020 7898 0500
The pound continued its climb against the euro on Tuesday.
Sterling hit another impressive milestone on Tuesday as it reached its highest level over the euro in almost three years. After final German inflation figures for November failed to surprise, the euro slipped as markets hardened their view that the European Central Bank (ECB) would cut interest rates by a further 0.25% on Thursday.
While the pound could enjoy the view, events may turn against it later in the week. The ECB’s decision is far from a certainty, while October’s GDP figures could be a further drag.
GBP/USD fluctuated slightly yesterday but avoided any major moves ahead of US inflation data this afternoon. It was a poor day all round for the euro, which sunk by half a cent against the US dollar and showed little sign of perking up as the day progressed.
The European Union (EU) government in Brussels is to advise member states not to afford the UK greater access to its energy market. Due to energy cables underneath the North Sea, some degree of cooperation is expected to reduce consumer prices and create a more efficient system. In the aftermath of Brexit, Brussels is reported to be urging members not to “cherry pick” rules and regulations.
In the US, business confidence continues to build at a rapid (some would say hysterical) pace. The National Federation of Independent Business (NFIB) small business optimism index climbed to its highest level since June 2021 last month.
The Chinese yuan continued to climb yesterday and stocks in Shanghai rallied as the government appeared to take a more active role in managing the country’s stalling economy.
The Australian dollar meanwhile fell sharply against its rivals as the Reserve Bank of Australia stubbornly stuck with interest rates at 4.35%.
In Syria, The Unite Nations warned Israel to halt its attacks over fears it could disrupt the transition of power. Currency markets continue to monitor the news to pre-empt any further turbulence from the flow of events.
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: Five months, five cents
Since the second week of August, GBP/EUR has climbed by around five months. That means that, on average, sterling has strengthened by a cent every month. Such a performance is mightily impressive but it raise questions over whether that success is sustainable as the world heads towards a volatile new dawn.
GBP/USD: the past year
EUR: The bottom of the dip?
Fretful euro investors have been asking themselves if the euro could fall further this week. The generous interpretation is that an interest rate cut to 3% has now been baked into the price, yet there is a nagging danger than it could fall further.
GBP/EUR: the past year
USD: Eyes on inflation
The US dollar has been flying high of late and is yet to experience a real data setback after the election. Could November’s inflation report provide that? It’s always possible, although economists are predicting the figures to fall closely in line with October’s.
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 Private Client Account Manager on 020 7898 0541.
