Monday 7th April 2014
Exchange rates are relatively stable as we start the trading week. In today’s post I’ll have a quick look at where Sterling/Euro and Sterling/Dollar rates stand, and what the forecast is for the short term for whether Pound exchange rates will go up or down. As usual for a Monday, I’ll also list the week’s economic data releases that I think will affect the currency markets.
In my post last week I explained that rates had shot up to just over €1.2100 after the ECB announced it discussed conducting a Quantitative Easing programme. Pound/Euro rates remain a little below the €1.21 level today, having dropped a bit through trading after one of the ECB members said that there was no need to take immediate action.
I’m surprised the Euro didn’t weaken further, but this week we will see several speeches by ECB members. If they shed any more light on the subject and give us an idea how likely a QE programme is, Pound/Euro rates could well pick up further the more likely it seems that they are concerned about the Euro.
I don’t think there’s much more to see in GBP/EUR getting too much higher however, due to the Bank of England not wanting the Pound to gain much more due to the effect it would have on our exports and in turn, the UK’s economic recovery.
Looking at other currencies, GBP/USD rates have crept up today steadily throughout the day after jobs numbers from the states disappointed on Friday. This has caused the Dollar to weaken and we’re now back above the $1.66 level.
These gains could be short lived though – if the ECB members comments this week do weaken the Euro, then an inverse effect of that would be a strengthening US Dollar and lower GBP/USD rates. This is because the USD is a safe haven currency, so worries in the Eurozone would cause investors to move back to the safety of the Dollar, strengthen it and making it cheaper to buy.
This week’s economic data releases.
Monday 7th April 2014 – It’s been fairly quiet on the data front today, with the only noteworthy release being Industrial Production data from Germany, Europe’s largest economy. The numbers were a little better than expected, giving the Euro a little spike and pushing GBP/EUR rates lower, but not by much.
Tuesday 8th April 2014 – At 09:30am we have the latest UK Industrial and Manufacturing production figures. These can often affect the value of the Pound. We will also see the latest NIESR GDP estimate released at 3pm. The last result showed growth of 0.8%, and if we see a higher number today, Sterling could gain.
Wednesday 9th April 2014 – Another important UK release today, Trade Balance figures at 09:30am. The market is already expecting a negative number, but if the number is even worse than expected then Sterling could take a hit. Germany also releases its Trade Balance figures today.
Further afield, the USA will release the minutes of their recent FOMC meeting at 7pm. I think that the US will keep tapering its QE programme this year, and if the minutes support this then expect GBP/USD rates to dip away as the greenback gains strength.
Thursday 10th April 2014– The Bank of England announces today if it will change its interest rates and QE programme – I expect rates to be left at 0.5% so don’t think it will affect exchange rates.
Elsewhere, Australia releases a raft of unemployment data that could affect GBP/AUD rates. The US also have jobless figures, so Dollar rates could also swing today.
Friday 11th April 2014 – After a very busy week for UK data, we end on a quieter note with nothing of interest from the UK. Germany has some inflation figures, as does the United States, along with a consumer sentiment survey, released at lunchtime.
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