End of the week and GDP figures expected to cause volatility

After a stable start to the week, yesterday saw the pound begin to correct itself from its good run in August so far. Sterling lost around half a cent against both the Euro and the Dollar during yesterday’s trading as respective good news saw these 2 major currencies strengthen against the pound.

The dollar looks set to regain some of the 6 cents that it has lost against the pound in the last 3 weeks after Federal Reserve officials last night announced that they were “broadly comfortable” with plans to scale back the Fed’s $85bn (£54bn) a month bond-buying programme, giving confidence to the progressive economic recovery in the US. At the same time the Euro was on the front foot against the pound yesterday following better than expected Services and Manufacturing PMI figures, indicating the highest level of growth within the Euro-zone for 26 months.

GBP/EUR has now seemingly exhausted its recently rally, having so far lost 1 cent from its peak last week as rates start to come down off this resistance level. This correction is likely to be aided by the recent good figures for the Euro-zone, following on from France coming out of recession last week, and just this morning Germany has posted its latest positive growth figures of 0.7% in the second quarter.

All eyes will now be on the first major UK data release of the week at 9:30am when we get the latest revised Q2 GDP figures. Analysts are expecting the figures to hold at the same level as last month which confirmed a 0.6% growth on the quarter and 1.4% on the year. With the Euro-zone growth picking up pace and with the pound technically on the back foot, these figures will need to impress to prevent any further losses for the pound as the weekend approaches. Always remember you can speak to one of our CI account managers to get set up and ready to send money abroad.