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The US dollar lost 0.4% and 0.25% against the pound and euro yesterday, respectively.
Both the pound and the euro made decent gains against the US dollar yesterday, as odds for a US rate cut increased ahead of the Federal Reserve’s policy meeting tomorrow.
Pound investors expect the Bank of England to keep interest rates unchanged at 5.0% on Thursday, however, sterling will be guided by tomorrow’s inflation reading for August as a soft reading tomorrow could trigger selling pressure. Economists estimate the annual core UK CPI to have grown at a faster pace of 3.5% from 3.3% in July.
Should you have any upcoming transactions, speak to your account manager today about managing your currency risk effectively ahead of key decisions later this week.
Wages in the eurozone rose 4.5% year-on-year in the second quarter of 2024, following a downwardly revised surge in the first quarter. This reading was the biggest increase since late 2022, despite slowing wage growth for a number of industries including manufacturing and construction.
Yesterday, The Guardian reported that the rent gap between the north and south of England closed to its lowest level in 11 years. The latest figures say the gap is now 37%, a significant reduction from the 43% gap recorded last year and the 55% peak in 2021.
This morning, September’s German ZEW economic sentiment index figures are due. Markets forecast the rate to fall slightly to 18 from 19.2 in August, which was well below expectations of 32. The indicator’s scale is measured from -100 to 100, with zero representing neutrality.
Later this afternoon, we’ll receive the latest US retail sales data, which is expected to have grown by 0.3% in August, from 1% in July.
Bright and early tomorrow morning, the UK inflation rate is expected to fall slightly from 2.2% in July to 2.1% in August, edging closer to the Bank of England’s 2.0% target.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your account manager on 020 3918 7255 to get started.
GBP: UK thinktank says investment is key to economic growth
The Institute for Public Policy Research (IPPR) said that the government needs to invest £15bn per year on a radical program of reforms to tackle Britain’s growing ill-health crisis. The IPPR said that this is vital for economic growth.
GBP/USD: the past year
EUR: Little high-level data leaves euro exposed
The euro remains dependent on foreign data releases this week following the European Central Bank’s interest rate decision last week. This morning’s ZEW data for Germany could provide a boost, however, foreign interest rate decisions remain the most influential releases of the week.
GBP/EUR: the past year
USD: Retail sales in the spotlight
Ahead of a few high-level economic releases this week, US dollar investors will look to US retail sales for impetus this afternoon. Having lost 0.4% and 0.25% against the pound and euro, respectively, on Tuesday, traders will be seeking short-term opportunities to boost the greenback.
EUR/USD: the past year
For more on currencies and currency risk management strategies, please get in touch with your Smart Currency Business account manager on 020 7898 0500 or your personal account manager on 020 7898 0541
