The week ahead for Sterling exchange rates

True to recent form, the Pound fell towards the end of last week, dropping from an 18 month high against the USD and from a 7 month high against the Euro. Given the strong run Sterling has had recently, it’s not surprising to see it’s rally run out of steam. Currently Pound/Dollar is still quite good at $1.41. Pound/Euro has dropped into the mid €1.13’s. (view live graphs here).

Many clients that got in touch with us last week managed to freeze their rate at the high, with some opting to do so with a ‘Forward Contract’. This allows you to lock in the current rate for up to 2 years, thus protecting you from rates dropping and allowing you to budget effectively. This is key when you need to transfer a large sum, for a property purchase for example. If you would like to get a free quote or just find out more about the currency services we offer, then make an enquiry today or send me an email.

What could move exchange rates this week?

As usual for a Monday, in today’s post I’ll outline what economic data releases are in store for the week ahead and how I think they may affect the currency markets.

Monday 29th January 2018 We’ve already seen German trade balance numbers this morning which bettered forecasts. This strengthened the Euro and caused GBP/EUR to fall slightly. There is also a speech by 2 ECB members today, and if these mirrors the upbeat tone of last weeks ECB meeting, the Euro could make further gains against Sterling. There is nothing of note from the UK today , however GBP/USD could move on US inflation numbers, and GBP/NZD could be affected by trade balance numbers from the land of the long white cloud tonight. 

Tuesday 30th January 2018Quite a bit today that could move Pound/Euro. From the UK we have the latest mortgage numbers and a speech by BoE governor Mark Carney. His comments usually send the Pound lower as he’ll usually rather pessimistic about the UK economy. Also of note will be EU GDP numbers and various measures of confidence. If growth matches or exceeds the 0.6% forecast, then expect GBP/EUR to move lower.

Wednesday 31st January 2018German Retail Sales and German/EU unemployment numbers are the main release today that could move GBPEUR. The EU’s largest economy is doing ok, and if today’s figures confirm this then the Euro could gain. EU unemployment though is rather high at nearly 9%, so these numbers could take limit the single currency gaining too much. Over in the states we have the latet FED rate decision with interest rates expected to remain at 1.5%. The accompanying statement however could move GBP/USD rates. 

Thursday 1st February 2018UK data is thin on the ground today, with only House Prices and manufacturing PMI numbers to watch out for. The latter could send the pound higher if this sector continues to show robust expansion which of late, it has. Elsewhere US Jobs numbers and Manufacturing figures will be the main release for the USA.

Friday 2nd February 2018Again not much that will move GBP/EUR unless there are any developments with regards to Brexit negotiations. there are some EU Inflation numbers at 10am but I’m not expecting much movement from this. the USA however releases it’s non-farm payrolls at 13:30pm – these are notoriously difficult to forecast and so the actual result is often way off the expected. Currently markets are pricing in a number of +175k new jobs – more than this would move GBP/USD lower.  Less than this would move GBP/USD higher. 

To discuss this report in more detail, get a quote, or just find out more about the foreign exchange services we offer, contact us today.

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