What could move exchange rates this week?

Sterling/Euro rates have slipped further today dropping to €1.13, around 1 cent below last week’s 3 month high. The Pound started to fall after some UK manufacturing data came in below forecast. Sterling/Dollar has also fallen by around 1 cent.

This is a repeat of the trend we saw in the summer, when GBP/EUR also rose to €1.14 before dropping back away.

I mentioned in a post last week that it was highly likely that Sterling/EUro rates would drop from €1.14 and repeat a trend we saw in the summer.

With continued concerns over the lack of any progress in Brexit negotiations, it could well be that the Pound falls further against the Euro and other currencies. On the other hand, the Euro itself could weaken limiting any further losses. The weekend’s Catalonia referendum has cast another unknown into EU integration.

What else could move exchange rates this week?

Below I’ve listed the main economic events for the week ahead that will likely affect Sterling exchange rates.

Monday October 2nd – We’ve already had weaker than expected UK manufacturing figures that has pushed the Pound lower. Later we have a speech by a member of the US Federal Reserve that could affect GBP/USD rates.

Tuesday October 3rd – The only UK data of note is Construction data due at 09:30am. The number is expected to be 50.8 signalling expansion; Sterling will be affected if the actual number differs from htis. We also have EU inflation numbers that could move the GBP/EUR pair. Elsewhere an Australian interest rate decision could affect GBP/AUD rates if they hint at future monetary policy.

Wednesday October 4th – UK Services PMI data will be in focus today for the Pound. Elsewhere we also have EU Services PMI and Retail Sales, all of which could affect the GBP/EUR rates. We also have the same released from the USA, so lots today that could affect rates. Also those with Euros to buy or sell should watch out for a speech by ECB president Mario Draghi – if he hints at tapering their stimulus measures before year end, expect GBP/EUR to drop.

Thursday October 5th – There’s nothing on the agenda for the UK or EU today, so GBP/EUR rates will be driven by politics and Brexit developments. We also have Speeches by 3 members of the US Federal Reserve. If any of them hint at another US interest rate hike, GBP/USD may drop away.

Friday October 6th – We end the week with UK House price data, and a speech by a member of the Bank of England’s MPC. Their chief economist may hint at UK interest rates rising – if he does, expect the Pound to gain against other currencies. If he doesn’t or is dovish in his comments, then Sterling could weaken. We also have US jobs numbers today, which often have a big effect on GBP/USD due to the fact the number is notoriously difficult for the markets to forecast.

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