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The Bank of England decides interest rates on Thursday. Editorial credit: William Barton, via Shutterstock
Sterling finished Friday on a high, gaining around half a per cent against the US dollar and slightly more than that against the euro over the course of the week.
GBP/EUR at times threatened to reach its highest rate for over a year last time out, boosted by central bank comments and economic data.
The upcoming week will likely be dominated by interest rate decisions in the UK and the US, as well the traditional and slightly tedious bickering that accompanies their announcement. It’s likely both will leave rates unchanged, but someone has blink first in the coming months.
Exchange rates have a habit of jumping around when central banks meet, so expect volatility in the runup to interest rate decisions this week. Why not remove the risk from your next transaction with a Forward Contract? To do so, talk to your account manager today on 020 3918 7255.
US core CPE – the Federal Reserve’s favoured method of tracking inflation – fell below 3% for the first time since March 2021 in December. So, while consumers were spending more on Christmas gifts, there are now clear signs that price pressures as easing.
The European Central Bank (ECB) seems to have changed course slightly last week, as Christine Lagarde noted the progress that had been made on inflation.
Here’s what to look our for this week…
Tomorrow will see preliminary figures for French, Italian and German GDP in Q4, as well as the eurozone’s overall economic performance and US JOLTs job openings.
We’ll get German unemployment and inflation on Wednesday, followed by the Federal Reserve’s press conference once markets have closed.
Thursday is the Bank of England’s (BoE) time to shine but US manufacturing PMI and eurozone inflation will also be closely watched.
The week ends with non-farm payrolls and January’s unemployment figures from the US.
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: PMI promise
It was a good week for sterling, which ticked up against both the euro and the US dollar.
The Bank of England makes its latest interest rate decision this week, amid an improving economic outlook. Last week’s PMI data showed that activity was proving relatively resilient, perhaps boosting the likelihood the Bank will hold off cutting rates at this meeting.
GBP/USD: the past year
EUR: Growth and inflation
The euro recorded marginal losses against the US dollar and a 0.6% dip against the pound in last week’s trading.
It’s another busy week for European data, as we’ll get a barrage of inflation and GDP figures. Christine Lagarde said inflation was easing last week, and this is our chance to see if the data reflects that view.
GBP/EUR: the past year
USD: Pushing back
The US dollar lost around 0.5% to the pound last week, while USD/EUR advanced by a quarter of a per cent.
The Federal Reserve is widely expected to be the first to cut interest rates this year, but we may have to wait a little longer. Chair Jerome Powell has been desperately trying to tame expectations of imminent cuts, but the wolves are starting to snap at his heels.
USD/EUR: the past year
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