previously the market had been Read More