Sterling enjoys a good Wednesday – will retail sales add further impetus?
With little in the way of data releases around the globe, sterling somehow managed to strengthen against its major trade partners yesterday. Comments from Martin Weale, a member of the UK’s Monetary Policy Committee, underlined the central bank’s stance that interest rates will not remain at 0.5% indefinitely. As higher interest rates would be the result of the MPC’s confidence in a robust UK economy, this statement helped to push sterling back to its highest levels against the euro since 10th March. Citing recent wage growth in the country and the general strength of the economy, this positive rhetoric provided stark contrast to the less encouraging news out of the Eurozone this week.
Today sees the release of retail sales data from the UK, which may see sterling maintain yesterdays and strengthen further, given that consumer spending is such an important part of the overall economy.
Looking to buy or sell sterling? Call your trader now for the latest rates and updates, as well as for guidance on currency-buying solutions.
Sterling on a high as we wait for key releases today
Sterling was a standout performer yesterday, making gains against most currencies. This performance was surprisingly not due to physical data, but from encouragement received from the International Monetary Fund (IMF). The IMF increased its UK growth forecast more than it did for any of the other G7 nations, causing sterling to benefit, notably reaching its highest level since January 2013 against the euro.
Today is possibly even more important for sterling, as we await the Monetary Policy Committee (MPC)’s votes on monetary policy and interest rates. Significant labour market figures are also due, in the form of the unemployment rate and claimant count change, with the market holding its breath for unemployment levels nearing the threshold for when the MPC supposedly starts raising interest rates. This will be of particular interest to businesses making or receiving international payments as it could well be a catalyst for either further sterling appreciation or disappointment and sterling weakening from its current highs.
Thinking of buying or selling sterling? Call your trader now for the latest sterling rates, as we expect to see some movement in exchange rates following the various releases out today.
Sterling stumbles, will it “collapse”
Sterling has certainly stumbled against the euro losing over two cents in less than two weeks. This week had started well with sterling on the front foot with optimism in the markets helping to buoy the currency. Strong manufacturing production and house price data then helped push sterling higher, however, events from elsewhere then weakened sterling, bringing about a near perfect see-saw week against the US dollar to rest at similar levels to the start of the week, whilst ending down for the week against the euro. This weakness was compounded by words from a member of the Monetary Policy Committee (MPC), who stated that inflation had dropped sharply and unexpectedly, which will ease pressure on the Bank of England to reduce interest rates. Furthermore, the MPC member questioned the effectiveness of the central banks “Forward Guidance” policy. Today, another MPC member is due to speak, in what is the only scheduled UK event with cause to impact the markets. Call your trader now for the latest on sterling, after a roller coaster week and to discuss the likelihood of sterling’s fall turning into a “collapse”.
Worries about today’s BoE meeting undermine sterling | 01/08/2013
The sterling slide continued yesterday as data from the British Retail Consortium showed that average retail prices have dropped for the third month in a row. The poor data in combination with a continuation of the decline in support for sterling ahead of today’s MPC statement has caused sterling to drop to a four and a half month low against the euro and a two week low against the US dollar. Whilst we are unlikely to see any change in the rate of quantitative easing or an alteration in interest rates this month, speculation is rife that the new Governor will use the meeting to provide further forward guidance with regards to how long interest rates will be kept at its historic low. Sterling has been sold off in anticipation of this move, as a result, if no such guidance is given, you would expect the trend to snap and sterling to appreciate. Call your trader now to see how the statement is received.
Sterling slides as we await Thursdays BoE meeting | 31/07/2013
It was a torrid day for sterling yesterday as it lost ground for the sixth day straight against the euro and experienced its greatest depreciation in two weeks against the US dollar. Traders seem to be betting against sterling ahead of tomorrow’s Monetary Policy Committee’s (MPC) meeting. Expectations are that the Bank of England will be relatively proactive in their policy decisions when compared to their counterparts in the US and the Eurozone. Whilst it seems unlikely that we will see an increase in quantitative easing at this stage (all 9 members voted against an increase last month) and the MPC has already expressed a commitment to keep interest rates low for the foreseeable future, investors will be paying close attention to the forward guidance issued as they look for hints as to what policy adjustments we can expect as we approach the autumn. The release will be key in determining sterling’s performance in the near future with a number of key figures predicting further sterling weakness. There is little in the way of important economic releases emanating from the UK today, however you can expect sterling to remain under pressure in the run up to Thursdays announcement. Call in now to track on-going market volatility ahead of Thursday’s events.