This morning the Pound has fallen further, dipping in to the €1.14’s against the Euro briefly before settling around €1.15. Later today there is important news from Europe that could push the rate even lower however, when the European Central Bank (ECB) will announce their decision on interest rates and their Quantitative Easing (QE) stimulus programme at 12:45pm.
I don’t expect any change in interest rates and they will likely keep everything unchanged due to the risky elections coming up in Holland and France.
However, they may announce that they will start to taper their QE programme which could give the Euro some strength and pull GBP/EUR rates lower. The EU economy is actually performing pretty well but I don’t think they will tighten monetary policy until the elections are out of the way. The ECB President Mario Draghi will be giving a press conference at 13:30pm and his comments often cause movements in the GBP/EUR rate. If he hints at tapering, expect Pound/Euro to drop further. If he doesn’t, then it may help the rate recover.
Important UK data coming tomorrow that could weaken Pound further
At 09:30am tomorrow morning the UK will release the latest Industrial and Manufacturing production figures. These will be watched closely to see if the impending Brexit negotiations are having any effect on these sectors. Markets are already expecting a decline of around -0.5% for the month, and if the actual figure is lower then the Pound will fall. Equally a higher reading may lift Sterling if there is a surprise result.
US Jobs data likely to strengthen Dollar
In the states at 13:30 on Friday we’ll see the latest ‘Non-Farm’ payroll numbers (it excludes the agricultural sector as this is seasonal). This is the most important release of the month for the US, and are notoriously difficult to predict, and therefore won’t by fully priced in to the GBP/USD exchange rate. Analysts expect 190,000 new jobs to have been created. If the actual figure is this or higher, then it’s almost certain that they will raise interest rates later this month, and the Dollar will immediately strengthen and pull GBP/USD lower.
Do you need to exchange currency at the best rates?
As you can see then, the next couple of days will be pretty key for how Pound/Euro and Pound/Dollar rates may move. Personally I think there is a big risk of rates falling even further if the UK data in the morning isn’t very encouraging. If you need to make a currency transfer, then why not get in touch to discuss your requirement with an expert currency broker. We can explain your options, give our view on which way exchange rates are going, and provide you a free quote for you to compare with your bank or existing broke. We provide rates that are up to 5% better than available at banks, and when transferring a large sum you could save thousands of Pounds.