Interest Rates and Exchange Rates

Good morning. Both the UK and EU left interest rates on hold as expected yesterday. Comments from the ECB however strengthened the Euro and caused rates to fall slightly. As at 08:30am 9th July rates are as follows:

  • GBP/EUR1.1957
  • GBP/USD 1.5179
  • GBP/AUD 1.7332
  • GBP/NZD2.1440
  • GBP/CAD 1.5826
  • GBP/CHF1.5952
  • GBP/ZAR 11.455
  • GBP/JPY 134.14
  • GBP/HKD 11.813
  • GBP/DKK 9.9107
  • EUR/USD 1.2692

Interest Rates

As expected, there were no moves in interest rates for either the UK or EU yesterday. There was no comment after the BoE decision, so we’ll have to wait 2 weeks for the minutes of the decision, to see how many of the 9 member committee voted for a hike. If the minutes show that some voted for an increase, it will likely boost the pound and cause exchange rates to rise.

The comments from the EU after their decision gave some support to the single currency, and it pushed GBP/EUR rates down to the mid €1.19’s.

Today’s Data

We have some inflation data from the UK today. If higher than expected, then this will support the case for higher interest rates. If rates are thought to go up, then it spurs investment due to the higher return, and usually causes rates to rise.

There are also trade balance figures for the UK today. This is a balance between imports and exports. It can cause volatility for the pound if the figures are different to forecast.

Enjoy your weekend, and the British GP if you’re watching it!

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