As other economies around the world look to a brighter future, it looks like the UK will have a tough time in the next few months. The Pound reacted accordgingly, dropping nearly 2c against both the Euro and the US Dollar.
Much of the improvements in rate last week were wiped out during the course of today, against both the Euro and US Dollar.
This week is all about inflation. We have key figures out in the UK, Europe and the USA, on Tuesday, Wednesday and Thursday. Which economy is performing best at the moment will probably indicate which currency will perform better too.
Elsewhere, look out for the RBA Minutes if you are buying Australian Dollars, and the Swiss interest rate decision if you need to send money to Switzerland. For the latest news contact Currency Index directly.
Interest rates, which used to be the monthly headline from the Bank, are at 0.5% and are not likely to change any time soon. However, the big question in recent months has been whether there will be additional funds pumped in to the economy via 'quantitative easing'.
If the current £175bn programme is increased, we would expect to see the Pound fall significantly. If the amount is left as it is, there may be a small increase for sterling.
The decision is particularly hard to predict because last month the voting committee was split as to the right course of action, with Governer King voting for more action than most of his colleagues.
Whatever your currency needs, contact an experienced currency company today if you are concerned about your own forthcoming transactions.
This week's exchange rate news
There is a bank holiday in the USA for Labour Day today, so trading may be fairly quiet on the – but for the rest of this week we return to key announcements in the UK by the Bank of England on Thursday and on industrial figures on Tuesday.
Last week, Friday’s US employment data was very close to expectations, making little impression on the rate for sending dollars to America. In Australia, speculation that interest rates will be raised soon is making the AUD more expensive, despite the RBA’s decision to keep the central bank rate on hold at 3% last week.
In all cases for sending currency abroad, the Bank of England’s monthly announcement on Thursday is the key event this week. If the Bank continue their policy of quantitative easing, this is likely to be seen as negative for sterling, while any signal that the policy is coming to an end is likely to make exchange rates better. The vote was split last month and this month’s outcome will be taken as an important signal for the UK economy, and therefore sterling's value around the world.
US MARKETS CLOSED
1100 – German factory orders
Overnight – RICS House Price Balance
0930 – UK Industrial & Manufacturing Production
Overnight – UK Consumer Confidence
0930 – UK Trade Balance
Overnight – UK GDP
1200 – Bank of England Interest Rates & Quantitative Easing
1330 – US Trade Balance
0900 – ECB September Report
0930 – UK PPI Inflation
US Dollar rate down on jobs data
Sending money to the USA has been getting more expensive in recent weeks, and the improved employment figures have not helped. Mid-market level is now just below $1.63.
The Pound gained some value this morning, but for now seems to have tailed off, as all eyes are on next week's key Bank of England announcement on Thursday lunchtime.
This week's currency news 313
10am - Eurozone unemployment
10pm - US consumer confidence for August
7pm - FOMC (US interest rate) meeting minutes
10am - European retail sales
12.45pm - European interest rate decision
1.30pm - US jobless claims
1.30pm - US non-farm payroll (key employment figures)