Pound Sterling forecast. Currency overview.

Pound Sterling

In this mornings post I will have a look at what major data this week could have an impact on pound sterling exchange rates. This includes key data releases and how this could impact exchange rates. Of course on going Brexit developments will be set to dominate the market, however it is also important to keep an eye on data releases. I will focus on GBP, USD and AUD exchange rates.

Key data releases

Monday 29th July

To start the working week we have a relatively quiet start on the data front. Early this morning we had some European releases with inflation figures from Spain, these came out flat at 0.5% have had little impact as a result. This morning in the UK we have money supply data and mortgage approvals, not likely to impact the pounds short term movements.

Tuesday 30th July

Overnight will be the release of building permits in Australia but the focus will be on European and US data sets. This starts with Euro Zone consumer confidence data at 10:00 followed by industrial confidence. Both expected to be poor and could put the Euro on the back foot to start the day. Heading into the afternoon session and focus shifts to the US. The key release also being consumer confidence data at 15:00.

Wednesday 31st July

We have plenty of Australian data overnight. This being inflation data in the form of CPI. Expected to move from 1.5% from 1.3%. If as forecast I would expect the AUD to weaken as it takes the pressure off the RBA to cut interest rates. This morning will see a raft of European data with GDP, inflation figures, and the unemployment rates. Plenty for those with an interest in the Euro to focus on. The afternoon session will be dominated by the US and the Fed. Will they cut interest rates? The Fed decision is scheduled for 19:00 – if they cut I would expect the USD to weaken against GBP, falling from its current 2 1/2 year highs.

Thursday 1st August

Today will be dominated by UK data with the Bank of England interest rate meeting. This is followed by its quarterly inflation report and accompanying speech by governor Mark Carney. Nothing expected from the interest rate meeting but Mark Carney’s speech will be the key. This is scheduled for 12:30. It will be his first speech following PM Boris Johnson entering number 10 and it will be interesting to hear his thoughts.

Friday 2nd August

To finish the week look out for Australian retail sales data, expected to show a slight improvement month on month. Following this will be European retail sales followed by the key US jobs data non-farm payroll at 13:30. This is a key data release and sets the tone for the US economy. Its shows the number of new jobs outside of the farming industry and forecasts are for 170k. These figures are often wildly off the mark and often will see some significant movement for the USD post the release.

Do you need to exchange currency?

If you are worried about the Pound falling, then fixing the rate with a ‘Forward Contract’is an option worth considering. It removes your exposure to the volatility and allows you to budget. This is very useful when purchasing property overseas for example.

Those that are less risk averse and think the rate could rise, can consider a Stop Loss order. This instructs your broker to purchase your funds if the rate drops below a pre-agreed level e.g. €1.09. You then have a worst case scenario while still allowing you to take advantage if the rate of exchange moves in your favour.

To discuss your requirements with a currency expert and get a quote, email michael@currencyforecasts.co.uk