Good Morning. The election will be the main driver this week, especially with the Tories regaining a 10 point lead over the chasing pack. Rates @ 09:05am are as follows:
- GBP/EUR 1.1538
- GBP/USD 1.5204
- GBP/AUD 1.6497
- GBP/NZD 2.0829
- GBP/CAD 1.5380
- GBP/ZAR 11.269
- GBP/JPY 144.00
- GBP/CHF 1.6524
- EUR/USD 1.3175
Market Report this for week
The past week has seen a slightly milder fluctuation in the GBP/EUR pairing, with a rate for exchanging Sterling to Euro reaching a high of 1.16190 and a low of 1.14470. This means a 1.5% shift between the highs and lows of the week. To put this into monetary terms it would mean a difference of £3,440 on a £200k trade.
Sterling has seemingly been at the mercy of the media and its political opinion polls this week, as every time a hung parliament is published as looking more likely, Sterling seems to have lost strength. That said, the downgrading of Spain and Portugal’s credit ratings along with the now uninvestible status of Greece has weighed heavily on the Euro, balancing things out and actually allowing Sterling to remain in a position of power.
Previous talk of certain European countries being ‘on the chopping block’ for credit ratings is now coming to fruitition, rumoured further downgradings and economic difficulties throughout Europe prophesising an ominous future for the Euro. Those looking to move their Euros back to Sterling may want to consider the downgrading situation in Europe and those looking to buy Euros must surely be watching the political situation in the UK closely, as the nearer we draw towards election day, the more realistic the chance of a hung parliament becomes and therefore a possible weakening of Sterling strength. For an up to date consultation of whether or not the market is in your favour, call your account manager at Foremost today.
The week ahead is quite thin on the ground for data releases, but Thursday will more than make up for a lack of releases with the UK General Election taking place and the BoE and ECB interest rate decisions being released. These factors will undoubtedly have a huge influence on the currency markets.
If the BoE is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the GBP. Likewise, if the BoE has a dovish view on the UK economy and keeps the ongoing interest rate, or cuts the interest rate it will be seen as negative.
With these impending data releases and the result of the UK general election ahead, an air of uncertainty once again encapsulates the market, the prospect of a new government or possible hung parliament in the UK holding a prominent position in the weeks influencing factors.
Those with impending purchases in the Eurozone might look to consider booking a Forward contract with the Foremost Currency Group. By placing a 10% deposit, clients can eliminate the risk of an unstable GBP/EUR rate by locking in a price today for a transaction that will take place in the future, up to maximum of two years. With all of these factors in mind, it is of utmost importance to speak with your specialist account managers to ensure you know all of the options available to you , ensuring you can make the right decisions when it comes to exchanging your currency, please feel free to contact us for a free consultation.
This Weeks Data
Due to the May Day bank holiday on Monday Economic Data from the UK will begin today and as with previous weeks, please bear in mind that in addition to the scheduled releases unexpected news this week such as opinion polls leading up to Thursdays UK General election, credit rating and debt developments in the Euro zone will also have an effect on exchange rates.
UK begins its week with Manufacturing Purchasing Managers Index (PMI) as detailed above and House Price data, Actual or more than Forecast would be good for GBP. From Europe we’ll see Retails sales figures from Germany.
Kicks off with Australian Building Approvals data, It’s an excellent gauge of future construction activity because obtaining government approval is among the first steps in constructing a new building. Construction is important because it produces a wide-reaching ripple effect – for example, jobs and various services. We are expecting data to return at 0.9% anything above this forecast could give AUD further support. New Zealand will release unemployment data and we’ll see Non- Manufacturing (PMI) from the US.
A big day for data in particular for the UK with the General Elections taking centre stage, the winner may well be projected before the official vote count is announced, based on early vote counts and exit polling; a hung parliament if announced could undermine Sterling and the future of the economic recovery whereas a majority verdict would have the opposite affect. Service sector data is also due for release from the UK and From Europe we have the central banks interest rate decision, 1% or more would be good for the Euro. Australia announces its retail sales and trade balance data. Building Permit data from Canada and unemployment data from the US round off what could be an eventful day.
Starts with the Reserve Bank of Australia (RBA) Monetary Policy Statement, It provides valuable insight into the bank’s view of economic conditions and inflation, the key factors that will shape the future of monetary policy and influence their interest rate decisions. There is no specific measure for this but a positive sentiment could be good for AUD. For the rest of the day we will see Retail sales for the Swiss market, unemployment data from Canada and the US to end the trading week.
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