The calm before the storm?
Over the last week or so, movements within the currency market have been minimal – a complete turnaround from earlier this year. The possibility of an interest rate rise in both the UK and the US, while now seemingly unlikely before the beginning of the new year, remains a question on the lips of the investors – and while discussions have been expected, these have not transpired.
Little economic data released across the globe has cemented this quiet period, but with the big issues likely to rise again – how long could this period continue for?
The main issue to affect the Eurozone in coming weeks is the possibility of an extension to the European Central Bank’s (ECB) Quantitative Easing (QE) programme. ECB President Mario Draghi has been expected to provide further stimulus for some time now, with the market contracting and relaxing dependent on sentiment. He has not ruled out this possibility should he deem it necessary so it is possible that this is really just a waiting game.
In the US and the UK, the interest rate hike question dominates. Recent speculation from Goldman Sachs suggests that it expects the Bank of England (BoE) to take this plunge within the first quarter of 2016, thanks to a tightening job market and high wage inflation. Members for the US’s Federal Reserve, including Chairperson Yellen, regularly comment on the likelihood of an interest rate hike across the country – with no news so far. Sentiment expected that the US would raise rates in September, with the UK following close behind – but there seems a really possibility that the UK could be first.
An interest rate rise for either currency will spell good news for those selling it; this is likely to strengthen – perhaps allowing sterling to recapture the losses it experienced during the summer.
As ever, we recommend that anyone interested in transferring funds to and from any of these countries sign up with Smart Currency Exchange today – a no-fee, no-obligation account gives you instant access to the expert guidance necessary to navigate the uncertainties that continue to affect the currency markets.